Anglo-American Relations in the 1920s: The Struggle for Supremacy 0888642245, 9780888642240

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ANGLO-AMERICAN RELATIONS IN THE 1920s The Struggle for Supremacy

Also by B. J. C. McKercher ESME HOWARD: A Diplomatic Biography SHADOW AND SUBSTANCE IN BRITISH FOREIGN POLICY, 1895-1914 (editor] THE SECOND BALDWIN GOVERNMENT AND THE UNITED STATES, 1924-1929: Attitudes and Diplomacy THE VIETNAM WAR AS HISTORY (editor)

ANGLO-AMERICAN RELATIONS IN THE 1920s The Struggle for Supremacy

Edited by B. J. C. McKercher Royal Military College of Canada

Foreword by D. Cameron Watt

OCA

THE UNIVERSITY OF ALBERTA PRESS

First published in Canada by The University of Alberta Press 141 Athabasca Hall Edmonton, Alberta, Canada T6G 2E8 1990 Copyright © B. J. C. McKercher 1990 First published in England by The Macmillan Press Ltd, 4 Little Essex Street, London, England, WC2R 3LF ISBN 0-88864-224-5 Library of Congress Cataloging-in-Publication Data Canadian Cataloguing in Publication Data Anglo-American relations in the 1920's Includes bibliographical references. ISBN 0-88864-224-5 1. United States — Foreign relations — Great Britain 2. Great Britain — Foreign relations — United States. I. McKercher, Brian. E183.8.G7A53 1990 327.73041 C90-091378-9 All rights reserved. No part of this publication may be produced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without prior permission of the copyright owner. Printed in Great Britain on acid free paper

Contents Acknowledgements Notes on contributors Foreword by D. Cameron Watt

vi viii x

Introduction B. J. C. McKercher 1

1

Ideology, Diplomacy and International Organisation: Wilsonism and the League of Nations in Anglo-American Relations, 1918-1920 George W. Egerton

17

2

The Symbol and the Substance of Seapower: Great Britain, the United States, and the One-Power Standard, 1919-1921 John R. Ferris 55

3

Between Two Giants: Canada, the Coolidge Conference, and Anglo-American Relations in 1927 B. J. C. McKercher

4

5

6

7

81

The House of Morgan in Financial Diplomacy, 1920-1930 Kathleen Burk

125

Anglo-American Monetary Policy and Rivalry in Europe and the Far East, 1919-1931 Roberta Allbert Dayer

158

The Image of Britain in the United States, 1919-1929: A Contentious Relative and Rival Benjamin D. Rhodes

187

The Deep and Latent Distrust': The British Official Mind and the United States, 1919-1929 B. J. C. McKercher

208

Index

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v

Acknowledgements The editor and the other contributors would like to thank the staffs of the following archives, institutions, and libraries for their help in our research; the Bank of England, London; Barings Bank, London; the Bodleian Library, Oxford; the British Library, London; the Master, Fellows, and Scholars of Churchill College in the University of Cambridge; the University Library, Cambridge; the Federal Reserve Bank of New York; the Harvard Business School; the Herbert Hoover Presidential Library, West Branch, Iowa; the House of Lords Record Office, London; the India Office Library, London; the Library of Congress, Washington, DC; the Minnesota Historical Society, St Paul, Minnesota; Morgan Grenfell and Company, London; the National Archives, Washington, DC; the National Archives of Canada, Ottawa; the National Maritime Museum, Greenwich; Nuffield College, Oxford; Princeton University Library, Princeton, New Jersey; the Public Record Office, London; the School of Oriental and African Studies, London; the Scottish Record Office, Edinburgh; the Sterling Library, Yale University, New Haven, Connecticut; and the Naval History Division, Washington Navy Yard, Washington, DC. We are grateful to the copyright holders of the following sets of papers and manuscript collections for permission to examine, and where appropriate quote from, the materials under their control: Sir Charles Addis; Ray Stannard Baker; the first Earl Baldwin of Bewdley; Admiral Lord Beatty; R. H. Brand; Sir William Bridgeman; Rear-Admiral Victor Brodeur; Viscount Cecil of Chelwood; Sir Austen Chamberlain; Sir Henry Clay; Calvin Coolidge; the Marquess Curzon of Kedleston; John W. Davis; Admiral Sir Sydney Freemantle; Baron Hankey; Charles Evans Hughes; Admiral Lord Jellicoe; Frank B. Kellogg; Edwin W. Kemmerer; Admiral Lord Keyes; Thomas W. Lamont; the fifth Marquess of Lansdowne; Ernest Lapointe; the first Earl Lloyd-George of Dwyfor; the eleventh Marquess of Lothian; the second Earl of Lytton; James Ramsay MacDonald; William Lyon Mackenzie King; Lord Norman; James Ralston; Lord Revelstoke; Admiral Sir John de Robeck; Rearvi

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Admiral Frank Schofield; Oscar D. Skelton; the Benjamin Strong-Norman Montagu correspondence; Tennyson d'Eyncourt; Admiral Lord Wester-Wemyss; and Woodrow Wilson. Of course, our thanks are also extended to those archives holding official papers: the National Archives, Washington, DC (the records of the State Department); the National Archives of Canada (the records of the Department of External Affairs and the Department of National Defence); and the Public Record Office, London (the records of the Admiralty, the Cabinet, the Foreign Office, and the Treasury).

Notes on Contributors Kathleen Burk is Lecturer in History and Politics at Imperial College, University of London. Her publications include Britain, America and the Sinews of War 1914-1918 (1985), The First Privatisation: The Politicians, the City and the Denationalisation of Steel (1988), Morgan Grenfell 1838-1988: the Biography of a Merchant Bank (1989), an edited book of essays, and a number of articles on Anglo-American relations and economic diplomacy. Roberta Allbert Dayer is the Executive Director of the Western New York International Trade Council Inc. in Buffalo, New York. Her publications include Bankers and Diplomats in China, 1917-1925 (1981), Finance and Empire: Sir Charles S. Addis, 1861-1945 (1988), and many articles. George W. Egerton is Associate Professor of History at the University of British Columbia. The author of several studies on the history of international organisation, including Great Britain and the Creation of the League of Nations (1978), he is presently directing the Political Memoirs Project, editing a symposium of studies on memoir, and writing a critical history of the genre of political memoir. John R. Ferris is Assistant Professor of History at the University of Calgary. His publications include Men, Money, and Diplomacy: the evolution of British strategic policy, 1919-1926 (1989), plus several articles on British military and strategic policy and intelligence. B. J. C. McKercher is Associate Professor of History at the Royal Military College of Canada. His publications include The Second Baldwin Government and the United States, 1924—1929: attitudes and diplomacy (1984), Esme Howard: A Diplomatic Biography (1989), a couple of edited books on various aspects of international history, and articles on Anglo-American relations and British foreign policy in the twentieth century. Benjamin D. Rhodes is Professor of History at the University viii

Notes on Contributors

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of Wisconsin-Whitewater. He has published a large number of articles on Anglo-American relations in a variety of journals, as well as The Anglo-American Winter War with Russia, 1918-1919: A Diplomatic and Military Tragicomedy (1988) D. Cameron Watt, of the Department of International History at the London School of Economics, is the Stevenson Professor of International History at the University of London. His publications include Personalities and Policies (1965), Too Serious a Business (1975), Succeeding John Bull (1984), and How War Began (1989). Along with a number of edited books, he is now the co-editor, with Kenneth Bourne, of the series British Documents on Foreign Affairs (ongoing).

Foreword The Anglo-American relationship in the twentieth century has been very much bedevilled by mythology from the opening of the century to the 1980s. The name given to the myth has varied, from the semi-racialist pan-Anglo-Saxonism to be found on both sides of the Atlantic at the end of the nineteenth century (an ideology enshrined in the terms of Cecil Rhodes' will), through Churchill's coinage of the 'English-speaking peoples' to the 'special relationship' discerned or claimed from the sixties onwards. As a myth its role has been instrumental rather than descriptive - in that belief in it or acceptance of it was furthered or advocated by those who wished to see it accepted, because from such acceptance would burgeon a whole garden of persuasions, arguments, interactions, policies. In historiographical terms, advocates of or believers in the special nature of the Anglo-American relationship got off to an earlier start than their critics. Churchill's own memoirs of the Second World War imposed their own magisterial view of the relationship he enjoyed with President Roosevelt with such strength and authority that even the appearance of the three volumes of wartime correspondence between the President and Prime Minister, edited by Professor Warren Kimball, has had virtually no impact outside the limited circle of academic historians, able and working to digest and integrate its revelations into the wider view of Anglo-American relations during and after the Second World War. Parallel with the reevaluation of America's relations with the external world, which began in the 1950s under William Appleman Williams and Richard van Alstyne, and led speedily to the decade and a half of parahistorical debate on American imperialism and the Cold War, generally lumped together as 'revisionism', British historians had begun to look again at the history of Anglo-American relations. The revision in 1967 of the 1958 Public Records Act, which suddenly released for research all the British records between 1914 and 1937 and initiated the regular annual opening of records on the first day of the thirty-first year of their creation enabled new generations of British, and other, historians to follow the twentieth-century x

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relationship between the two countries through the eyes and perceptions of British policymakers, while at the same time releasing a good deal of new material on American actions and policies which the variegated archival practices of American policymakers and agencies had obscured or failed entirely to record. In the course of this convergence of historians whose first perceptions were formed by the prior availability of American as opposed to British records, with those whose initial research experience was in the British records, the premises and suppositions underlying the myth of the special relationship came under rigorous examination for each government to hold office in Britain and each administration in America. The examination was itself much coloured by the perceptions brought by the new generation of historians to their examination. When one student can talk of imperial rivalry and another of informal entente, there is obviously no easy resolution of the kind the lay reader of history would prefer to discover. Nor did the problem of British relations with the newly-emerging European communities, least of all in the period dominated by President de Gaulle, ease matters. It is to the complexity of relations between two politically plural societies, each itself divided by generational as well as social differences, but linked with its fellow not only by a common language but by the easy transition of ideas and concepts from one side of the Atlantic to the other by innumerable social and familial links, that the papers in this collation are directed. It is an area in which Canadians of the dominant English culture have been doubly interested, both by virtue of the half-membership Canada has had in each of the United States and British blocks since her emergence as a separate member of the British Commonwealth before, during and after the First World War, and because the 1920s saw the beginning of a separate and distinctly Canadian foreign policy. One aim in this policy was the avoidance of, or mediation of, conflict between her two foster-parents, an aim justified by the claim that there existed a 'North Atlantic Triangle', a single triangular relationship rather than a trio of bilateral relationships, between Canada, the United States and Great Britain. With the history of this, particularly Canadian, gloss on the myth of the 'special relationship' this study is not particularly con-

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Foreword

cerned. If it is mentioned here, it is only to call attention to the particular Canadian initiative which has given rise to this collection of essays. Dr McKercher's own work has been firmly anchored in the new approaches to international history developed in Britain (and Europe) in the last thirty years, an approach which treats the evolution of foreign policy as the sum of a massive series of individual transactions executed and, to a certain extent planned, within a cluster of closely-linked, constitutionally definable, groups of definable individuals. Together these groups form a 'foreign-policymaking elite', the distinguishing marks of which are the continuance of its membership over time, the comparative freedom of debate and discussion within its ranks and the firm, though by no means entirely impermeable, barrier controlling the flow of information about these debates from within its ranks to the public or, rather, the various publics in whose name its members act, whose interests they believe they serve and from whom, via the political process, they derive their authority and their salaries. The British practice of conducting most of the debate by written records, when taken with the normal practice among those in constant social relationships with one another of confiding their thoughts and experiences to private correspondence diaries, journals and the like, is a gift beyond treasure to twentieth-century historians. It enables them comprehensively to reconstruct the processes of policymaking in Britain in great detail, and to evaluate and apprehend the structure of perceptions and concepts which informed the minds of those who played a role in that process. It enables them, too, to weigh the relative importance to be given to economic, financial and strategic factors and to the influence of 'outside' factors on their deliberations, factors which include public opinion, the views of the press, of the City of London, of industrial, labour and religious spokesmen and so on. These new approaches to international history benefit from the availability of historical evidence of a similar character emanating from the nations and governments with whom the particular foreign-policymaking elite is, in any particular instance, concerned. Such availability enables historians to correlate the perceptions of other nations, entertained by the elite under study, with the realities of power and policy in the

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nations they were concerned with, to note faulty correlations between perception and reality, and to enquire into how they arose, whether from accidental or contrived distortions in the information flow or from faults or misperceptions in the evaluation of the information. This availability is nowhere more comprehensive than in the United States. It is with this process of correlation, examination and enquiry that Dr McKercher and his colleagues are concerned. The structure of events on which their enquiries are centred enables them to contribute to our understanding of how far the transatlantic relationship is one between two national societies and how far within a single transnational society, and to our understanding of both these concepts. British relations with America have been described as being between those who were less than kith and more than kind. This book is concerned with one critical decade in that relationship. D. Cameron Watt

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Introduction B.J. C. McKercher While the British Empire vastly exceeds the United States in area and population and while their aggregate wealth is perhaps greater than ours, yet our position is much more favourable. It is because of this that the relations between the two countries are beginning to assume the same character as that between England and Germany before the war. House, July 19191 A war with America would indeed be the most futile and damnable of all, but it is not 'unthinkable', and we shall the more surely avoid it by cutting that word from our vocabulary. If it is childish - and it is - to suppose that two nations must forever be enemies, it is also childish to stake one's whole existence on the gamble that two must be forever friends (especially when they never have been really). Vansittart, September 19272 In the decade separating the negotiation of^the Treaty of Versailles in 1919 from the Wall Street collapse in 1929 and its immediate aftermath, relations between Britain and the United States were distinguished by strain and tension; though masked periodically by outbreaks of goodwill and cooperation, this uneasiness a few times threatened rupture. The reason is not hard to fathom. 'Its Credit and its Navy', Lord Selborne, the First Lord of the Admiralty, wrote in 1901, 'seem to me to be the two main pillars on which the strength of this country rests and each is essential to the other.'3 Here lay the truth about Britain's external strength before and after the Great War. Prior to 1914, Britain was perceived largely by its citizens and those of most other civilised countries as preeminent in terms of financial strength and naval potency, and the concomitants of diplomatic leverage and, because of the Empire, international responsibilities and strategic preponderance. In short, Great Britain was the only truly global power. But by 1918, 1

2

Introduction

thanks to the financial exigencies of fighting the war, the tide seemed to be turning in favour of the United States. Along with several large eastern banking houses, the American government had underwritten a substantial portion of the costs of the British and Allied war effort.4 Added to this was a decided increase in American naval strength which, with the scuttling of the German fleet at Scapa Flow in 1919, thrust the United States into the role of principal challenger to British naval supremacy.5 But this change in fortunes concerning Britain and the United States was incomplete, nor was there any reason to believe that the situation was either permanent or that the trend favouring the United States would continue. Indeed, from the perspective of 1919-20, the gains made by the Americans might not resist a sustained British revival. Within each country, except for a small number of vocal pan-Anglo-Saxons,6 those responsible for foreign, financial, and naval policy tended to see the other as a rival. Colonel Edward House, President Woodrow Wilson's diplomatic emissary, saw this clearly even as the ink on the Treaty of Versailles dried. More telling, perhaps, was the fact that in Britain there could be serious discussion within the Foreign Office in late 1927 about the possibility of an Anglo-American war, this the result of the failure of the Coolidge naval conference. When the senior Foreign Office adviser concerning the United States, Sir Robert Vansittart, could echo Palmerston's hoary comment about Britain having no permanent friends or enemies, just permanent interests, and to do this when looking at Britain's relationship with the United States, the depth of perceived Anglo-American rivalry can be appreciated. This does not deny that at particular times other foreign policy problems involving other powers or groups of powers preoccupied London and Washington so as to divert their attention from one another. It is not even to say that in the larger scope of foreign problems, other diplomatic, naval, or financial issues were less important. For British diplomatists throughout the 1920s, the questions associated with European security and the position of Germany always remained in the first rank; on the American side, worry about Japanese ambitions in the Pacific and East Asia could not be ignored. But, nonetheless, suffusing the Anglo-American relationship during these ten years, from the perspective of both London and Washington, the belief existed that Britain,

B. J. C. McKercher

3

the sole global power, and the United States, with pretensions to inhabit that plane, were involved in a struggle for supremacy. This is why an examination of the Anglo-American relationship in the 1920s, revolving almost exclusively around the issues of naval strength and finance, is essential to a better understanding of twentieth-century international history. It is to achieve this better understanding that the papers in this volume are directed. The existing historiography on AngloAmerican relations in the 1920s is founded on a number of studies which concentrate primarily on the financial side.7 These studies show that the United States made significant economic gains in those ten years, a result of the Anglo-American debt settlement of 1923, the American debt settlements with other former allies, the important part played by Americans in the diplomacy centring on reestablishing Germany's economic viability so that it could make reparations payments, and the capture by American industrialists and traders of new markets abroad to a degree at British expense. But this advance by the United States was restricted almost solely to the narrow pecuniary sphere, and the general implication in this work, which is primarily the result of American scholarship, is that increases in economic power meant that Britain had been to a degree superseded by the United States by the late 1920s. A smaller body of work, by some Americans but by a larger number of British or British-trained historians, argues that whilst Britain certainly declined economically vis-a-vis the United States, Britain had strength in other areas, notably in the possession of naval power, which had yet to be overtaken by the United States by the onset of the great Depression.8 As a recent corrective about the Anglo-American relationship in the 1920s argues, the power of the United States in international politics, as a result of its growing economic strength, was more potential than real; that of Britain, conversely, was real, a consequence of its still strong economy, currency, and overseas wealth, the size of the Royal Navy and the strategic advantage the navy could enjoy as a result of the Empire, and the diplomatic leverage that British foreign policy achieved through active British participation in the League of Nations and the European balance of power.9 Of course, Britain in 1929 was relatively weaker in economic, naval, and political

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Introduction

terms than it had been fifteen years before; the United States was certainly stronger. However, by the time the great Depression descended on the world, Britain had yet to be surpassed by the United States. The struggle for supremacy in the 1920s had not been lost by Britain. The postwar Anglo-American relationship had a rocky beginning that set the tone for the subsequent decade, this deriving from the difficult diplomacy surrounding the negotiation of the League of Nations Covenant and the failure of Woodrow Wilson to get the Senate to ratify the negotiated agreement. Following on his major study of the creation of the League,10 George Egerton examines the collapse of Wilson's efforts to secure Senate ratification and the negative affect this had on British leaders. Professor Egerton shows that the League Covenant that emerged from the initial stages of the Peace Conference and was then placed as the first part of the Treaty of Versailles represented a compromise between Wilsonian ideals about 'New Diplomacy' - open diplomacy, non-discriminatory trade, national self-determination, anti-colonialism, and disarmament - with established British concepts about the conduct of diplomacy - the protection of national and Imperial sovereignty above all else, the possession of enough armed force to do this, and the ability to have as much of a free hand as possible in the conduct of foreign policy. But a range of British leaders, especially David Lloyd George, the Prime Minister, believed that the cooperative spirit that had emerged in Anglo-American relations during the war should continue in the postwar period. To achieve this, Lloyd George's government accepted the two most important elements of Wilsonism - territorial and political guarantees and obligatory sanctions to buttress the procedures for resolving disputes and modified British League policy accordingly. When Wilson subsequently ran into domestic opposition to the Covenant and rejected any idea of conceding to reservations demanded by the Senate to protect American sovereignty, and which most British leaders were willing to countenance, ratification became impossible. The United States did not join the new international organisation and, more telling, in the American elections of November 1920, the Republican Party won control of both the White House and Congress by appealing to isolationist sentiment amongst voters. Whether justified or not, British

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leaders felt that they had been betrayed, and feelings of distrust continued to permeate British handling of the American question throughout the 1920s. Along with American determination to remain isolated politically from international politics, this made the conduct of Anglo-American relations a difficult proposition for the remainder of the decade. Nowhere was difficulty more apparent than in the possession of naval strength, the most tangible expression of great-power status, indeed, of world-power status, for Britain and the United States during the interwar years. The naval question stood as the most visible issue in the Anglo-American struggle for supremacy after 1918.11 John Ferris assesses the success of the American challenge by looking at the nature and consequences of British naval policy from the end of the war to the Washington conference of 1921-22. This conference is generally held to be the moment when Britain, in acknowledging the validity of American naval pretensions for equality, acceded to Washington's demands. Dr Ferris argues that, traditionally, other powers' perceptions of the Royal Navy were just as important to British diplomatists and sailors as the types, number, and disposition of vessels - the symbol and substance of Britain's naval power. This melded with British foreign policy after 1918, the purpose of which was to ensure that a stable international order resulted from the chaos of 1914-18 and, from this, that British leaders could ensure that they would be able to protect British interests to the best of their ability. It follows that the perception of British naval strength was just as potent in Britain getting its way diplomatically as was the use of the Royal Navy in anger. But after 1918, the United States had the capacity and resources to build 'a navy second to none', something seen poignantly in the Wilson Administration building programmes of 1916 and 1918. The question was, did it have the will? Lloyd George and his advisers ultimately came to the conclusion that this will would not be there if Britain did not appear as a threat to the United States. The result was a 'naval diplomacy', the bargainingdown of American naval ambitions which would not weaken Britain in actual terms in the world, especially vis-a-vis other potential enemies like the French. This led the Lloyd George government to accept equality in capital ships, those over 10000 tons like battleships, with the United States at the

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Introduction

Washington conference, and appeasing Washington to a degree by abrogating the Anglo-Japanese alliance. However, it is significant that Britain would not agree to equality in vessels below 10000 tons, such as cruisers; there were limits beyond which London would not go. Adding to his extant work on British security policy in the 1920s,12 Dr Ferris shows that the British surrendered little at Washington in terms of the substance of sea power, even against other powers like Japan. Instead, they compromised on the symbol. In this way, the existing interpretations which argue that Britain 'abandoned its trident of maritime supremacy' at Washington are wide of the mark. The shift in fortunes came much later, after the Second World War began. The naval rivalry between Britain and the United States in the 1920s did not end with the signing of the Washington treaty. It reemerged a few times afterwards, for instance, within the League of Nations disarmament discussions after 1925 and, spectacularly, during the abortive Goolidge naval conference in the summer of 1927. This story is well-known,13 deriving from what Dr Ferris might characterise as the British refusing to compromise on the substance of sea power. Nonetheless, the implications of this British resistance concerning the Empire and the strain that the American challenge to Britain put on intra-Imperial relations is not so well understood. B. J. C. McKercher seeks to remedy this by looking at the problems that Canada, the senior dominion, faced when Britain and the United States agreed to find a basis for limiting vessels below 10000 tons at the Coolidge conference. The making of Canadian foreign and defence policy in 1927 highlights some of the problems that dominion leaders confronted in seeking to balance between Britain and the United States in the 1920s. As in other dominions, Canadian leaders desired to keep Imperial ties firm whilst achieving as much independence in foreign policy from Britain as they could. This stance had already borne fruit when, at the 1926 Imperial Conference, Britain conceded the dominions their independence in foreign policy. Afterwards, it became the purpose of the Canadian government, led by William Lyon Mackenzie King, to ensure that this right was strengthened. But unlike the other dominions, Canada shared a 3000-mile border with the United States and, with its southern neighbour increasingly important

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in matters relating to trade and investment, Canada could not afford to antagonise Washington unduly. Mackenzie King's government had been engaged in a conscious effort since the Canadian general election of 1926 to increase naval spending in Canada, and to integrate the Royal Canadian Navy within the operational context of British Imperial defence. However, the advent of great-power naval talks in the summer of 1927 created problems for Ottawa. Mackenzie King's government wanted a separate invitation to Geneva, where the conference was to meet. When the United States government seemed reluctant to do this, suggesting that the British Empire was an indivisible whole in terms of foreign policy, Canada joined with the Irish Free State, that other dominion which balanced between London and Washington, to secure this. Mackenzie King then ensured that the Canadian delegation sent to Geneva had the most powerful political representation possible, supplemented by the best naval advice. When it later became clear that the British and Americans would be unable to compromise on cruiser limitation - cruisers were the principal weapons for attacking and defending seaborne lines of communication - the Canadians trod warily between the two giants. Ultimately, Ottawa sided with London over limiting vessels under 10000 tons, since this would ensure sound Imperial defence for which the new Canadian naval programme was being framed. But Mackenzie King also made certain that he remained on friendly terms with the Coolidge Administration, especially after the conference ended in failure. In doing so, he succeeded in making sure that Canadian-American relations were on a firm footing - there were a range of bilateral issues that had to be resolved - and that his country's position in the North Atlantic triangle was not endangered. Although the naval question existed as a flashpoint in AngloAmerican relations in the 1920s, and did so until the London naval conference in 1930 settled the matter, economic and financial issues were just as important. Of all the points of contention in Anglo-American relations in the 1920s, this is probably the one on which the most work has been done by historians.14 The reason quite simply is that a wide range of historians on both sides of the Atlantic seem mesmerised by the notion of economic determinism and, as the United States emerged from the Great War as the leading economic and

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Introduction

industrial power, there is the view that it had ipso facto replaced Britain as the preeminent world power. As the transplanted British historian, Paul Kennedy, states baldly in his study of the rise and fall of great powers: 'the United States . . . by 1918 was indisputably the strongest power in the world'.15 However, as Kathleen Burk and Roberta Dayer demonstrate in their separate pieces, this belief in the unbridled economic superiority of the United States was not necessarily held by contemporaries in either London, New York, or the wider world. Therefore, the struggle for supremacy was just as sharp in this field as it was in the naval one; it was just more muted. The centre of international finance in the post-1918 period lay in the money markets of London and New York, the latter the American financial capital. Dr Burk examines the financial relationship between these two centres in the 1920s in terms of the role of the House of Morgan in Anglo-American relations. This powerful private bank had allied firms in London, New York, and Paris, as well as close ties with the political leaderships at both Westminster and Washington. The House of Morgan and other private banks, and banking groups like it, were fundamentally important in international politics throughout the 1920s because it was they, rather than governments, that undertook to raise loans in the international marketplace. Where the British governments of the decade could not loan taxpayers money because of the fiscal difficulties they faced as a result of the war, and where the Republican Administrations of the period saw the loan of public money as anathema to the idea of laissez-faire capitalism, it fell to private banks like Morgans to find private money for projects like European reconstruction, the underwriting of reparations payments, and so on. Echoing her earlier work on Anglo-American economic diplomacy during the Great War,16 Dr Burk sees that as a result of the war, the centre of financial gravity had shifted away from London to New York. But just as important, whilst New York was 'awash with money and labouring under few restrictions', London did not lack advantages. The London money market had an available pool of investment capital and, more than New York, the experience and expertise in utilising it to the best advantage in the international marketplace. It follows that a symbiotic relationship emerged in the 1920s

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between London and New York amongst private bankers, and the House of Morgan stands as the best example of this. Downplaying the idea of unrestrained rivalry between the two leading financial centres in the 1920s, Dr Burk adheres to the view adumbrated by Michael Hogan that a cooperative competition imbued Anglo-American economic relations in the 1920s.17 This derived from the fact that whilst the British and American governments might fall out over a variety of political, naval, and economic issues, the bankers in each country had worked together well during the war so that, afterwards, they saw every advantage to continue doing so. Still,, when it came to some crucial issues, an element of the struggle for supremacy emerged. This can be seen in the American pressures to have Britain return to the gold standard in the mid-1920s and, later in the decade, over the nature, function, and location of the Bank of International Settlement that emerged from the Young Committee. Thus, although private banks like Morgans with feet on both sides of the Atlantic were an integral part of the Anglo-American relationship in the 1920s, a struggle for economic superiority remained. In Dr Burk's view, the Americans were coming to dominate the financial relationship as the 1920s unfurled, though they did not yet have the dominance that some, like Kennedy, assert. As counterpoint to Dr Burk's chapter, Roberta Dayer assays the course of Anglo-American relations and the issue of monetary policy from the Paris Peace Conference to the Japanese invasion of Manchuria in 1931. And in this assessment, any notion of a cooperative element in the economic relationship between Britain and the United States goes by the board. Admittedly, Dr Dayer shows that in the early part of the decade, cooperation did exist. British and American bankers were linked by notions of friendship and through their wartime experiences; however, the point is made that these bankers also saw themselves as rivals, and the American ones proved to be more adept - or, to the uncharitable, ruthless - in pursuing their ends. Dr Dayer argues that British financial leaders sought cooperative policies with the Americans after the war concerning monetary policy and that, given the importance of the European balance of power, efforts respecting the continent were most important in this regard. These British leaders believed that their American counterparts had promised that

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Introduction

if certain British concessions were forthcoming, the desired cooperation would be assured. Therefore, the British agreed to abrogate the Anglo-Japanese alliance and accept parity in capital ships in 1922, settle their war debt to the United States before agreeing on the level of German reparations in 1923 and 1924, and return to the gold standard in 1925. However, when the Americans then refused to cooperate in currency regulation, hoarded their gold, and would not countenance any reduction of the war debt, the British felt aggrieved. The sense of betrayal, suggested by Professor Egerton, was compounded and with the problems in monetary policy coming at the same time as the cruiser question heated up, Anglo-American relations suffered. Dr Bayer's main point is that the British in the first part of the 1920s were willing to make major concessions in the Far East - the ending of the alliance with Japan and the notion of parity in capital ships most importantly - in order to get a European settlement. However, in the latter half of the decade, feeling betrayed, the British worked with moderate success to shore up their position against American inroads. Embroidering on her existing work on Anglo-American financial rivalry in the Far East and Europe,18 Dr Dayer interweaves the history of British policy in these two spheres to show how this aspect of the struggle for supremacy unfolded. In appraising the overall Anglo-American relationship in the 1920s, Professor Benjamin Rhodes and Dr McKercher offer separate assessments of the images which the foreign-policymaking elites on each side of the Atlantic had of the other power. Professor Rhodes shows that the American image of Britain underwent several shifts and changes during those crucial ten years. The zenith of good Anglo-American relations and, hence, of a favourable British image in the United States, came during the latter stages of the Great War. This derived from the spirit of cooperation against a common enemy, augmented to a degree by the afterglow of the 'great rapprochement' which had marked relations after 1903.19 However, Germany's defeat and the return of peace began to take the sheen off Britain's image, as the problems relating to the peace settlement, the League, war debts, reparations, and the naval question emerged. Little doubt exists that the majority of American political leaders in the 1920s were not necessarily anti-British,

B.J. C. McKercher

11

though particular constituencies in the United States, chiefly the Irish-Americans, and some powerful press barons, like William Randolph Hearst, held deep anglophobe convictions. However, the diplomatic reality of the 1920s was that American leaders were diplomatists like those in any other country. They might in varying degree share a liking for Britain, but their first loyalty was to their own country and, to the best of their ability, the defence of American national interests. Moreover, given the American political system, they had to pursue diplomacy that reflected the desires of American voters. It followed that as the problems which the preceding papers address arose, Britain's image in the United States darkened or lightened accordingly. The dilemmas surrounding the League, naval arms limitation, war debts, and reparations each affected the way in which Britain and its foreign policies were perceived by Americans. Professor Rhodes also shows how the problems in Anglo-American relations caused by the emotive issue of liquor-smuggling from Canada and the British West Indies into Prohibition America created additional difficulties. In this whole equation, the rise of Herbert Hoover to the presidency in 1929 is seen as a turning point in Anglo-American relations in the 1920s. Wanting a naval agreement, and suggesting that some sort of compromise might be possible over war debts, he invited Ramsay MacDonald to the United States in late September and early October 1929 - the first official visit by a sitting British prime minister to the United States. A resolution of the naval question was achieved, which found form in the London naval treaty, and Britain's image waxed. Unfortunately, the advent of the great Depression created an economic crisis that saw the debt issue resolved in a way neither country would have earlier believed possible. Still, a turning-point had been reached with the rise of Hoover. Indeed, Professor Rhodes contends that only after this, when the rise of common British and American adversaries again presented themselves, the former community of interests between the two powers reemerged and the British image in the United States attained its pre-1918 lustre. Dr McKercher's analysis of the British 'Official Mind' respecting foreign-policymaking in the 1920s shows that this can be broken down into three rough groupings: Atlanticists, Imperial isolationists, and world leaders. The first grouping

12

Introduction

held decidedly pro-American views, believing that an AngloAmerican condominium of interests was always present and could be relied on to meet danger in moments of crisis. Imperial isolationists, on the other hand, saw American pretensions to naval equality with Britain and United States economic strength as inimical to the Empire's security. This led to the perception that the United States existed as a threat to Britain's position as the only global power. Between these two extremes, world leaders reckoned that Britain had to look after its own interests, centring on the rubrics of maintaining the balance of power in Europe and defending the Empire, and, if Anglo-American interests intersected, so much the better. But if they did not, then Britain had to protect its interests either independently of the Americans or in spite of them. Like the Imperial isolationists, world leaders saw American policies possessing the potential to undermine Britain's preeminent global position, but this did not translate into the base anti-Americanism of the Imperial isolationists. Importantly, nothing hard and fast existed about these divisions within the elite. Some British leaders, like Winston Churchill who held various Cabinet posts in the 1920s, could at various times exhibit qualities of each group and, depending on the question, argue from different perspectives. However, when assessing Anglo-American relations in the 1920s from the British point of view, and in contradistinction to what Professor Rhodes shows about American views fluctuating between good and bad, the British tended to be uniformly distrustful of the United States. This was a function of world leaders dominating the decision-making process in Britain for most of the decade, for example, Austen Chamberlain, who served as Foreign Secretary from 1924 to 1929. However, even when an avowed Atlanticist like MacDonald controlled Britain's American policy, there were limits in accommodating the United States beyond which he could not go. Like those American leaders who were not necessarily ill-disposed to Britain, he could not allow his country's interests to be imperilled because of sentiment. Thus, Dr McKercher adds to his existing work on the Anglo-American relationship in the 1920s20 to show that from the perspective of London and the British 'Official Mind', it was not anti-Americanism that dictated British policy towards the United States. Instead, it derived from

B.J. C. McKercher

13

men who, distrusting the United States because of its economic and naval diplomacy, treated the United States as just another power with which they had to deal in preserving Britain's leading position in world politics. The historiography of the Anglo-American relationship in the twentieth century is rich and diverse,21 and no more so than in this collection dealing with the 1920s. Subtle differences of interpretation exist amongst some of the contributors - for instance, between Dr Burk and Dr McKercher - whilst in one case - that of Dr Ferris and Dr Dayer - there is an extreme divergence of opinion. However, in one crucial way all of these papers share an overriding view: that a struggle for supremacy existed in Anglo-American relations in the 1920s. The United States was mounting a challenge to Britain's preeminence and, whether it was marked by a cooperative competition or outright confrontation, this struggle was a fact of international political life. Moreover, it is clear that by the end of the decade, Britain had resisted the American challenge. The onset of the economic crisis in 1929, as devastating as it was for Britain, was disastrous for the United States, as many of the gains made by Americans in the 1920s were seriously eroded. As the 1930s dawned, Britain still had its powerful navy, global strategic preponderance, and key position in the European balance of power. In the United States, on the other hand, an ambitious programme to build a sizable cruiser fleet was shelved, American leaders could not collect debts owed the United States, and, as the Far Eastern crisis after 1931 showed starkly, the United States lacked both the will and resources to project its strength into one area judged vital to American interests. It is crucial to note that the foreign policy problems confronting diplomats in the 1930s were the same as those which preoccupied their confreres of the 1920s: arms limitation, a measure of international - especially European - security, and the need to devise an equitable settlement of the economic and territorial problems spawned by the Great War and the Paris Peace Conference. Without doubt, the British position in Europe and the wider world became progressively weaker in the 1930s, a consequence of the rise of Hitler and the obvious aggressiveness of fascist Italy and Imperial Japan. British leaders seemed less able than their predecessors a decade earlier to meet these problems so as to protect their

14

Introduction

state's leading position in the world, whether by their own inabilities or the bad luck of facing a series of international circumstances beyond their control. But for exactly the same reasons, American international strength declined, and probably more so as the United States remained Britain's junior by 1929 in the ability to project strength so as to underpin foreign policy. Britain's preeminence in the world had not been transferred to the United States, nor would it until the outbreak of a second European Great War in 1939 severely tested the thinning resources of Britain and its Empire. Thus, the course of Anglo-American relations between the Paris Peace Conference and the Wall Street crash is important, important both to understand and appreciate the significance of the relationship of the two principal English-speaking powers in the history of that crucial decade. But despite the obvious continuity of issues in international history between the two decades, the 1920s are more than a backdrop to the 1930s. In a broader intellectual sense, especially in terms of appreciating the Anglo-American struggle in the ten years after 1919, this period can be judged as a distinct phase in international history. The papers in this volume are offered to illuminate key aspects of this rivalry in the 1920s.

NOTES 1. House (US diplomatist) to Wilson (US president), 30 July 1919, in C. Seymour, The Intimate Papers of Colonel House, Vol. IV (London, 1928), 510. 2. Vansittart (head, Foreign Office American Department) minute, 15 Sept. 1927, Austen Chamberlain MSS (Foreign Office Archives, Public Record Office, London) FO 800/261. 3. Selborne memorandum on the 'Balance of Naval Power in the Far East', 4 Sept. 1901, CAB (Cabinet Archives, Public Record Office, London) 37/58/81. 4. See K. M. Burk, Britain, America and the Sinews of War, 1914-1918 (London, 1985) for an indication. 5. See S. W. Roskill, Naval Policy Between the Wars, Vol. I: The Period of Anglo-American Antagonism, 1919-1929 (London, 1968), 19-130. 6. Philip Kerr, a private secretary to Lloyd George from 1916 to 1921, the l l t h Marquess of Lothian after 1930, and the British ambassador

B.J. C. McKercher 15

7.

8.

9.

10.

11.

12.

13.

at Washington in 1939-40, was one of the most prominent. His writings are far too numerous to mention, but for an indication see his 'AngloAmerican Relations', Round Table, 65 (Dec. 1926). Representative are F. C. Costigliola, 'Anglo-American Financial Rivalry in the 1920s', Journal of Economic History, 37 (1977), 911-34; M. J. Hogan, Informal Entente: The Private Structure of Cooperation in Anglo-American Economic Diplomacy, 1918-1928 (Columbia, MO, 1977); M. P. Leffler, The Elusive Quest: America's Pursuit of European Stability and French Security, 1919-1933 (Chapel Hill, NC, 1979); C. S. Maier, Recasting Bourgeois Europe: Stabilization in France, Germany, and Italy in the Decade after World War I (Princeton, 1975); C. P. Parrini, Heir to Empire: United States Economic Diplomacy, 1916-1923 (Pittsburgh, 1969); S. Schuker, The End of French Predominance in Europe: The Financial Crisis of 1924 and the Adoption of the Dawes Plan (Chapel Hill, NC, 1976); and D. P. Silverman, Reconstructing Europe after the Great War (Cambridge, MA, 1982). Representative are H. Feis, The Diplomacy of the Dollar: The First Era, 1919-1932 (Baltimore, 1969); M. G. Fry, Illusions of Security: North Atlantic Diplomacy, 1918-1922 (Toronto, 1972); B. J. C. McKercher, The Second Baldwin Government and the United States, 1924-1929: attitudes and diplomacy (Cambridge, 1984); and Roskill, Naval Policy, I. Cf. D. Cameron Watt, Succeeding John Bull: America in Britain's Place, 1900-1975 (Cambridge, 1984) which examines the perceptions and misperceptions of the foreignpolicy elites in each country and the impact of these on foreign-policy formulation. B. J. C. McKercher, 'Wealth, Power, and the New International Order: Britain and the American Challenge in the 1920s', Diplomatic History, 12 (1988), 411-41. This view is not shared by all scholars of the AngloAmerican relationship in the 1920s; for instance, see P. M. Kennedy, The Rise and Fall of the Great Powers. Economic Change and Military Conflict from 1500 to 2000 (New York, 1987), 275-343. G. W. Egerton, Great Britain and the Creation of the League of Nations: Strategy, Politics, and International Organization, 1914-1919 (Chapel Hill, NC, 1978); and idem, 'Britain and the "Great Betrayal": Anglo-American Relations and the Struggle for United States Ratification of the Treaty of Versailles, 1919-1920', Historical Journal, 21 (1978), 885-911. Cf. C. G. L. Hall, Britain, America, and Arms Control, 1921-1937 (Basingstoke, 1987); McKercher, Second Baldwin Government; Roskill, Naval Policy, I; and D. Richardson, The Evolution of British Disarmament Policy in the 1920s (London, New York, 1989). See J. R. Ferris, 'A British "Unofficial" Aviation Mission and Japanese Naval Developments, 1919-1929', Journal of Strategic Studies, 5 (1982), 416-39; idem, The Theory of a "French Air Menace": Anglo-French Relations and the British Home Defence Air Force Programmes of 1921-25', Journal of Strategic Studies, 10 (1987); and idem, Men, Money, and Diplomacy. The Evolution of British Strategic Policy, 1919-1926 (London, 1989). See note 11, above, plus D. Carlton, 'Great Britain and the Coolidge Naval Disarmament Conference of 1927', Political Science Quarterly, 83 (1968), 573-98.

16

Introduction

14.

See note 7 above, plus the thought-provoking F. C. Costigliola, Awkward Dominion: American political, economic, and cultural relations with Europe, 1919-1933 (Ithaca, NY, 1984). Kennedy, Great Powers, xix. K. M. Burk, 'Great Britain in the United States, 1917-1918: the turning point', International History Review, I (1979), 228-45; idem, 'The mobilization of Anglo-American finance during World War F, in N. F. Dreisziger (ed.), Mobilization for Total War (Waterloo, Ontario, 1981), 23-42; and idem, Sinews of War. Hogan, Informal Entente. For example, Bankers and Diplomats in China, 1917-1925: The Anglo-American Relationship (London, 1981); and idem, Finance and Empire. Sir Charles Addis, 1861-1945 (New York 1988). A. E. Campbell, Great Britain and the United States, 1895-1903 (London, 1960); C. S. Campbell, Anglo-American Understanding, 1898-1903 (Baltimore, 1957); and B. Perkins, The Great Rapprochement. England and the United States, 1895-1914 (New York, 1968) are instructive. McKercher, Second Baldwin Government; and idem, Esme Howard. A Diplomatic Biography (Cambridge, 1989), 269-351. Cf. F. M. Carroll, 'Anglo-American Relations and the Origins of the Cold War: The New Perspective', Canadian Journal of History, 24 (1989), 191-208; D. A. Lincove and Gary R. Treadway, The Anglo-American Relationship: An Annotated Bibliography of Scholarship, 1945-1985 (Westport, CT, 1988); and W. R. Louis and H. Bull (eds), The Special Relationship: Anglo-American Relations since 1945 (Oxford, 1986). As can be seen here, the concentration of study has been on the later rather than the earlier period.

15. 16.

17. 18. 19.

20. 21.

1 Ideology, Diplomacy, and International Organisation: Wilsonism and the League of Nations in AngloAmerican Relations, 1918-1920 George W. Egerton As the 1920s began, America's relations with the European democracies, particularly Britain, entered a period of renewed turbulence. The legacy of wartime cooperation and the hopes for a postwar Euro-American partnership, institutionalised in the new League of Nations, seemed to have been rudely disrupted. When Viscount Grey, having returned from a frustrating mission as Special Ambassador to Washington, in January 1920 published a famous private letter in the London Times calling for a sympathetic attitude on the part of the Allies toward the reservations which Republican Senators wished to attach to the Treaty of Versailles - reservations which had the primary purpose of qualifying American participation in the League - the American President responded with intense hostility. Woodrow Wilson, severely incapacitated since his stroke of the previous October, saw the Grey letter as part of an Allied conspiracy with Senator Lodge to break the President's refusal of reservations, and an attack on the integrity of the Covenant of the League.1 Relations with the Allies reached their nadir in February over European concessions to Italy on the Fiume question, when only interventions in both Washington and London prevented utterly undiplomatic language from 17

18 Ideology, Diplomacy, and International Organisation being exchanged between Wilson and Prime Minister Lloyd George. There was a tragic irony in the fact that it was the question of the League of Nations, the very organisation intended to facilitate continuing Anglo-American cooperation in the cause of future peace, which proved to be the principal stumbling block to such hopes. Grey's letter, while acknowledging the depth of the personal and partisan animosities aroused in the American ratification struggle, nevertheless insisted that larger issues of principle were paramount: the constitutional division of powers over foreign policy and treaty-making between the executive and legislature, and the understandable 'conservative feeling for traditional policy' which eschewed entangling foreign commitments. The central obligations of the Covenant, as designed largely by Wilson, notably the political and territorial guarantees of Article Ten, represented a violation of American diplomatic traditions. Grey argued, therefore, that the Allies should accept the Americans on their own terms, predicting that the reservations would not in practice detract from the operation of the League. The vital point was to have the United States in the League as a willing partner; without America the League would lose both its physical and, more important, its moral force. Grey's letter, a desperate, last-minute intervention in the American Treaty struggle, failed to break the deadlock, while further stiffening Wilson, who was anxious to turn the 1920 elections into 'a great and solemn referendum' on the League question. Grey knew that although the British government was reluctant to accede to a privileged and unequal American participation in the League, they had their own deep reservations on the League as constituted by the Covenant. Indeed, the Covenant, so-named in tribute to Wilson's Presbyterian predilections, represented the triumph of one vision of the proper nature and functions of a League of Nations - the Wilsonian liberal-internationalist conception, grounded in the ideological and religious response of liberalism and Protestantism to the joint challenges of war and revolution in modern conditions. It was a vision generated largely in British liberal circles which Wilson brilliantly articulated in his inspiring wartime liberal manifestos, notably the Fourteen Points. So successful was the American President in his personal propagation

George W. Egerton

19

of liberal war-aims that, by 1918, the programme was heralded popularly as 'Wilsonism'. A second, more conservative approach to the creation of the League was conceived carefully in official British quarters, far from the glare of publicity. Grounded less on ideology and more on diplomatic experience and political empiricism, this conception of the League evolved from detailed technical study of the question of international organisation. By the time of the peace conference this more cautious approach to the League was shared by the senior members of the British diplomatic elite and the political circles closest to Prime Minister Lloyd George. It was a conception which also enjoyed support in America from Senator Lodge and the moderate Republican opposition, together with the members of the American peace commission aside from Wilson - Secretary of State Lansing, General Tasker Bliss, the Republican Henry White, and finally also by Colonel House, Wilson's principal adviser and diplomatic agent until their estrangement during the peace conference. It is the intention of this chapter to analyse the distinct and conflicting approaches to the creation of the League of Nations - the ideologically-impelled programme directed by Wilson, and the conservative diplomatic path favoured by the British political eiite and his American critics.2 It has been a standard interpretation to view the establishment of the League as marking 'the highest achievement of Anglo-American co-operation' in the peacemaking.3 The evidence and argumentation advanced in what follows will contest this assessment. Indeed, it will be argued that in the conflict between Wilson's passionate ideological and moral vision of the League and his critics' more sober designs lay a tragedy for both Anglo-American relations and forces of democracy in world politics after 1919. The study, then, focuses not only on the areas of conflict in British and American approaches to the League question in the peacemaking and its aftermath, but also addresses fundamental issues concerning the nature and functions of international organisation in the twentieth century.

The idea of a league to prevent war had a long history in the peace movements of both Europe and America. It was reborn

20

Ideology, Diplomacy, and International Organisation

early in the Great War, largely in British liberal and radical circles for whom the outbreak of European war represented a profound psychological shock and urgent ideological challenge. While revolutionary socialists and conservatives could view war ideologically as either necessary or natural, the reversion of Western civilisation to the barbarism of war represented a direct contradiction to the irenic and progressive political tenets of liberalism. For many war-shocked liberals it was both a psychological and ideological necessity to explain the coming of the war as not simply a result of German and Austrian aggression but, more profoundly, as a result of the prevailing militarism, diplomatic secrecy, competing alliances, and 'international anarchy' of prewar Europe. Soon groups of radicals, Fabians, liberals, and labourites, such as the Union of Democratic Control, the Bryce group, and the League of Nations Society, converged with the purpose of preparing and pressing for the creation of a new diplomatic order that would prevent the recurrence of the disaster of 1914. The central themes in this liberal war-aims programme included the democratisation of foreign policy, the prohibition of secret diplomacy, the limitation of armies and navies, the end to imperialism, and, most important, the creation of an international organisation to resolve disputes peacefully and provide security against future wars. In America, similar ideals were embraced by the League to Enforce Peace, whose leaders kept in close touch with British and European colleagues. It would not be until 1917, the third year of the war, that the scale of suffering, death, and privation would have generated the necessary socio-political conditions for the translation of the liberal war-aims programme into a liberal internationalist ideology. The seminal events of 1917 - costly military failures, the loss of Russia to revolution, the politicisation of the Left and labour in Allied countries, the American entry into the war as an 'Associated Power' - all served to transform the nature of the war into an ideologically-charged struggle in what was now a revolutionary era. It was Woodrow Wilson's definition of American war-aims and appeal to the forces of British and European liberalism and social democracy which mobilised the existing British liberal critique of the old diplomacy into a full-fledged ideology - complete with credo, emotive/redemptive vision, prophetic/

George W. Egerton

21

charismatic leadership, and the dynamics of an international movement. In contradistinction to both the prewar old order, stigmatised most starkly in Prussianism, and the new looming menace of Bolshevism, Wilson delineated the principal objectives of the 'New Diplomacy' in speeches of unsurpassing rhetorical genius through 1918. The most dramatic and inspiring projection of the 'New Diplomacy' was set forth, of course, in Wilson's Fourteen Points of 8 January 1918. Here, along with the liberal agenda of open diplomacy, non-discrimatory trade, national self-determination, anti-colonialism, and disarmament, Wilson's Fourteenth and culminating point stated that: 'A general association of nations must be formed under specific covenants for the purpose of affording mutual guarantees of political independence and territorial integrity to great and small states alike.' The President's Fourteenth Point projected a theme which was of immense importance to the wartime league of nations movement and, indeed, would be seminal to twentieth-century liberal internationalist ideology through the era of the two world wars and the cold war — the ideal of collective security. Although this term would not be used popularly until the early 1930s, in both Britain and America the ideals of guaranteed peace, 'enforced peace', and 'mutual defence', were integral to the pro-league movement from its birth. Wilson's earliest wartime reflections on the league idea projected 'an association of the nations all bound together for the protection of the security of each, so that any one nation breaking from this bond will bring upon herself war; that is to say, punishment, automatically.'4 Subsequently, through the period of American belligerency and his Fourteen Points, the struggle for Article Ten in the drafting of the League of Nations Covenant, and the bitter campaign in the United States for ratification of the Treaty without Senate reservations, the American President never deviated from his passionate commitment to the moral principles and the security guarantees which he portrayed as the heart of the Covenant. In elevating the ideal of collective security, Wilson rightly sensed the seminal ideological import of this concept to the liberal internationalist cause. For the President and the liberal forces whose values he articulated, the collective security concept came to symbolise and encode the liberal quest to conquer

22

Ideology, Diplomacy, and International Organisation

the international anarchy which had brought on the war, and to 'make a society instead of a set of barbarians out of the government of the world'.5 Indeed, for Wilson and the AngloAmerican liberal intelligentsia, the establishment of a system of collective security represented an international analogue to the social contract myth, the functional equivalent to the evolution of a proto-legal system in national societies, as in such precedents as the British 'hue and cry', and the American posse. For Wilson, moreover, the league cause had deep religious and nationalist wellsprings. His devout Presbyterian faith ramified his political ideals with a sense of responding to the call and directives of Providence, whereby he and his country were chosen to usher in a new age of justice and peace. The desired new international order, therefore, represented not just an international constitutional contract, but also a covenant for righteousness and justice sanctioned by God. The league project was viewed eschatologically by Wilson as the 'final enterprise of humanity'. 6 While Wilson would keep the theme of the League and collective security in the forefront of his subsequent wartime addresses defining the liberal war-aims programme, the President did little to advance the detailed planning which would be necessary to establish a league of nations. Indeed, the President responded with opposition and even hostility to all suggestions that efforts should be made in America, or with the British, to agree on the details of a scheme for a peace league. Wilson instead, fearing perhaps the response of critics to any proposed scheme, advised House that he believed 'the administrative constitution of the League must grow and not be made; that we must begin with solemn covenants, covering mutual guarantees of political independence and territorial integrity . . . but that the method of carrying these mutual pledges out should be left to develop of itself, case by case. . . .'7 The impression is retained, even after Wilson immersed himself in the immensely satisfying task of constitutional drafting at Paris, that he would have preferred the League to have been generated by a series of pristine moral covenants setting out a code of international behaviour and specifying the form of retribution against transgressors, with very little by way of structure and organisation being established.

George W. Egerton

23

It was in Britain, in the league of nations movement and in official quarters, that the details, dilemmas, and alternative designs involved in creating a peace league were considered in greatest scope. By late 1918, leaders of the British pro-league movement, now united in the League of Nations Union (LNU), had been successful in converting the mainstream of British society, including the churches, labour, and principal newspapers, to the league cause. The official programme of the LNU, calling for the establishment of a peace league wherein members would agree 'to suppress jointly, by the use of all the means at their disposal, any attempt by any State to disturb the peace of the world by acts of war', embraced the collective security ideal in a form somewhat different from Wilson's - a guarantee of peace rather than the President's favoured guarantee of territorial integrity and political independence. Nevertheless, the leaders of the LNU looked to Wilson as their ideological mentor and the champion of their cause in the impending peace conference.8 The principal British advocate of the league ideal was Lord Robert Cecil who, if less charismatic than Wilson, would devote a long and unfaltering career to the cause of peace through the League and, later, the United Nations. A younger son of Lord Salisbury, the Victorian Prime Minister, Cecil was attracted to the League ideal by a combination of his Christian ethics, his Tory apprehensions as to the revolutionary consequences of modern war, and his admiration for the liberalism of Grey under whom he served in the Asquith coalition as Minister for Blockade. It was Cecil who took up the League cause within British official and government circles. When British leaders of the league of nations movement were unsuccessful in petitioning for the formation of an Anglo-American committee of officials and experts to study the league idea, Cecil in late 1917 persuaded his cousin, Arthur Balfour, Foreign Secretary in the Lloyd George government, to form a commission of British officials and specialists under the chairmanship of the prominent Law Lord, Walter Phillimore, to analyse and report on the idea of a peace league. Although Cecil never developed a personal friendship with Wilson, he fully shared the President's ideological and religious passion for the league and the collective security ideal. Indeed, Cecil, like Wilson, came to view the league cause as a modern crusade: 'For so

24

Ideology) Diplomacy, and International Organisation

great a cause . . . we seek not adherents only, but Crusaders. Crusaders for an ideal not less high and not less holy than any which has ever moved man in the history of the world.'9 The crusading ideological mentality of Cecil, Wilson, and the LNU found little sympathy within the British diplomatic and political elite. While Asquith and his Liberal Foreign Secretary, Grey, had been personally supportive of the league idea, and aware of its diplomatic value in managing relations with Wilson during the period of American neutrality, the Lloyd George coalition presented a much more hard-headed and determined political grouping. The initial responses of several senior British officials and politicians had been sceptical or even hostile towards proposals for a peace league. But Lloyd George, a renegade Radical, in January 1918 had nearly preempted Wilson's liberal internationalism in his speech to British labour at Caxton Hall, where, following Cecil's advice, he committed the British government to 'a great attempt . . . to establish by some international organisation an alternative to war as a means of settling international disputes . . . , to limit the burden of armaments and diminish the probability of war.'10 Obviously, much detailed planning would be necessary to give form and content to the 'some international organisation' suggested by Lloyd George. The first comprehensive official British attempt to do this resulted in the Report of the Phillimore committee of 20 March 1918. This committee, composed of historians, lawyers and Foreign Office officials, experienced great difficulty in reaching consensus and raised as many questions as it settled. In claiming to adopt the 'leading ideas' of the pro-league groups, while avoiding their pitfalls, the Phillimore committee recommended the establishment of the league as an 'alliance' of members who would agree not to resort to war against each other without submitting disputes to peaceful means of settlement. If a member violated these commitments, the Phillimore scheme recommended that 'this State will become ipso facto at war with all the other allied states and the latter agree to take and to support each other in taking jointly and severally all such measures - military, naval, financial, and economic - as will best avail for restraining the breach of covenant'.11 The Phillimore scheme then, wary of the complexities of a collective security system, attempted to reach

George W. Egerton

25

consensus by severely limiting the operation of such a system to members of an alliance and, mindful of the frustration of conference diplomacy in the summer of 1914, placed the sanction of a league only behind the minimal obligation to discussion of international disputes in conference before any resort to war, and not to attack a state which abided by the recommendations, if any, of a conference. Little was said about the machinery that would give structure to such a league, nor its relations with non-members. Clearly, the Phillimore scheme lacked inspiration and, when Wilson was sent a copy, his response was so cool as to prevent the Lloyd George government from allowing Cecil to publish the report in an attempt to form public opinion around its proposals.12 Indeed, by mid-1918 the thinking of leading members of the Lloyd George War Cabinet and its most influential advisers was travelling on quite different lines from Wilson, Cecil and the LNU on the league question. Whenever the senior members of the Foreign Office and the Cabinet had discussed the idea of a peace league, the principal difficulties identified always related to the principle of guarantees, sanctions, and compulsory obligations which, if central to the Wilsonian liberal internationalist conception, ran directly into the problem of national sovereignty.13 The responsibility for delineating an alternative to the Wilsonian league was taken up principally by Philip Kerr, a leader of the liberal-imperialist Round Table movement and now secretary and foreign policy adviser to Lloyd George, together with Maurice Hankey, the influential secretary to Lloyd George's War Cabinet. Hankey and Kerr both saw the most promising foundations for a peace league to lie in the voluntary cooperative experience of the British commonwealth and the wartime Allies, now institutionalised, respectively, in the Imperial War Cabinet and the Supreme War Council at Versailles. Kerr, in differing with the Wilsonian model, warned that 'no international machinery or treaties' involving obligatory sanctions could, in themselves, guarantee a lasting peace.14 Hankey favoured an attempt to build a world concert out of the experience of wartime allied cooperation and institutions. In a memorandum of 16 January 1918, the Cabinet secretary called for the consolidation of the existing wartime political, economic, and military organisation of the Allies - ranging from the Supreme Council at Versailles down to the smaller

26

Ideology, Diplomacy, and International Organisation

economic and technical commissions - into 'a veritable League of Nations'. Such an organisation could be formed immediately, help coordinate the economic offensive of the war, establish relationships with neutrals, and then be used to conduct eventual peace negotiations with the enemy, after the war being converted into a peacekeeping organisation. This organ could also play a central role in postwar economic reconstruction and in the coordination of many international activities in such fields as communications, commerce, finance, and technology. Like Kerr, Hankey shunned all reference to territorial guarantees or sanctions, stressing instead the benefits that would accrue if the 'Greater States' could develop habits of cooperation by means of a permanent conference of 'Resident Ministers' at Versailles. Hankey would later become not only a practitioner, but also a major theorist, of 'diplomacy by conference'.15 Philip Kerr closely monitored the league idea for Lloyd George and advocated the favoured approach through the Round Table. Cautioning against the millennial hopes that various 'paper constitutions' for a peace league had aroused, the Round Table proposed basing the league on a regularised system of great-power consultation, using the Allied wartime machinery and the Imperial War Cabinet as models. In the transitional period from war to peace, the Allied machinery must be fully utilised in administering the urgent tasks of reconstruction; otherwise there would be 'small hope for the future of international organisation.'16 The government's preliminary thinking on the league idea was made public by Lord Curzon, a member of the War Cabinet, in debates during March and June 1918, in the House of Lords. While Curzon promised that the government was 'in earnest' about creating a league of nations and suggested an approach which paralleled partly the Phillimore Committee's recommendations, the substance of his remarks dwelt mainly on the difficulties all such schemes faced. If the 'larger schemes' for a league failed to materialise, Curzon advised that the two leagues already in existence - the British Empire and the league of Allied nations - could still provide 'a nucleus from which it may be possible to proceed'.17 The conception of a league favoured by Curzon, Kerr, and Hankey stirred little enthusiasm in the hearts of Cecil and

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leaders of the pro-league movement. Through the remaining months of the war Cecil attempted to have his government give a general endorsement to the Phillimore scheme, discuss the scheme with the Allies, particularly America, and then publish the plan to guide and focus public opinion. Again and again Cecil was frustrated, as both British political leaders and Wilson resisted publication of the Phillimore report as well as any attempt to form a league during the war. Wilson's coldness towards the Phillimore scheme, and his reluctance to enter into joint Anglo-American planning on the league question both mystified and worried Cecil who was fully aware of the difficulties the league project would face.18 Had the President welcomed the British invitations for Anglo-American discussions and planning, the results would likely have been entirely salutary. While the Ambassador to Washington, Lord Reading, was charged in early October 1918 with undertaking 'a free and frank interchange of views' with Wilson on the league question, the war unexpectedly came to its sudden conclusion before Reading could carry out his instructions.19 The war, then, ended with both British leaders and Wilson viewing each other with a mixture of distrust, misunderstanding, and apprehension on the fundamental issue of future international organisation. This mutual distrust was not dispelled in the tense prearmistice negotiations when Colonel House was successful in pressing the Allies to accept Wilson's Fourteen Points and subsequent war-aims statements as the basis for making peace with Germany. Allied leaders clearly resented the presumption of American moral hegemony, placed their reservations concerning the naval and financial aspects of the President's programme on record, and persuaded themselves that Wilson's points were phrased so loosely as not to preclude the realisation of Allied objectives at the peace conference. Conversely, House cabled Wilson his congratulations at having won 'a great diplomatic victory' in committing the Allies to his programme. House advised the President that both Lloyd George and Clemenceau, the French Premier, had desired to make the creation of a league 'an after consideration, and not part of the Peace Conference'. The Colonel now believed they were committed to this goal, along with the rest of the Wilsonian programme.20 In the interval from the armistice until the opening of the

28

Ideology, Diplomacy, and International Organisation

peace conference, the league idea received widespread attention and detailed study in Britain. The popular support mobilised by the LNU helped ensure that all parties in the general election of December gave their endorsement to the league idea, while Lloyd George, whose coalition swept to victory, pledged to go to the peace conference 'to see that the League of Nations is a reality'.21 It was the Foreign Office, particularly its Political Intelligence Department (PID), which wrestled with the perplexing questions related to the structure and functions to be accorded a league of nations. The various Foreign Office studies canvassed the league question thoroughly, providing information on the history of international organisations, the recent growth of an array of technical, humanitarian, educational functions and agencies which could well be coordinated under a league of nations, and the prewar precedents and development of international law.22 The central and most difficult question, however, remained what principles of international morality and law should be established, guaranteed, and enforced by a league of nations. While no Foreign Office advisers favoured the universal guarantee of territorial integrity and political independence called for by Wilson, there was broad agreement that a permanent, institutionalised, conference system encompassing America and the European great powers was basic to the creation of a league. Lesser powers could be invited as participants when their interests were directly engaged. Mindful of the failure of the European Concert in the summer of 1914, the public enthusiasm for a powerful league, and President Wilson's espousal of a league with 'teeth', Foreign Office advisers recommended that league members undertake to enforce the principle that all states submit disputes to examination by an international court or conference before resorting to hostilities, providing thereby, at the minimum, a cooling-off period to permit the operation of diplomacy. In this, Foreign Office advice followed the pattern recommended by the Phillimore Report, but expanded the operation of the collective guarantee of peace to encompass all states and not just the league of Allies suggested by Phillimore. Nevertheless, the principle of sanctions to buttress this obligatory submission of disputes to examination by other powers was endorsed only with reluctance and misgivings by Foreign Office members, while the service advisers were positively hos-

George W. Egerton

29

tile.23 The Foreign Office also favoured building the League up empirically from the agencies of Allied wartime cooperation centred on the Versailles Council, emphasising its voluntary and cooperative features, while minimising constitutional and obligatory undertakings which violated national sovereignty. Senior Foreign Office staff, together with service advisers, saw British and Imperial security still depending on such traditional foundations as the navy and the European balance of power. The traditionalism and caution of British leaders was amplified, moreover, by the results of the November Congressional elections in America, which gave control of both Houses to Wilson's Republican critics. Senator Lodge was not slow to advise his friends overseas as to the vulnerability of Wilson and his programme. It was Cecil who continued to drive forward the cause of the league in official circles. After resigning from the government on the Welsh Church issue, Cecil was able to have himself appointed head of the Foreign Office League of Nations section, where he instructed members of the PID to prepare an organisational outline for a league of nations, based on the work they had already done. On 14 December Cecil was given a 'Brief Conspectus of League of Nations Organization', a document which would, in later form, go to the Paris peace conference as the 'Cecil Plan'.24 Its features elaborated Foreign Office thinking in pivoting the league on a regular great power conference system, composed of statesmen responsible to their own sovereign governments, and relying on the principle of unanimity in its decision-making. Annual meetings of the prime ministers and foreign secretaries would be supplemented by meetings of all member states, including the lesser powers. The great powers would appoint a permanent secretariat, which would provide a channel of communication between the interstate conference and all the international judicial, administrative and investigatory bodies functioning under treaties administered by the league. Geneva was suggested as a suitable headquarters for the league. The 'Brief Conspectus' limited the obligations of league members to respect and enforce the guarantee of peace, applying the sanctions proposed by the Phillimore committee only against a state which resorted to war without first submitting the dispute to international examination for a reasonable interval. For Foreign Office advisers,

30

Ideology, Diplomacy, and International Organisation

such a limited league would be a major step forward in international relations, and coincided clearly with British interests, particularly if America became a full partner in a new world concert. At the very least, it would go far to prevent recurrence of the diplomatic impasse of July-August 1914. The publication of General Smuts' Practical Suggestion in midDecember rekindled popular enthusiasm for the league ideal in its brilliantly-argued fusion of liberal imperialism, atlanticism, internationalism, and anti-militarism.25 It was Smuts' paper which served as the focus of discussions when the Imperial War Cabinet first attempted to reach an agreed policy on the question of future international organisation at its session of 24 December. Here, with Wilson's imminent arrival in England very much in mind, it was apparent that there were major areas of disagreement within the Cabinet concerning the proper role and powers to be given the league. The crux of the matter, as always, was whether or not to countenance limitations of national sovereignty by granting the league independent executive authority in such vital areas as armament policy, colonial administration, and, most important, collective resistance to aggression. While no one advocated the creation of a fullfledged world government, there were those, like Cecil and the Labourite George Barnes, who believed in the collective idea and were supportive of automatic economic and military sanctions against aggressors, as proposed in the Phillimore report and the memoranda of Cecil, the Foreign Office, and Smuts. Cecil put this view before the Cabinet passionately. At the same time, leading Conservatives like Bonar Law, Curzon, Austen Chamberlain, and Balfour, together with realists like Churchill, the War Secretary, and William Hughes, the volatile Australian Prime Minister, doubted the viability of any collective system of security, and opposed the sacrifices of national sovereignty that such a system involved. Chamberlain doubted that the Americans 'would put their forces at the disposal of an International Council', and argued that, in any event, such schemes involved 'more than we could effect even in our own Dominions' on the point of calling for military support. Hughes saw schemes like Smuts' as 'incompatible with national sovereignty', while Balfour advised against allowing the league any power to interfere in the internal matters of any state. To Churchill an Anglo-Franco-American alliance

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was the proper basis for any league, while Reading cautioned against overloading the league with responsibilities at the beginning. Despite its opposition to a league with extensive authority over members, the Cabinet nevertheless was agreed, in light of popular support for the idea and Wilson's commitment, that the creation of some new international organisation was imperative. What seemed best was to proceed cautiously by establishing a league modelled after the Versailles Council and the Imperial War Cabinet - a league which would promote conference diplomacy, the closest voluntary international cooperation and exchange in political as well as economic, humanitarian, and administrative matters, but which left national sovereignty unimpaired. Such was the path suggested by the Prime Minister in his summation of Cabinet policy. Lloyd George argued that the Cabinet supported the idea of a league of nations and the framework outlined by Cecil, but there was hesitation, if not disagreement, on the power to be given the league. He thought that the league must promote disarmament; otherwise the public would regard it as a 'sham'. The Prime Minister commended the Imperial War Cabinet and Versailles Council as 'admirable precedents' for the framework of the league. Lloyd George clearly repudiated endowing the league with executive authority: 'It must not be constituted as a body with executive power. But on the basis of the Imperial War Cabinet and the Supreme War Council you would get a body whose authority rested with the governments.' The Prime Minister, believing it would be a mistake to attempt too much at the outset, nevertheless hoped the league would provide a valuable forum for personal diplomacy: 'The thought that if only the leaders of the different nations could meet it would make all the difference in international relations'.26 It appeared, then, from the conclusions of the Imperial War Cabinet's discussions that the conception of the league delineated by Philip Kerr and Hankey had become the policy of the government.27 This was affirmed in Cabinet discussions of 30 and 31 December, after Lloyd George had the opportunity to discuss matters with Wilson, who visited England on 26-31 December. The Prime Minister emphasised to his colleagues the areas where common ground had been found with Wilson. As anticipated, Wilson had placed highest priority on the league ques-

32

Ideology, Diplomacy, and International Organisation

tion: 'that was the only thing which he really cared much about'. At the same time, the American President had said nothing on this question 'which would in the least make it difficult for us to come to some arrangement with him'. His proposals seemed close to those advanced by Cecil and Smuts, and did not appear to be advocating 'anything in the nature of giving executive powers to the League of Nations'. He did, however, want the league to be the first question discussed at the peace conference and both Lloyd George and Balfour recommended acceding to this wish, 'on the ground that this would ease other matters, such as the question of the "Freedom of the Seas," the disposal of the German colonies, economic issues, etc.' When the Prime Minister's strategy of cooperating with the Americans in the peacemaking was attacked by Hughes and Curzon, who advocated alignment with France if Wilson attempted to frustrate British imperial interests, Borden, the Canadian Prime Minister, and Cecil sprang to the defence of an Atlanticist policy as a foundation for a durable peace. And, as Cecil emphasised, cooperation with America 'could not be secured unless we were prepared to adhere to the idea of a League of Nations'. The Prime Minister concluded Cabinet discussions by reaffirming his confidence that it would be possible to reach agreement with Wilson on most matters: He was not pessimistic about inducing President Wilson to agree ultimately, though possibly under protest, to the things to which we attached importance, providing he could secure his League of Nations, which, politically, was a matter of life and death to him. On the other hand, he entirely agreed with Mr. Hughes that if President Wilson should, in the last resort, prove obstinate, then the sacrifices of France and Great Britain were such that they were entitled to have a final say, and would say it. Clearly Lloyd George's optimism about working with Wilson reflected the elan and good intentions attending the successful ending of the war. The initial encounter with Wilson had been brief; the differences in the Wilsonian and British peace conference agenda glossed over. The possibility that the American President might prove 'obstinate' had been mentioned, but no one suspected how obstinate Wilson could be.

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Indeed, British leaders remained largely in the dark on the details of the American peace programme, not least on the question of international organisation. Cecil and Smuts, who were now commissioned to represent the British Empire on the league question at the Peace Conference, also had but a sketchy idea concerning Wilson's thinking on this issue. While Wilson had been given the key British and French documents on the league question, he had not reciprocated either with documents or verbal briefing during his pre-conference visits. Cecil and Leon Bourgeois, the French representative on the league questions, had tried to arrange exchanges with the President, but were unsuccessful. Grey, as President of the LNU, had met briefly with Wilson, but had to resort to a letter to House to convey his advice that it would be best to proceed cautiously with the league.28 While the President's visits and speeches to the war-ravaged Allied peoples had catalysed the forces of Wilsonism, clearly Wilson himself was not prepared for detailed discussions with Allied representatives on the league question in December 1918. The draft of a league he had composed with House the previous August was not seen as a suitable basis for exchange and the President's thinking on the structure and functions of a league, as distinct from its moral basis, remained surprisingly undeveloped prior to the peace conference.29 Moreover, Wilson was unwilling to share planning on the league question with members of the Inquiry, or his fellow Peace Commissioners, and rebuffed initiatives that were offered in this policy area. It would not be until 8-9 January, in Paris, that House would brief Cecil on the President's plans for the league. This initial encounter left Cecil worried about several aspects of the American approach, particularly the President's call for a universal system of compulsory arbitration.30 Things went much better on 19 January when Cecil met with the President and finally was given a copy of the plan Wilson had drafted in early January for the Paris negotiations.31 Cecil was relieved to find that the scheme was 'almost entirely Smuts and Phillimore combined, with practically no new ideas in it'. This first impression perhaps did not do justice to the distinct American features of the plan; but the President had obviously been powerfully impressed with Smuts' Practical Suggestion and, in borrowing heavily, clearly saw the tactical wisdom now in

34

Ideology, Diplomacy, and International Organisation

working closely with the most supportive members of the British delegation. Soon the British League of Nations Section was hard at work rilling out the legal terminology and structure of the British draft convention for the league of nations, and negotiating with the Americans to integrate their plans in a common draft.32 Meanwhile, the opening phase of the peace conference had seen Wilson, with British leaders' support, set an agenda which gave priority of treatment to the league question. On 25 January the first plenary session of the conference endorsed resolutions agreed to previously by the Council of Ten which stated that the league would be created 'as an integral part of the general Treaty of Peace' and referred the detailed drafting of the league's constitution to a Commission, which Wilson would chair.33 As leaders of the British Empire Delegation had predicted, the launching of the league project facilitated the realisation of other more urgent interests and objectives. The potentially explosive American call for 'freedom of the seas' now was muted by Wilson in the broader context of planning the sanctions to be operated under the league. Also the first major confrontation of the peace conference, between Wilson and the leaders of the southern Dominions over the control of nearby former German colonies, was kept short of rupture only by the compromise of the Type-C mandates, the form of which satisfied Wilson while giving the Dominions effective control.34 The negotiations on this issue, however, left a bitter legacy as Wilson had refused any designation of final mandate authority until the league was formally established. Soon other, smaller, explosions occurred to mar the hitherto close AngloAmerican cooperation in preparing a common draft to guide the impending discussions of the League of Nations Commission of the conference. While Cecil had been successful during negotiations with American officials in protecting certain British interests on such questions as representation of Dominions, trade conditions, and freedom of the seas, he had acceded to Wilson's principal objective for the league - the guarantee of territorial integrity. American and British negotiators both favoured the sanctioning of procedures for considering international disputes as suggested by the Phillimore committee and the Foreign Office. Cecil attempted to inform

George W. Egerton

35

Lloyd George on the substance of Anglo-American discussions as they proceeded, but had only minor success in attracting the Prime Minister's attention. When preliminary negotiations with American officials were nearing conclusion, on 29 January, with the Council of Ten at each other's throats over the destiny of the German colonies, Cecil submitted the so-called Cecil-Miller draft to Lloyd George with the request for government authorisation to continue the negotiations on the basis of its provisions.35 The sequel to this request was a meeting between Cecil, Smuts, and Lloyd George on 31 January in which the Prime Minister challenged the central elements of the league as negotiated to date with the Americans.36 Using a memorandum prepared by Philip Kerr, Lloyd George outlined his opposition to just those features which were fundamental to all Wilsonian designs - the territorial guarantee and the obligations to participate in collective resistance to aggression.37 If the League was to succeed, Lloyd George contended, 'it will not be because the nations enter into solemn covenants to guarantee one another's territories or to go to war with rebellious powers on certain stated conditions, but because it constitutes the machinery by which the nations of the world can remain in continual consultation with one another and through which they can arrive promptly at great decisions for dealing with all international problems as they arise'. The Prime Minister summarised poignantly and presciently the arguments against guarantees and compulsory sanctions: The probable effect of including in the constitution of the League of Nations obligations to go to war in certain stated conditions will be to make it impossible for any nation to join the League, for no nation will commit itself in such a vital matter except by the free decision of its own Government and its own Parliament and no Government and no Parliament can come to such a decision except after an examination of the facts at the time when the decision had to be made. The attempt to impose obligations of this kind at the start will either end in their being nugatory or in the destruction of the League itself. In opposing the central Wilsonian conception of territorial guarantees, Lloyd George was repeating not only what Kerr

36

Ideology, Diplomacy, and International Organisation

had written, but also the views of Foreign Secretary Arthur Balfour, the principal members of the Imperial War Cabinet (including the Dominion premiers), the Foreign Office, and the service departments. Indeed, from the earliest consideration given to the League idea within official British circles, through the systematic studies carried out under Foreign Office auspices in 1918, up to the encounter of 31 January 1919, there runs a consistent theme of opposition to the idea of territorial guarantees as a proper basis for a league of nations. Harking back to the Imperial War Cabinet of December 1918, the Prime Minister recommended starting the league on the more modest but durable foundations of a permanent system of voluntary great-power consultation and cooperation, bringing in the smaller powers when their interests were directly involved. As with the model of the Supreme War Council, and the Supreme Council of the peace conference itself, the essence of the League should be plenipotentiary ministers in continuous consultation. They would divide their time between the capital of the League and their own capitals. They would be men of great authority who would also supervise the League's humanitarian and technical organs. At regular intervals, and in time of crisis, the prime ministers and presidents of member states would strengthen the deliberations of the League. A joint secretariat, constituted on the same lines as the secretariat of the Supreme War Council or of the Peace Conference, would serve the League. When he touched on the question of what international obligations league members should undertake, Lloyd George recommended that each member should be required merely to guarantee negatively that it would not 'initiate military or economic action against its neighbours until it [had] submitted the matter in dispute to the consideration of the Council of the League and given it reasonable time to negotiate or impose a settlement'. Any nation which violated this obligation would 'become ipso facto an outlaw of the League and an immediate meeting of the Council of the League [would] take place in order to determine what action should be taken by the League to deal with the matter'. The Prime Minister recommended that the League should grow out of the organisation of the present peace conference, which could be expanded with the neutrals into a 'Conference of the Nations' to take up tasks

George W. Egerton

37

of postwar reconstruction. This second conference could be inaugurated as formally and dramatically as possible, but 'the paper obligations to be entered into . . . should be reduced to the absolute minimum, for otherwise various legislatures will never accept them'. Lloyd George's last comment reflected a recurring premonition of British leaders, that Wilson would not be able to carry his programme in face of the Senate opposition now being organised by Lodge.38 Cecil, however, proved deaf to the advice proffered by the Prime Minister, unwisely dismissing the encounter as part of a French plot to postpone the league question until after the treaty had been signed.39 Cecil, therefore, proceeded in his negotiations with the Americans along the lines already set in preparing the AngloAmerican draft of the League's Covenant which served to guide the work of the League of Nations Commission.40 This draft, and the draft of the Covenant which was placed before the peace conference by Wilson on 14 February, represented for the most part the fruit of British planning reaching back to the Phillimore Committee, the detailed work of the Foreign Office League of Nations Section, and several of the features advocated by Smuts' Practical Suggestion. The structure projected for the League, with the division between a Council dominated by the great powers but with representation of smaller powers, and an Assembly of delegates encompassing all members, the influential role for a secretariat, the proposals for arms limitation, the plans for an international court, the system of mandates, the technical and humanitarian functions to be centred in the League, all were generated in British circles and readily embraced by Wilson and his American colleagues. The British and Americans also presented a united front against the French designs for a league of allies protected by an international army. Wilson's principal personal contribution to the Covenant was, of course, Article Ten, the obligation 'to respect and preserve against internal aggression the territorial integrity and existing political independence' of all League members. This he defended tenaciously as 'the key to the Covenant,' against all attempts to have it reduced to removed, including repeated, if belated, efforts by Cecil to meet his own government's objections to this contentious provision. On 14 February, with his hand on the Bible, Wilson pres-

38

Ideology, Diplomacy, and International Organisation

ented the draft Covenant to a plenary session of the peace conference in a speech which reasserted the religious dimension of his mission and recaptured the ideological elan of the liberal peace programme. The intrigues of the old diplomacy would wither away in light of the moral force of public opinion which the league would express; if the moral force of the world would not suffice, then 'the physical force of the world shall'; the League of Nations was 'a living thing', born out of the terrors of the war, but expressing beautifully a newly discovered 'Covenant of fraternity'.41 The President referred in his speech to the 'union of wills in a common purpose' which lay behind the making of the Covenant and which, he dared to say, no nation 'would run the risk of attempting to resist'. It was of course back in his own nation where the forces of resistance were awaiting the President's return with deadly anticipation. Wilson would sail for America directly after presenting the Covenant on 14 February, returning to Paris on 13 March. In the month away, when efforts to explain the virtues of the Covenant as drafted to Senate critics were unsuccessful, and, confronted with the round-robin of 3 March whereby Senators and Senators-elect signified their opposition to the President's programme, Wilson abandoned any hope that his enemies could be converted. Instead, in his departure speech at the New York Metropolitan Opera House on 4 March, Wilson switched from conversion to coercion: when the treaty came back the Covenant would be such an integral part that it could not be dissected without destroying the whole structure of the settlement. The President's speech was charged with ideology, nationalism, and messianism in a tone which signified the antithesis of political and diplomatic compromise.42 After the 14 February draft of the Covenant had been reviewed and critiqued in Europe and America, it was Cecil who led the process of revision during the second round of the League of Nations Commission meetings in March and April. Here Cecil was anxious to meet the criticisms of British arid Dominion political leaders, while not losing the support of LNU enthusiasts and the Left. Equally, despite finding Wilson 'in a very truculent mood, fiercely refusing to make any concessions to Republican senators', he was concerned to accommodate the principal points of opposition orchestrated by Senator Lodge in America.43 The second session of the League of

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Nations Commission did result in significant revisions to the Covenant designed to meet British and American criticisms notably the specification of the rule of unanimity, recognition of withdrawal rights, clarification of the League's role in arms control, limitation of the role of the Council in enforcing even unanimous recommendations, and explicit exclusion of 'domestic' questions from the League's jurisdiction. The central peacekeeping and security functions of the Covenant, however, remained intact. All attempts by Cecil to remove or amend Wilson's territorial and political guarantee provisions proved futile in face of the President's commitment. Cecil was fully aware by now of the depth of the opposition to this feature of the League on the part of Lloyd George, his principal colleagues and advisers, as well as Dominion leaders; but he could do nothing to move Wilson.44 It was while the Covenant was being revised that the peace conference entered its climactic period of crisis in late March and early April as the French pressed their Rhineland claims in face of British and American resistance, while the latter themselves quarrelled bitterly over the American naval construction programmes. The joint Anglo-American treaty of guarantee to France, which Lloyd George had obtained from Wilson upon the latter's return to the peace conference, represented a potentially pivotal element in the strategy of continuing Anglo-American cooperation that the Prime Minister and his government had undertaken to pursue. It also proved a vital factor in containing the French Rhineland objectives after Wilson threatened to leave the peace conference. When Lloyd George circulated his Fontainebleau memorandum of 25 March after a weekend closeted with several of his advisers, American leaders could support warmly the Prime Minister's reassertion of the liberal themes of self-determination, moderation, and justice which were portrayed as essential for a durable peace, and necessary also to prevent the spread of bolshevism. Wilson, however, could not but resent deeply one cutting element in the Fontainebleau memorandum - the separation of the Covenant from the general peace treaty and, worse still, its acceptance being made conditional upon an arms limitation agreement (i.e. an Anglo-American naval accord) between the principal League members.45 Lloyd George made his tactics clear to Cecil on 26 March

40

Ideology, Diplomacy, and International Organisation

when he instructed the latter to withhold British support from any mention or protection of the Monroe Doctrine in the amendments currently being made to the draft Covenant.46 Lloyd George knew that such an amendment was crucial for Wilson in overcoming the growing opposition centred in the Senate and was willing to exploit the President's political vulnerability. This tactic did not mean that Lloyd George was abandoning the basic strategy of Anglo-American cooperation. It did mean, however, that the Prime Minister viewed the Covenant as essentially Wilson and Cecil's handiwork and not the instrument which he and his government had favoured; it was not to be supported if the Americans continued building ships despite their declared faith in the new era to be inaugurated by the League. Whatever logic Lloyd George's argument contained, to press on the sensitive issue of the Monroe Doctrine not only risked alienating Wilson but so alarmed Cecil that he threatened resignation. It was only Wilson's threatened departure from Paris, and the truce in the 'Naval Battle of Paris' negotiated by House and Cecil, which allowed the amending of the Covenant to proceed, with an explicit recognition of the Monroe Doctrine now being written into the final draft of the Covenant. The latter was then placed before the peace conference in a plenary session of 28 April. By this time, and through the tense period leading to the German signature of the Treaty of Versailles, 28 June, with the Covenant forming the first section, the tides of Wilsonism which had impelled the liberal internationalist programme in late 1918 and early 1919 had receded dramatically. The one durable and animating hope of the President and the increasingly dispirited forces of international liberalism was that the Covenant would redeem the sins of the peacemaking and bring healing to the nations. It remained, of course, for the President to carry the treaty and the Covenant through the process of domestic ratification which required the support of two-thirds of Senate votes - a result which appeared increasingly problematic in face of the opposition now being mobilised with consummate skill by Senator Lodge. In Britain, the Lloyd George government was also troubled by the sins of Versailles, but less sanguine that these could be redeemed or remedied by the League of Nations. Indeed, Lloyd

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George and the British political, official and military elite looked upon the incipient League of Nations as an alien, fundamentally flawed, and problematic institution. The principal features of the Covenant which concerned and estranged British political leaders included the representation of smaller powers on the Council, the challenges to national sovereignty implied in Articles 11-16, which spelled out the procedures for peaceful resolution of disputes and the sanctions to be imposed on those who violated these rules, and the positive guarantee of territorial integrity and political independence of Article 10, Wilson's seminal contribution. Hankey, initially attracted by entreaties from Cecil and House that he become the League's first Secretary-General, after having his own scepticism on the Covenant amply confirmed by Lloyd George, Lord Esher, Curzon, and Balfour, turned down the position in favour of retaining his influence as head of the Cabinet Secretariat.47 In British discussions on future military strategy and security which culminated in the Cabinet's adoption of the famous 'Ten Year Rule', 15 August, coupled with the exclusion of any continental expeditionary force, the idea that the new League of Nations merited any consideration as an alternative source for the security of the British Empire received no support. It would be up to Cecil and his colleagues in the LNU to make the case for the League in the shaping of future British foreign policy. Lloyd George and his Cabinet, nevertheless, had not abandoned the League. Putting a minimalist construction on what was set out in the Covenant, they still hoped the League could be made into a valued instrument for conference diplomacy as well as a bridge to facilitate Anglo-American postwar cooperation.48 Moreover the government was willing to tolerate Wilson's League in the hope that the problematic obligations the President had inserted in the Covenant would be fully shared by the United States as a partner in the League experiment. Kerr, in particular, reaffirmed the wisdom of continuing efforts to fuse an Anglo-American strategy with a far-reaching joint liberal-reformist imperial mission, the League providing the forum for such cooperation.49 When the prospects for the President's programme became increasingly clouded in light of the burgeoning ratification struggle, Lloyd George and House, still overseas, persuaded

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Ideology, Diplomacy, and International Organisation

Viscount Grey to leave political retirement temporarily to undertake a special mission as Ambassador Extraordinary to Washington. Given Grey's international stature, his support for the League cause, and devotion to Anglo-American friendship, Wilson initially welcomed his appointment. Grey's mission and his instructions illustrated the desire of the British government to restore and sustain close relations with the United States in the wake of the tensions and conflicts of the peacemaking. These instructions, drafted largely by Grey himself in concert with House, envisioned a naval entente based on joint reductions and the exclusion of the American navy in calculating future requirements of the Royal Navy, a liberal policy for Ireland, and cooperative efforts to develop the League of Nations. In commending Grey's undertaking to the American Ambassador, John Davis, Lloyd George argued that 'no more important mission ever left the shores of Britain', and that world peace depended on 'a complete understanding being established between the two great English-speaking Commonwealths'.50 Grey's mission, undertaken with the best of intentions, turned quickly into a diplomatic nightmare. His arrival in Washington coincided with Wilson's incapacitating stroke of 2 October, suffered after the President exhausted himself on a Western tour to build public support for the Covenant and ratification of the treaty without reservations. After taking initial soundings in Washington, the new Ambassador wrote back to Lloyd George that Wilson was probably too ill ever to resume public business; he doubted he would ever see the President; House was without influence; and American politics would likely be 'chaotic' for some time, with anti-British sentiment on the rise.51 The President's collapse did nothing to attenuate the bitter ratification struggle and debate over the Covenant in American politics. The terms of the opposition's case were specified in fourteen reservations to the Treaty which Lodge introduced into the Senate on 6 November, and around which he had united the various factions of the Republican party. The principal reservations, designed to protect fully the prerogatives of the Senate, effectively exempted the United States government from any obligations under Articles 8, 10 and 16 of the Covenant, granted Congress the right to withdraw American from

George W. Egerton

43

the League at any time, reasserted the primacy of the Monroe Doctrine, and empowered the American government to define unilaterally what constituted a question within its exclusive domestic jurisdiction. A final reservation, aimed at the British Empire, exempted the United States from any League decision in which any government together with its dominions and colonies cast more than one vote. The preamble to the reservations required their acceptance by three of the four principal signatories prior to Senate consent to ratification.52 Grey faced an extremely complex and politically-charged situation, which fully tested his diplomatic skills. His diplomacy had to remain utterly discreet and largely secret, as any appearance of favouring one or other of the American factions would have brought down wrath on the British government. His first efforts were to convince his own government to do everything possible to remove outstanding issues and irritants, whether on the new Anglo-Persian treaty, the Irish situation, or the current ratification debate. Specifically Grey pressed for a public announcement by his government that in any dispute under Article 15 of the Covenant involving Britain or a Dominion, no member of the British Empire would cast a vote in the League Assembly. This would remove any substance to the argument that the United States could be outvoted 6 to 1 by the British Empire in the League.53 Meanwhile Grey secretly advised Secretary of State Lansing as to his strictly personal opinions on what features of the reservations were most objectionable to Britain and most damaging to the League, while suggesting possible 'interpretive' resolutions. However, later secret negotiations with Republican leaders and contacts, such as Elihu Root and Chandler P. Anderson, convinced Grey that the most that could be hoped for from the Lodge coalition was elimination or alteration of the preamble requiring Allied assent, and the dropping of the first part of the so-called Lenroot reservation which violated the promises to the Dominions concerning their status in the League. The more Grey discussed the reservations with the Republicans, ultimately with Lodge directly, the more understanding he became of their position and critical of the hard line of resistance to any compromise adopted by Wilson and the small White House cabal protecting the stricken President.54

44

Ideology, Diplomacy, and International Organisation

Indeed, Grey found it much easier to make contact with Republicans than with Wilson. The old liaison through House was now a liability as Wilson had long since severed the special relationship which gave the Colonel his former authority, while Mrs Wilson blocked all House's attempts to communicate with her husband. Lansing could listen to Grey, but had no influence in the White House circle. Hitchcock, leader of the Democratic forces in the Senate, could confirm the President's line, but would risk no independent initiative. Direct access to the White House also eluded Grey, even after Wilson was well enough to receive the Prince of Wales, the Belgian King and Queen, and a group of Senators. The Ambassador never was able to present his credentials; nor was he granted even informal access to the White House, as elemental courtesy and protocol demanded in the case of Prince Edward's visit. The reason for Grey's exclusion despite his former personal and political affinity with Wilson, a matter of no small surprise and speculation at the time, was the Ambassador's refusal to expel a member of his Embassy as demanded by the President through Lansing and Admiral Grayson, Wilson's physician and family friend. Major Charles Kennedy-Craufurd-Stuart, while serving as private secretary to the previous Ambassador, Lord Reading, had been charged in November 1918 with criticising Wilson's decision to attend the peace conference, and Lansing had conveyed the request for his recall. The major had protested his innocence, and the matter seemed forgotten when he returned to Britain with Reading in early 1919. However, his reappearance as private secretary to an unsuspecting Grey scandalised the White House, as the offences charged against the Major now multiplied to include having circulated an offcolour riddle about the second Mrs Wilson, and a salacious story about a leading member of the administration (Bernard Baruch, Wilson's Chairman of the War Industries Board and now a principal in the White House cabal). Grey took offence at the peremptory nature of the demands for Craufurd-Stuart's dismissal and, removing him from the diplomatic list to his personal staff, he refused to expel the Major unless the charges against him were proven in a diplomatic hearing. Such a hearing was conducted by the doyen of the diplomatic community, French Ambassador Jusserand, but Craufurd-Stuart's accusers could not produce evidence and the Major was seemingly vin-

George W. Egerton

45

dicated. This impasse of aroused White House lese-majesty, deeply resented by Grey, marked the nadir of his mission. As he protested to Curzon and Lloyd George, he had not come out of retirement to put up with 'this indignity and nonsense'.55 Curzon and others advised Grey that Craufurd-Stuart was not worth a serious quarrel with the Americans, while Lloyd George later reflected that the proper procedure in such circumstances was to send the embarrassing employee home, and then promote him.56 Grey's relations with his own government also developed into something of an impasse. With Curzon as the new Foreign Secretary, the imperial theme in British foreign policy was elevated to rival the Atlanticism and internationalism which Grey represented. The entreaties of the Ambassador for a clarification of British Empire voting rights in the League were ignored by Curzon when he encountered Dominion opposition. Neither did Curzon favour appeasing the Americans on naval matters.57 The deadlock in the American Senate during mid-November voting on the peace treaty, when neither the Republicans nor the Democrats had the necessary two-thirds majority to support the treaty either with the Lodge reservations or without any reservations, left Curzon less alarmed than Grey. The British government's response to the Lodge reservations and the ratification debate, forwarded by Curzon to Grey on 27 November after a lengthy and intensive policy review, differed from Grey's position in several fundamental aspects. Curzon argued against the acceptance of any American reservations as this would violate the underlying principle adopted as a basis of the peacemaking that 'the internal political obligations incumbent upon civilized States in future be shared in common and that this principle should be substituted for the disordered conditions which prevailed hitherto in international relations'. If the American government was allowed to ratify the treaty and enter the League on a special footing, this would destroy the basis for the new diplomatic order envisaged by the League. Indeed, the government doubted whether it would 'be possible to admit the United States to the League with any reservations having an external effect without automatically breaking down the Covenant'. Continuing with the tactic of pressing the logic of Wilsonism

46

Ideology, Diplomacy, and International Organisation

against the American reservations, Curzon argued that for Britain to be bound by the obligations of Article 10 while the United States remained free, 'would place a burden upon the resources of the Empire which no government could face'. So too with the reservation to Article 16 and its sanctions; if America stood outside an economic boycott and claimed freedom to trade with Covenant-breaking states, the whole effort of economic sanctions would be frustrated. The reservations on domestic questions, which included an item like the Canadian-American boundary, obviously could never be accepted by a British government. Curzon concluded by advising Grey that the government felt: so impressed with the difficulties that would accrue if the United States fail to become a party to the Treaty or endeavoured to become a party on terms in any way approximated to those indicated in the reservations, that we should have to consider the question of giving notice to withdraw from the League at the end of two years. Such notice of withdrawal might be coupled with intimation that if within two years all the States accepted the Covenant or agreed to amend the Covenant in a way to render it universally acceptable the notice would be withdrawn.58 Curzon obviously was willing to countenance the demise of Wilson's Covenant, coupled with the possible substitution of the type of League favoured originally by the British government and, ironically, also by Lodge. Lloyd George, for his part, privately advised the American ambassador that the trouble with the Covenant stemmed from Wilson's and Smuts' insistence that the League start with an extensive constitution and formal organisation rather beginning simply and following an evolutionary development.59 The ingenuity of Curzon's suggested tactics failed to impress Grey, who responded the next day that the British government must be prepared to accept either an American failure to ratify, or ratification with the Lodge reservations only slightly altered.60 A few days later, opposed to his government's hard line on reservations, and still burdened with the Craufurd-Stuart imbroglio, Grey decided to return to London, privately giving out that the British government needed to be shaken out of

George W. Egerton

47

their misperceptions and persuaded to accept the necessary American reservations.61 The British government rejected another effort aimed at signalling willingness to accept modified American reservations when Clemenceau suggested this line at the Inter-Allied conference held in London on 12-13 December.62 Even if the Allies sided with the pro-reservation faction in America, Wilson had the final weapon of pocketing the treaty, a weapon he had made clear he was prepared to use. Subsequently, Britain and the European Allies proceeded with addressing the outstanding issues of the peacemaking and ratification of the Treaty of Versailles, without awaiting the final resolution of the American deadlock. Faced with domestic pressures to get on with inaugurating the League, whatever the outcome of the American struggle, Lloyd George had assured the pro-League members of Parliament in the debates of 18 December, that the government would support the League venture, regardless of the outcome in America. The Prime Minister's words of assurance, however, were full of disappointment that after the support of the British government for the League project during the peace conference, the appointment of two 'zealots', Cecil and Smuts, to sit on the drafting commission, and the acceptance of a constitution 'all written out, tabled, and with all the details', despite the government's preference for a more modest beginning, the difficulties now came from America. In Lloyd George's view it would be very difficult for Britain, if America entered the League on conditions which left her absolutely free, while others had their hands tied behind their backs; the League must be a League of 'equal nations'. Concurrently, the Prime Minister made it clear that the foundations of British security would not rest on the League: 'until the League has been formally established, until we know that the nations of the world, including America, will work the League - we must make our own country secure. If Britain is insecure, civilization is insecure.'63 The British government now proceeded with ratification of the peace treaty. Ratification was not accompanied with an announcement of intention to withdraw from the League in two years unless the Covenant were amended to provide for equal obligations for all members; such an announcement not only would have mortally wounded the League's inauguration

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Ideology, Diplomacy, and International Organisation

on 16 January 1920, it would also have raised a storm of protest from the burgeoning pro-League forces of the LNU. Clearly, however, the British government had its own reservations on the League of Nations and, on this issue, Senator Lodge would have found congenial friends within the British Cabinet.

Grey's letter to The Times of 31 January 1919, calling for sympathetic acceptance of the Lodge reservations and American participation in the League on their own terms, while further weakening Wilson's position, failed to advance the cause of ratification, as the Senate remained deadlocked. Grey returned to England sadly disappointed with the outcome of his mission and convinced that Wilson had lost all his qualities except his obstinacy.64 The failure of the Grey mission represented a broader failure of British and American diplomacy in the peacemaking era. The British government, although sceptical about many features of Wilson's 'new diplomacy', were willing to cooperate genuinely with America in adjusting mutual conflicts and working together in the peacemaking. The league of nations project, carefully studied and planned for by British officials and leaders, was viewed as essential, both as a bridge to continued Anglo-American cooperation and as a means of institutionalising a reformed international order. British and Dominion leaders, however, with a few exceptions such as Cecil and Smuts, did not share Wilson's liberal ideological vision of a world transformed and redeemed by an international Covenant. The British political military and diplomatic elites remained convinced that international peace and imperial security would remain dependent on the strength of the navy, the proper power balance among the nations, and well-intentioned, resourceful diplomacy. The League of Nations, nevertheless, could provide a valuable supplement to traditional bases for peace and security, particularly those features of the League which institutionalised and facilitated conference diplomacy and fostered habits of international cooperation. The type of League which emerged from the drafting process,

George W. Egerton

49

despite the contribution of Cecil, Smuts, and British officials, was viewed by Lloyd George and the British political elite as essentially Wilson's League. Its central features - the territorial and political guarantees and obligatory sanctions .to buttress procedures for resolving disputes - were viewed as both unwise in themselves, and mistaken in light of the opposition to them in the American Senate. These aspects of the Covenant were tolerated reluctantly by British leaders in the hope that a minimalist construction could be placed on Covenant obligations, and in the expectation that all the powers, including the United States, would be equally committed. When Grey's mission demonstrated that the expectation of an unreserved American membership in the League was no longer politically tenable, British leaders focused their bitterness on Wilson and 'his league'. Ironically, the project expected to provide the principal means of promoting Anglo-American cooperation turned out to be the stumbling block. While there were many interests and issues that divided Britain and the United States in the wake of the Great War - notably war debts, trade rivalry, naval competition, the Irish question - it was the creation of the League which more than anything else alienated Wilson from the European Allies, while allowing the Republican forces directed by Lodge to prevent ratification of the Treaty and American membership in the League. Moreover, without the League, Wilson had no interest in proceeding with the Anglo-American treaty of guarantee to France. The American defection from the peace settlement of 1919 and retreat to diplomatic isolation represented a tragedy of momentous proportions, not just for the cause of Anglo-American cooperation, but also for the cause of democratic politics in interwar Europe. Lacking a generous American-generated settlement of war debts and reparations, the moderating presence of American diplomacy in European territorial and security issues, and the ideological elan of America to buttress the democratic ideal, the European democracies proved incapable, on their own, of meeting successfully the challenges of Fascism, Nazism, and Communism in the political storms of the thirties. The rift between America and her wartime associates represented a true tragedy, in that the realisation of a continuing democratic coalition, working through the League, was possible. The interests, ideals, and forces which invited Anglo-

50

Ideology, Diplomacy, and International Organisation

American and Euro-American cooperation were much greater than the divisive issues. The tragedy of Anglo-American disunity in large measure derived from a fatal flaw in Wilson's character. Wilson stands as one of the towering figures in the drama of twentieth-century world politics, indeed the leading actor, ideologue, and rhetorician of liberal internationalism. His wartime speeches and manifestos, brilliantly crafted and delivered, inspired the 'forces of movement' and contributed massively to the Allies' morale when this was desperately needed in 1917-18. Wilson's morally evocative phrases and his central concept - collective security - have been seminal to the quest for a liberal world order from the era of the League of Nations to today's United Nations Organisation. The flaw that coexisted with Wilson's heroic ideological stature was a lack of political caritas which proved debilitating to his diplomacy and fatal to his domestic politics. Again and again, from Princeton to the Presidency, Wilson proved in crucial tests deficient in the qualities of magnanimity which, more than anything else, make possible the diplomatic and political reconciliation of contending personalities and causes. Lloyd George and British leaders, for all their faults, were seldom deficient in this vital quality. Had Wilson responded with reciprocal trust, during the wartime British overtures for joint planning on the league, during his visit to England in December 1918, during the crises of the peacemaking, or during Grey's mission, the results would have been entirely salutary. Instead he chose the path of righteous prophet and ultimately martyr, bringing ruin to his greatest handiwork while destroying himself and defying his enemies. It was perhaps this failure in magnanimity which alienated and repelled so many of the leaders of substance who tried to work with Wilson - a list that included Lloyd George, Clemenceau, Grey, House, Lansing, and his nemesis, Lodge. Even Cecil found Wilson personally repellent.65 As the postwar decade opened, the hopes for an AngloAmerican world accord which had attracted the British political elite in 1918 had been sadly frustrated. British leaders would subsequently search out imperial, continental, and internationalist alternatives to such an accord, but with increasing strategic confusion through the twenties and thirties, until a

George W. Egerton

51

durable Atlantic alliance was fashioned in the conflagration of another world war and its aftermath.

NOTES 1.

2.

3. 4.

5.

6.

7. 8. 9.

For details of Grey's mission, his letter to The Times of 31 Jan. 1920, and its consequences, see my 'Britain and the "Great Betrayal": AngloAmerican Relations and the Struggle for United States Ratification of the Treaty of Versailles, 1919-1920', Historical Journal, 21 (1976), 885-911. This study, building upon my Great Britain and the Creation of the League of Nations: Strategy, Politics, and International Organization, 1914-1919 (Chapel Hill, NC, 1978), uses more recently-discovered sources, while drawing on the new information and insight on Wilson's role in the establishment of the League contained in Thomas Knock's fine doctoral dissertation, 'Woodrow Wilson and the Origins of the League of Nations' (Princeton, 1982), L. E. Ambrosius, Woodrow Wilson and the American Diplomatic Tradition: The Treaty Fight in Perspective (Cambridge, 1987), and A. S. Link (ed.), The Papers of Woodrow Wilson, Vols 53-60 (Princeton, 1986-89). S. P. Tillman, Anglo-American Relations at the Paris Peace Conference of 1919 (Princeton, 1961). 'Dr. Axson - Memorandum of Conversations with him on Feb. 8, 10, 11, 1925', Ray Stannard Baker Papers, Library of Congress, Washington, DC, cited in Knock, 'Wilson', 65-7. US Congress, Senate, Addresses of President Wilson, Senate Document No. 120, 66th Congress, 1st Session (1919), 88. The role of the concept of collective security in twentieth-century liberal-internationalist ideology is analysed in my 'Collective Security as Political Myth: Liberal Internationalism and the League of Nations in Politics and History', International History Review, 5 (1983), 496-524. Wilson's Guildhall address, 28 December 1918, in Link, Papers, Vol. 53, 531-3. The religious, moral, and nationalist groundings of Wilson's approach to the league question are treated in Knock, 'Wilson', Chapter I, and in K. Wimer, 'Woodrow Wilson and World Order', in A. S. Link (ed.), Woodrow Wilson and a Revolutionary World: 1913-1921 (Princeton, 1982). Wilson to House, 22 Mar. 1918, cited in Tillman, Anglo-American, 110. See Egerton, Creation, Chapters 4 and 5. For the genesis and history of the LNU, see D. S. Birn, The Birth of the League of Nations Union (London, 1981). The Times, 14 June 1919. Cecil still awaits treatment by a biographer. The best study is H. P. Cecil's dissertation, 'The Development of Lord Robert Cecil's Views on the Securing of a Lasting Peace, 1915-1919' (Oxford, D. Phil., 1971).

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Ideology, Diplomacy, and International Organisation

10. J. B. Scott (ed.), Official Statements of War Aims and Peace Proposals (Washington, DC, 1921), 225-33. 11. For the records and interim report of the Phillimore Committee, see FO (Foreign Office Archives, Public Record Office, London) 371/3439/3483. The report is printed in D. H. Miller, The Drafting of the Covenant, Vol. I (New York, 1928), 3-10. 12. Reading to Lloyd George, 19 Aug. 1918, Lloyd George Papers (House of Lords Record Office, London) F/43/1/14. Reading was the British ambassador at Washington. 13. For instance, see 'Notes by Sir Eyre Crowe on Lord Robert Cecil's Proposals for the Maintenance of Future Peace', 12 Oct. 1916, Cabinet Paper GT 404a, CAB (Cabinet Archives, Public Record Office, London) 24/10; and Imperial War Cabinet, 26 Apr. and 1 May 1917, CAB 23/30. 14. See Egerton, Creation, 69-71. 15. Cabinet Paper GT 3344, 16 Jan 1918, CAB 24/39. Also see M. P. A. Hankey, Diplomacy by Conference: Studies in Public Affairs, 1920-1946 (London, 1946). 16. The Round Table (1918), 221-8, 679-84. 17. Parliamentary Debates (Lords), 19 Mar., 26 June 1918, 5th Ser., 24 (1918), 476-510, 30 (1918), 393-404. 18. Viscount Cecil of Chelwood, All the Way (London, 1949), 142. 19. War Cabinet 481, 2 Oct. 1918, CAB 23/8. 20. House to Wilson, 5 Nov. 1918, House Papers (Yale University); and Egerton, Creation, 81-4. 21. The Times, 13 and 22 Nov. 1918. 22. For a detailed examination of the Foreign Office recommendations, see Egerton, Creation, 94-101. 23. Ibid., 98-9. 24. Cabinet Paper. P. 79, CAB 29/2; reprinted in Miller, Covenant, II, 61-4. 25. Reprinted in Miller, Covenant, II, 23-60. 26. Imperial War Cabinet, 24 Dec. 1918, CAB 23/42. 27. A recent article by Peter Yearwood which portrays official British policy on the league question as consistent from 1916 to 1918 in its commitment to a guarantee of peace as endorsed by the Phillimore Report, Foreign Office memoranda, and the Imperial War Cabinet, and which presents the type of international organisation favoured by Lloyd George, Hankey, and Kerr as involving a more extensive scheme for world government, is basically unsound in its conceptualisation of the issues debated and its treatment of the policymaking process. Yearwood fails to address the contemporary evidence which indicates the reservations and opposition of the British political, diplomatic, and military elite to the sanctions and violations of national sovereignty necessarily involved in any guarantee of peace - whether this took the form of a guarantee of procedures, treaties, or territories as favoured by Wilson. What distinguished the approach favoured by Lloyd George and endorsed by the Imperial War Cabinet in its December 1918 meetings was that the construction of the league on the basis of an institutionalised Great Power conference system would realise significant progress

George W. Egerton

28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38.

39. 40.

41. 42. 43. 44. 45. 46. 47.

53

over the prewar diplomatic system, by building upon British diplomatic traditions and wartime allied cooperation, but would not violate national sovereignty by giving the league executive power to enforce guarantees and mobilise sanctions. Peter Yearwood, ' "On the Safe and Right Lines": The Lloyd George Government and the Origins of the League of Nations, 1916-1918' Historical Journal, 31 (1989), 131-55. Grey to House, 30 Dec. 1918, cited in G. M. Trevelyan, Grey of Fallodon (London, 1937). For the plan of August 1918, see Miller, Covenant, I, 15-17, and II, 12-15. It is analysed in Knock, 'Wilson', 285-7. Cecil Diary, 8 and 10 Jan. 1919, Cecil of Chelwood Papers (British Library, London). Cecil Diary, 19 Jan. 1919, ibid. Wilson's first Paris draft is in Miller, Covenant, II, 65-93, and Link, Papers, 54, 138^8. See Egerton, Creation, 115-19. Miller, Covenant, I, 76-85, and II, Document 15. See W. R. Louis, Great Britain and Germany's Lost Colonies, 1914-1919 (London, 1967). See the Papers of Lord Lothian (Scottish Record Office, Edinburgh) G. D. 40/17/54. The substance of this meeting is reconstructed from records in the Lothian Papers and the Cecil Diary. The League of Nations', Lothian Papers G. D. 40/17/54. Harold Nicolson, Peacemaking 1919 (London, 1943), 205. Nicolson noted the 'incessant suspicion that the Americans would not be able to deliver the goods'; ibid., 219. See also A. Walworth, Wilson and His Peacemakers (Princeton, 1986), 13. Cecil Diary, 31 Jan. and 1 Feb. 1919. For a concise explication of the making of the 14 February Covenant, see Egerton, Creation, Chapter 6. Although sharing fully Wilson's dedication to the league ideal, Cecil found the experience of working with the President difficult. He particularly disliked 'the great tenacity of Wilson's mind and his incapacity for cooperation resulting from a prolonged period of autocratic power . . .'. 'I do not know quite what it is that repels me; a certain hardness, coupled with vanity and an eye for effect. He supports idealistic causes without being in the least an idealist, at least so I guess, though perhaps I misjudge him'; in Cecil Diary, 3 and 6 Feb. 1919. Miller, Covenant, II, Document 23. Link, Papers, 55, 413-21. Cecil Diary, 16 Mar. 1919. For the second round of discussions in the League of Nations Commission, and especially for Cecil's role, see Egerton, Creation, Chapter 7. ' The records of the Fountainebleau conference are in the Lothian Papers, G. D. 40/17/60-61. Cecil Diary, 26 Mar. 1919. S. W. Roskill, Hankey: Man of Secrets, Vol. II: 1919-1931 (London, 1972), 60-65; and Egerton, Creation, 167-8.

54 48.

49. 50.

51. 52. 53. 54. 55.

56. 57. 58. 59. 60. 61. 62. 63. 64. 65.

Ideology, Diplomacy, and International Organisation For the government's minimalist interpretation of the Covenant, see Great Britain, Parliamentary Papers (Commons), 5th Ser., 117 (1919); and 'The Covenant of the League of Nations with a Commentary Thereon', No. 3, Cd. 151 (1919), 685-703. Kerr to Prime Minister, 12 July 1919, Lloyd George Papers, F/89/3/6; and Kerr to Hankey, 21 July 1919, Lothian Papers G. D. 40/17/1-7. The instructions and published records of the Grey mission are in E. L. Woodward and R. Butler (eds), Documents on British Foreign Policy, 1919-1939 (hereafter DBFP}, 1st Ser., Vol. 5: 1919 (London, 1954). Lloyd George to Davis, 9 Sept. 1919, John Davis Papers (Sterling Library, Yale University) Box 9/53. Grey to Lloyd George, 5 October 1919, Lloyd George Papers F/60/3/7. For the role of Lodge and the Republicans, see W. Widenor, Henry Cabot Lodge and the Search for an American Foreign Policy (Berkeley, 1980), Chapter 8. DBFP, 1st Ser., Vol. 5, 1007-13. See Egerton, 'Britain and the "Great Betrayal" ', 901-3. Grey to Curzon, 2 Nov. 1919, Curzon Papers (India Office Library, London) F 112/211/ For details of the Craufurd-Stuart affair, see my 'Diplomacy, Scandal, and Military Intelligence: the Craufurd-Stuart Affair and Anglo-American Relations, 1918-1920', Intelligence and National Security, 2 (1987), 110-34. Curzon to Grey, 22 Nov. 1919, Curzon Papers F 112/211; and A. J. P. Taylor (ed.), Lloyd George: A Diary by Frances Stevenson (London, 1971), 277. DBFP, 1st Ser., Vol. 5, 1021-2, 1037-9. Curzon to Grey, 27 Nov. 1919, ibid., 1040-42. John Davis Diary, 30 Nov. 1919, John Davis Papers, Box 13/102. Grey to Curzon, 28 Nov. 1919, DBFP, 1st Ser., Vol. 5, 1045. Grey to Curzon, 6 Dec. 1919, ibid., 1054-5; and Arthur Willert to Wickham Steed, 6 Dec. 1919, Willert Papers (The Times Archives, London). Imperial War Cabinet, 13 Dec. 1919, CAB 29/81; and DBFP, 1st Ser., Vol. 2, 753-4. Parliamentary Debates (Commons), 5th Ser., Vol. 12, 18 Dec. 1919, 767-72. Wickham Steed to Northcliffe, 19 Jan. 1920, Steed Papers (The Times Archives). Cecil Diary, 6 Feb. 1919. Lloyd George and Clemenceau were agreed in criticising Wilson for his 'lack of the human touch'. Diary of John Davis, 12 Dec. 1919. Wilson's neurological illness no doubt contributed to his political inflexibility; but the lack of caritas was apparent long before the stroke of October 1919. For the most recent discussion of the relation between Wilson's neurology and politics, see Link, Papers, Vol. 58.

2 The Symbol and the Substance of Seapower: Great Britain., the United States and the OnePower Standard, 1919-19211 John R. Ferris The Washington conference of 1921-22 has traditionally been viewed as a turning point in modern history, as that moment when the United States emerged as a great naval power and Britain abandoned its trident of maritime supremacy. If Britannia did not rule the waves over what, then, could she hope to reign? A host of historians have addressed the events which culminated in that conference.2 Those scholars who have examined this matter from the British perspective, however, have not done so in a satisfactory manner. They have, for example, overlooked key pieces of evidence. None has referred to Britain's flirtation with the idea of taking over the German fleet so as to counter American naval policy. These writers have fully grasped neither the interrelationship between the maritime, diplomatic and strategic matters with which British statesmen were grappling, nor the nature of crucial aspects of the latter's decisions. Thus, Captain Roskill has recognised the significance of Britain's adoption of the 'one power standard' without discussing the meaning of that standard. 3 This chapter will attempt to overcome these weaknesses and to clarify the nature and the consequences of British maritime decisions in the years 1919-21. Navies are instruments which states use to further their interests. They serve this purpose in peace no less than in war; not merely by that which they are but also by what they 55

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The Symbol and the Substance of Seapower

represent. Such forces both embody and signify power. The substance and the symbol combine to shape external perceptions of any nation's strength and thus its ability to further its policy. Seapower was the inward pillar and the outward sign of the strength of the British empire. The survival of that polity and of its people hinged on the maintenance of maritime communications; Britain's strength rested not only upon material factors but also upon a foundation of prestige. The latter increased Britain's status as a power and helped it to play a role in the world which was not necessarily justified by its material strength, one which, by the 1890s, certain officials came to term a 'Great game of brag'.4 Although that prestige flowed from many factors, it was exemplified by Britannia's emblem, her trident. Should that emblem be tarnished, Britain's position might be eroded no less surely than by a weakening of its economy. Seapower also touched a psychological chord in Whitehall. The closest that British statesmen came to defining the idea of great-power status was through the concept of 'sufferance': the issue of whether a state could pursue whatever it defined to be its vital interests regardless of the wishes or the forces of foreign countries. A nation which could not or dared not do so was 'merely existing on the goodwill' of others.5 Although some interests of every country necessarily depended on the sufferance of foreign states, any nation whose truly vital ones did so to the degree that it could no longer follow an independent foreign policy would cease to be a great power. Thus in 1921 the British statesman Arthur Balfour asserted that if France could 'make English seaborne trade impossible . . . we must henceforward count ourselves among minor powers (sic). We should live on sufferance.'6 Nowhere more than at sea could Britain be placed in such a state. Since Britain's position as a power rested upon the waves, British decision-makers reacted firmly whenever their maritime pretensions were challenged. In 1919 even Robert Cecil, the British statesman most committed to the concept of a 'liberal' international order, informed Colonel House (the emissary of the American President Wilson), that 'if I were British Minister of the Navy and I saw that British naval safety was being threatened even by America, I should have to recommend to my fellow country men to spend their last shilling in bringing

John R. Ferris

57

our fleet up to the point which I was advised was necessary for safety'.7 Whitehall defined the nature of that point and of that safety through a simple set of principles. Britain had a right and a need to maintain a 'special position' at -sea. The point to be secured was 'sea supremacy': anything which challenged that status threatened naval safety. At the same time, Britain distinguished between the abstract concept of sea supremacy and the empirical one of maritime security; the question of whether the Royal Navy (RN) could protect specific interests at sea. No statesman assumed that naval supremacy required an ability simultaneously to exercise all the functions of seapower in every sea on earth. This meant, instead, nothing more or less than that naval strength which would sustain the symbol of Britain's special position and the substance of its vital interests in those areas which Prime Minister David Lloyd George termed Britain's 'special seas'. In December 1920 he modestly defined these as 'the North Sea, the Mediterranean, the Indian seas, etc'.8 Since 1860 Britain had determined the level of maritime strength needed to achieve these objectives through the use of naval standards: the concept that the RN should match in some numerical proportion the strength of certain potentially hostile navies. British naval policy cannot be understood unless the nature of these standards is clearly elucidated. Britain's maritime power was, of course, limited: the resources at its disposal could not sustain more than a given level of naval force. Yet between 1860 and 1939 Britain had the resources necessary to maintain a larger navy than it usually did. Thus, the level of these naval standards did not simply reflect that of Britain's absolute maritime power. They were not the maximum naval force which Britain could maintain but the largest which it chose to maintain, taking other grand strategic factors into account. After all, maritime threats were not Britain's only problem: to spend more than necessary on seapower would reduce its ability to achieve other objectives and might weaken its overall strategic position. These naval standards measured not Britain's maritime ability to defend its empire but rather its idea of what the empire had to be defended against. Variations in these standards do not necessarily represent changes in Britain's real maritime strength. The evolution between 1890 and 1920 from the two-power standard

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against France and Russia to the 160 per cent standard against Germany to the one-power standard vis a vis America does not in itself indicate a decline of British seapower, but rather alterations in its perceptions of the scale of dangers at sea. Through these standards Whitehall defined which states might threaten its maritime interests. Then, after considering factors such as cost, it selected the optimum ratio of naval strength needed to preserve these interests against this potential menace. In reaching this decision Britain might choose not to defend certain maritime interests. These standards were a simple and convenient means to define Britain's maritime needs. They were chosen no less for reasons of prestige than of security; they were just as much tools of internal politics as of external policy. Naval ratios should not be mistaken for maritime realities. Britain was no less secure at sea with a one-power standard during the 1860s than with a two-power standard in the 1890s. The issue of standards, the central means by which Britain defined its naval policy, hinged on its perceptions of which states were potential threats and what its maritime interests: on specific judgements of Britain's strategic environment. After the armistice in 1918 British statesmen hoped to create a stable postwar order in which Britain would be secure: to ensure that after winning the war, Britain did not lose the peace. One of their gravest concerns lay at sea, for the most powerful nation on earth was challenging British maritime supremacy. The nature of that challenge was unclear, since the United States' leadership was divided over its naval policy. Some, including President Wilson, saw it as a tool of diplomacy against Britain; others, particularly in the United States Navy (USN) saw that as a thing in itself. Certain American leaders favoured naval equality with Britain; still more demanded the world's strongest fleet. Indeed, from November 1918 to July 1921 the American government became increasingly confused about its aims at sea, which complicated British attempts to deal with them. Nonetheless, by spring 1919 that government had approved the '1916' and the '1918' naval construction programmes. Each of these consisted of 16 'post-Jutland' battleships and battlecruisers which would outclass all save a handful of British warships. Whereas the '1918' programme seemed to be a bargaining chip for use against Britain during the peace conference, some of the '1916' programme was already under construction.

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It was entirely possible that the '1916' programme and by no means impossible that the '1918' one would be completed. The Admiralty warned that unless America abandoned or Britain matched these programmes, by 1925 the '1916' programme alone would create Anglo-American equality at sea. Any further construction would make the USN the world's strongest fleet. The response of the British strategic-policymaking elite to this challenge turned on the vexed question of its perceptions of the United States. Certain historians have sought to define the root causes for the perceptions of all British decision-makers toward every issue of Anglo-American relations in the years 1919-31. Correlli Barnett, for example, has argued that acquaintanceship and intermarriage with the anglophile elite on the east coast of the United States led the entire British governing class to misunderstand American politics and to rest all their policy toward Washington on the false assumption that the necessary condition of Anglo-American relations was one of abiding friendship and cooperation. Professor D. Cameron Watt has explained the dynamics which governed British attitudes toward the United States in terms of the varying relationships between four groups of viewpoints in Whitehall: the 'nationalists', the 'neo-imperialists', the 'americophiles' and those 'in search of a possible America', which would support British aims.9 When dealing with such conceptual models, the proof of the pudding must be found in the eating: in the degree to which they illuminate specific events. Unfortunately, neither of these models helps to do so regarding Britain's response to the USN during 1919-21. Indeed, each falls at the first hurdle: neither can be reconciled with the documentary evidence. Thus, those crucial statesmen Winston Churchill and Lord Curzon with, respectively, a living American mother and a deceased American wife, offer no proof to sustain Barnett's argument. Curzon wrote in 1900 that when 'framing Government policy', Britain should pin few hopes on American sympathy: 'American feeling for us is entirely limited to the upper and cultivated classes, and is not universal there'. In his turn, throughout the 1920s Churchill always recognised that America could threaten vital British interests. Even his argument of 1920 that Britain could follow 'no more fatal policy' than to rely on Japan against the

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United States, stemmed not from sentiment but from a realistic assessment of Britain's strategic options. At exactly this time Churchill also wanted Britain to retain sea supremacy at all costs whatever the danger of complications with America.10 Similarly, by Watt's reasoning one would expect 'nationalists' to defend British interests against the United States more firmly than did 'americophiles'. Yet in 1921 'nationalists', such as Lloyd George and Andrew Bonar Law, opposed naval construction as a means to maintain maritime equality with America because they feared that this might spark an arms race. Despite this risk, 'americophiles' like Lord Lee and Churchill favoured such a programme.11 General analyses of British perceptions of America over large swathes of time cannot explain the rationale behind all the decisions of such periods. This is necessarily so, given the sheer number of aspects of Anglo-American relations and the influence upon them not merely of perceptions of the United States as such but also of internal political and bureaucratic factors and of British attitudes toward other countries, particularly Japan. The balance of perceptions of America at any time, in the corridors of Whitehall and in the minds of individuals alike, varied over specific issues. At precisely the same moment every decision-maker might favour concessions toward the United States in one area and defiance in another, equally crucial, depending upon his assessment of the relative importance of the different interests at stake. Thus, these perceptions are best appreciated on a case-by-case basis, such as British attitudes toward American naval policy between November 1918 and December 1921. During 1919-21 Britain decided that it needed nothing more nor less than a one-power standard in battleships and battlecruisers with the United States. The questions are why Britain preferred to overcome the American challenge at sea through diplomacy and why it sacrificed the principle of maritime supremacy in the process. Barnett and Paul Kennedy have suggested that a sentimental belief in Anglo-American friendship made British statesmen willing to 'appease' America at the price of compromising Britain's real needs. They have also argued that since its industry could not match the USN's potential growth, Britain could only have hoped to limit the latter through diplomacy.12 There is truth in these arguments.

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Just as with every country, if to a somewhat greater degree, sentiment affected British attitudes toward the United States. Britain ultimately abandoned the principle of maritime supremacy because it did not regard America as a military threat, an attitude shaped by its perceptions of that nation, while statesmen and sailors agreed that America could potentially outbuild Britain at sea. Walter Long, the First Lord of the Admiralty, for example, conceded that if the United States 'chose to put all their resources into the provision of a larger Navy the competition between us would be impossible, and we should in the end be beaten from the point of view merely of finance'.13 These arguments of sentiment and weakness explain why Britain was willing to compromise with Washington on certain matters. Since they do not explain why it refused to do so on others, they address but half the issue. All British statesmen recognised that Anglo-American interests clashed and favoured cooperation with or concessions to Washington on any matter only insofar as this seemed to suit the overall balance of imperial interests. The heaviest weight on that scale was the need to preserve British maritime security against all potential threats, including America. Whitehall was hostile towards American ambitions. It often did regard the United States as a potential menace, particularly when the latter's naval policy was linked to political matters, such as Washington's claim for the 'freedom of the seas' in 1918 or, in 1921, to what Britain regarded as an attempt to seize the reins of hegemony over the Dominions through the continual suggestion that 'the American Navy was available for the protection of civilisation and the white races of the world';14 that the USN could replace the RN as the Dominions' guarantor against Japan. So to match their moment, many decision-makers held that Britain should respond through naval construction, by taking over the interned German fleet or by renewing the Japanese alliance. In any case, Britain had formidable resources at hand with which to meet this American challenge. The discrepancy between the maritime power of these nations was far less than is implied in William Braisted's view that: In 1919 British statesmen and naval men fought to retain acknowledged first place for the Royal Navy, but they failed

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because the exhausted island kingdom was unable to match the great resources of continental United States (sic). By 1919, in short, the trident was passing peacefully from Britain to the United States.15 In fact, one area in which British economic capacity still matched that of America was shipbuilding and its allied industries. Moreover, Britain had the largest and best fleet at sea, the world's greatest mercantile marine and the most widespread network of naval bases on earth. It had the material and financial resources needed to match any American construction short of full economic mobilisation for naval competition; even then Britain could have fought a long and stubborn battle. Moreover, Whitehall had for long recognised that with its greater economic resources, America could create the world's strongest fleet if it so chose. By 1901 one First Lord, Lord Selborne, informed Curzon that I would never quarrel with the United States if I could possibly avoid it. It has not dawned on our countrymen yet, but doubtless it has on you as it has on me that, if the Americans chose to pay for what they can easily afford, they can gradually build up a Navy, firstly as large and then larger than ours, and I am not sure they will not do it.16 After the armistice, however, British statesmen doubted that any American government would undertake the arduous task of establishing maritime supremacy. In 1919 Lloyd George believed that by playing off the various elements of the American government, he might sink the American fleet before it ever set sail. Even in 1928 Churchill claimed that if Britain did not antagonise the United States, the latter would eventually abandon even maritime equality because 'our needs for a navy are so much more real than theirs that we should probably make far greater sacrifices for sea-power'.17 British decisionmakers knew that so long as America was not provoked in some extraordinary fashion, its public opinion would not face the enormous costs required to achieve maritime supremacy. Although the desire not to run this risk inhibited Britain's freedom of action, it was not in a unique situation. American naval policy was no less profoundly affected by perceptions of British strength and by fear of the consequences involved in

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twisting the lion's tail too far. The United States was no more ready than Britain to face the cost and the risk of a naval race. In the end, Britain sacrificed surprisingly little to America. Indeed, the most substantial strategic damage which Britain incurred through the events of 1919-21, the loss of the AngloJapanese alliance, stemmed from a desire to appease not Washington but rather Ottawa. British statesmen and sailors held that they had a strong bargaining position against America, through which they could sustain British security. Although the United States posed a complex strategic problem, it remained a manageable one. Neither bonds of sentiment nor feelings of weakness dominated Britain's maritime policy; instead, it sought in a realistic fashion to secure the best possible balance of its overall interests regarding America. The stakes at risk were so high, however, that Britain preferred not to overplay its hand. It hoped to maintain the principle of sea supremacy and to form an entente with America, but above all to avoid two worst-case possibilities. If the United States built a larger fleet, the entire British empire would exist on its sufferance; an arousal of Anglo-American hostility or a naval race between them could have incalculable consequences. Britain preferred maritime diplomacy because this was the best and safest means to avoid these dangers and to achieve its other aims. As Lord Salisbury wrote in 1877: 'Diplomacy is the natural recourse of states which feel that their aggressive power is small-witness Venice: while states which are conscious of their military strength are apt, very unwisely, to despise it'.18 Between 1919 and 1921 British statesmen did not despise diplomacy, nor did they forget its limitations. They knew that if diplomacy failed, they must preserve Britain's maritime ends through other means. Britain's fundamental need was to prevent the United States from seeking to strive for a larger navy, because this would automatically serve to drive the United Kingdom toward these worst-case circumstances. Once committed to diplomacy, its actions necessarily depended on those of its negotiating partner, America. Since Britain pursued so many goals, it would inevitably have to sacrifice some to secure others. The obvious compromise was that Britain and America should establish the principle of parity: that Britain should abandon its existing and the United States forgo its potential sea supremacy. The

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principle of maritime supremacy was of symbolic value but less important than the maintenance of maritime security. II America was not a threat, then that principle could be sacrificed if it was absolutely necessary to secure a bargain which preserved British naval security against real dangers. Britain could alter a symbol so as to assure a substance. The imperatives of grand strategy drove Britain to maritime diplomacy. The exigencies of the latter led toward naval equality which in turn gave rise to the one-power standard. This progression of events, however, was complicated by confusion over maritime matters in London and Washington. American naval policy was incoherent and its diplomatic signals ambiguous. Whitehall misinterpreted the latter because it misunderstood the former. In 1919 the Admiralty underestimated the determination which governed American naval policy; Lloyd George trusted too much in the efficacy of informal negotiations with Colonel House. Decision-makers exaggerated the prospects of Anglo-American strategic cooperation and differed over British maritime policy. Naval authorities demanded the toughest possible diplomacy with America while Lloyd George was more cautious. The Admiralty regarded security and supremacy at sea as being one and the same. Whitehall was willing to distinguish between the two. It came to believe that naval equality could provide security although it still preferred supremacy and hoped that underneath the principle of parity Britain would retain a stronger fleet. The Admiralty wanted a navy which could maintain security regardless of expense; the government wished to minimise naval spending. Sailors held that battleships were the measure of seapower, while statesmen questioned this belief. The fate of naval policy hinged on the resolution of these differences. These disagreements were veiled between November 1918 and August 1919, during a covert struggle in which each party pursued its aims without revealing them to the other. Lloyd George kept a loose rein on maritime developments, waiting for an opportunity to secure the largest relative naval position he could, at the smallest absolute cost. He was caught between the dangerous combination of America and the Admiralty. The latter demanded the preservation of sea supremacy without compromise, assuming that this would be Britain's overriding aim regardless of the price. Initially, the Admiralty expected

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the latter to be small. In 1918 an Admiralty committee charged to examine postwar naval policy, on the assumption that British sea supremacy would not be challenged, recommended a fleet with fewer battleships, battlecruisers and cruisers than in 1914 and with more submarines, aircraft carriers and destroyers. Immediately after the armistice the naval staff favoured major increases in this strength, so as to provide the 'Decided Superiority' required over the USN, the only 'potential rival, and consequently menace' to Britain. The Admiralty Board, however, approved most of the committee's proposals, believing that a navy 20 per cent smaller than that of 1914 could preserve sea supremacy.19 By March 1919, after American decisions on naval construction invalidated this assumption, the covert struggle intensified. Long hinted to the Cabinet that Britain must begin naval construction unless the United States abandoned its own. He demanded that Lloyd George force America to concede British maritime supremacy.20 Yet in March-April 1919 a formidable faction of naval figures flirted with ideas which would have wrecked any diplomatic settlement. Members of the naval staff branch at the Paris peace conference and Admiral Charles Madden, soon to be chief of Britain's main fleet, believed that America wished to subvert the British Empire. They wanted the RN to respond by taking over the modern elements of the German fleet. This, they argued, would immediately secure sea supremacy and ultimately lead to sound Anglo-American relations, by forcing Washington to realise that it could never match Britain at sea. Admiral David Beatty, commander of the Grand Fleet, warned the Admiralty that America, recognising Britain's weakened condition and confident 'that with their present building resources they can in a few years place themselves in the position of the first naval Power', did not 'at the present moment' accept British sea supremacy. The latter, however, 'must be maintained at all costs, even over an admittedly friendly power such as America. To ease the burden of maintaining such supremacy for the next few years must be our utmost endeavour.' Thus, Beatty concluded, should America refuse to abandon its construction programmes, the victor powers must divide the German fleet on a basis which favoured Britain. Nor did admirals alone voice such opinions. Long had earlier told the Board that while Britain must match American

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construction, public opinion would oppose large spending for this purpose should, as was intended, the German fleet be scuttled. Instead, it 'might become necessary' to divide that fleet among the victors, with Britain taking the lion's share.21 Long's logic led in a vicious circle. Britain would need construction if diplomacy faltered, which would be politically possible only if it took over the German fleet, which would have antagonised America and caused diplomacy to fail. Although these ideas reveal the strength of naval feelings, they were abandoned as soon as they were formulated. The naval staff refuted the arguments of Beatty and Madden, noting that an incorporation of pre-Jutland German vessels could not solve the real problem, the potential American superiority in post-Jutland warships by 1925. The First Sea Lord, Admiral Wester Wemyss, later conceded privately that the German fleet should not be scuttled until America provided 'some sort of assurance' regarding its naval intentions, for the disposition of these warships was 'a pawn in the game'. Yet he demonstrated that British maritime supremacy could be threatened only if other powers completed their construction programmes and he foresaw economies looming on the horizon. Were the peace conference successful, the 'question will not be what ships shall we build but how shall we man those that are already built'. 22 Thus, for strategic and political reasons the Admiralty should work with Whitehall to defeat the American challenge through diplomatic means. Wemyss converted Long, who had also come to realise that the government would not authorise new construction in 1919. The First Lord, however, raised the issue of the RN's postwar standard of strength. 'We may have to fight the United States or Japan. But can we contemplate an alliance of those two nations against us? If not, what is our standard of strength to be?23 Long held that this should be a two-power standard relative to France and America. He told Lloyd George that a reduction of the '1916' programme by three ships (and, implicitly, the cancellation of the '1918' one) would leave the RN equal to the French navy and the USN, a 'concession' which 'under the altered circumstances . . . we may safely make.'24 Excluding the semi-retired Admiral John Jellicoe (who was willing to accept a 70 per cent standard vis a vis the USN if necessary)25 all other senior naval officers demanded the

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complete cessation of American construction and thus some sort of two-power standard. The Admiralty dropped its most provocative tactics but its strategy could be tenable only if Washington abandoned entirely its espoused aims or if Britain sacrificed all other ends vis a vis America for the sake of blue water. Since one man alone could determine such issues for Britain, the Admiralty had to place the fate of naval policy in the hands of Lloyd George. Nor did he ignore Long's injunction to 'strike as hard as you like for England'.26 On 6-7 March the Prime Minister told Colonel House that Britain 'could not, whatever the cost, permit any other Power to get ahead and be in a position to starve her out in the event of war'. He emphasised that Britain and America must avoid an arms race and twice stated that any agreement to scuttle the German fleet would hinge 'upon the understanding that we should not in the future enter into a building competition against each other'.27 Just as Lloyd George would soon threaten not to ratify the League of Nations covenant so cherished by President Wilson in order to force an alteration in American naval policy, the Prime Minister also used the implied threat of a redistribution of the German fleet as a pawn in the game of sea supremacy. Indeed, the German navy cast a greater shadow than is commonly appreciated over British and American naval policy and maritime diplomacy during March-April 1919. Lloyd George also recognised, however, that failure to achieve an 'all important' final settlement on these issues could lead to American maritime supremacy, 'bankruptcy or war', or all three.28 No such settlement was reached in the negotiations between British and American representatives during 29 March to 10 April. The United States refused to define its policy at sea and insisted upon the completion of the '1916' programme. The American Naval Secretary stated that Washington would not reduce 'a single ship, until the peace was signed and all the arrangements completed' in Paris.29 This ambiguous situation, Lloyd George complained, was intolerable. It left America free 'to build a fleet nearly equal in numbers and superior in armament to the British Fleet'.30 Yet the United States' actions were more encouraging than its words. By formally cancelling the '1918' programme and by abandoning its demand for freedom

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of the seas, it offered major concessions to Britain and demonstrated a willingness to forgo maritime supremacy. By explicitly refusing to cancel the '1916' programme or to recognise the principle of Britain's special position at sea, however, it showed a determination to pursue parity. Sailors and statesmen derived differing lessons from these events. The Admiralty took them to prove that another strong diplomatic stand could force America to accept British sea supremacy. Britain could then reduce its naval strength below that of 1914, although in the interim it must maintain equal numbers of commissioned battleships and battlecruisers (21) with the USN and far more in reserve.31 If such a settlement did not occur, the Admiralty's demands would force a confrontation with America. Conversely, the Cabinet Secretary, Maurice Hankey, and a senior Treasury official, George Barstow, urged that Britain should simply ignore the USN when defining its naval strength, while Churchill suggested that the German fleet be offered to America if the latter would cancel the '1916' programme.32 Without advocating the principle of maritime parity, these men were implying that it could be tolerated if necessary. They certainly held that a conciliatory approach was Britain's best means to further its maritime interests. Lloyd George appears to have had similar beliefs. His earlier stand had reduced the problem from the possibility of American superiority at sea to the question of how much of the '1916' programme would be completed, which would at worst create equality. However desirable British sea supremacy might be, it could be pursued through further threats only at the risk of provoking America and losing even parity. Yet if maritime diplomacy could be renewed, Britain might continue to bargain down American naval strength, by playing on the latter's disinclination to pay the price of seapower, by using liberal arguments to achieve the realist end of British sea supremacy. This opportunity soon hove into view. By August 1919, House indirectly led Lloyd George to believe that America wanted a strategic entente with Britain, founded on an agreement that neither state would regard the other as a threat.33 This entente would be valuable in itself, while such a loose arrangement would leave Britain free to meet its needs against third naval powers. However, Britain overestimated the significance of House's proposal, because it

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failed to realise that he was no longer his master's voice. Moreover, this offer carried the implication that Britain must leave the United States a free hand with Japan and, in certain circumstances, let America establish a larger fleet. Lloyd George carefully ignored these implications, but offered to accept the rest of House's proposal if both nations would cease naval construction: if Washington would abandon the '1916' programme and leave Britain stronger at sea. Whether Lloyd George expected America to accept this condition or used it as a negotiating gambit is uncertain. However, he probably hoped to retain sea supremacy but was willing to accept parity in principle so as to reach a satisfactory settlement. In order to clinch this bargain Lloyd George had to control naval policy. He did so through the establishment of the socalled 'ten-year rule', one of the clauses of which stated that 'No alteration should be made, without Cabinet authority, in the pre-war standard governing the size of the Navy'; that is, a 160 per cent standard against the next-largest navy, excluding the USN.34 This ruling ideally suited Lloyd George. It allowed him to open negotiations on the basis of House's proposal and prevented the Admiralty from justifying large estimates by reference to the USN. Yet this was clearly not intended to be the last word on British naval policy. Taken literally, this ruling might mean the inconceivable, that Britain's navy would become smaller than the USN. The Cabinet had not reached a definite decision about naval policy but was, indeed, trying to avoid doing so at the moment. The shape of British seapower rested on the course of Anglo-American negotiations, and on a renewed debate in Whitehall. In August 1919 the original postwar policy of the Admiralty was destroyed. During autumn 1919 it formulated a new one which challenged that of the Cabinet. It approved a smaller fleet, including 20 commissioned battleships and battlecruisers. Although it still preferred sea supremacy, its minimum demand became 'mere' parity; since the government would not explicitly support supremacy, the Admiralty preferred equality rather than no defined standard at all with the USN. It believed that Britain must match any American construction, which could require a large and immediate rearmament programme.35 The dispute between the Admiralty and the government centred upon the question of whether naval policy should

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ignore the USN. Diplomatic developments let the Admiralty win this argument. Lloyd George, recognising that his policy might succeed only if he could continue maritime diplomacy, sought to convince Washington that London had adopted House's proposals.36 The latter, unfortunately, was not American policy. Moreover, the United States government, paralysed, would not discuss any maritime issues on which its aims became uncertain. Although the '1916' programme fell behind schedule, the USN wanted to establish American maritime supremacy. Given the failure of Lloyd George's approach, Britain needed a new means to forestall an American attempt to create the world's largest fleet. Long and Beatty used this opportunity to score a decisive victory for the Admiralty. Shortly after becoming First Sea Lord, Beatty decided that the Cabinet must be asked to define a 'General Naval Strength' which would match American and Japanese 'Naval Expansion'. He preferred an 'Alliance or an Entente' with the United States, based on 'Equality in Naval Material' but, failing this, Britain must match all American construction. Although Long and the naval staff still preferred the idea of sea supremacy, in January 1920 the Admiralty Board demanded that Britain should maintain naval equality 'at least' with the United States, through a 'One Power Standard'.37 Long told the Cabinet that he planned to inform Parliament that this standard would govern naval policy. However, in order not to compromise any negotiations with America, in 1920 the RN would not maintain more commissioned battleships and battlecruisers than the USN nor would it begin new construction. Long made no promises about 1921. In March 1920 he told Parliament, using precisely the terms which he had outlined for the Cabinet, that the fundamental principle in naval policy was that the RN 'should not be inferior in strength to the Navy of any other Power', including the United States. The RN's 'strength and standard of efficiency' must 'enable it to do its duty by the Empire'.38 Although no Cabinet authority formally approved this statement, Long could not have made it without ministerial approval. Lloyd George probably regarded this declaration as a clear but non-provocative warning on naval matters to America, one which would not commit Britain to any specific action. Whereas the Prime Minister saw this standard as an instru-

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ment of diplomatic influence against America, Long had truly forged a tool of naval policy against Lloyd George. Long had reversed the August 1919 decision about naval policy. The Cabinet could not easily abandon the one-power standard while the Admiralty could defend virtually any proposal through the use of this vague concept. As Barstow soon noted, the meaning of that standard has never been authoritatively interpreted and in one very important sense it is far from clear. Does it mean that the British Fleet is to be equal to that of any other Power in British waters? or in the selected area of operations of the rival Powers? or finally, is it to be equal on paper? Bonar Law shrewdly stated that this standard 'might mean much more' than its name;39 equally, it could mean less. Indeed, Long's statement could actually be used to justify a navy larger or smaller than the USN, depending on the precise interpretation of 'strength' and 'duty'. The Admiralty soon provided a costly definition of these terms. It took the one-power standard to mean numerical equality in battleships and battlecruisers with the USN. However, Britain did not require equal numbers of post-Jutland warships, providing that its vessels matched American ones by the Admiralty's judgement - in terms of their total fighting power. The Admiralty also wanted superiority in virtually all other classes of warship. The Board believed that Britain must respond to the American and Japanese programmes so as to maintain this standard. By autumn 1920 it decided that Britain should do so by building eight battleships and battlecruisers between 1922 and 1926, each of 51 900 tons, mounting 18-inch guns.40 These would trump the American ace, by rendering obsolete the vessels of the '1916' programme almost as soon as they were launched. The one-power standard had opened the gates to an ambitious naval policy. It remained uncertain whether the latter could maintain security at sea. For the mere declaration of that standard had not assured Britain's maritime position; indeed, by December 1920 this was under even greater threat than before. The American President-elect publicly advocated a navy larger than any while the USN wanted to complete both the '1916' programme and an entirely new one by 1926. Britain, finally face to face with its worst-case

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problems, had to find new means to ensure its vital interests at sea. Over the next six months this requirement became linked to others. The government's pursuit of cuts in expenditure threatened the existence of the naval programme. Moreover, during the Cabinet's debate about Britain's relations with Japan and the United States, the naval programme and the renewal of the Japanese alliance came to be seen as strategic alternatives. Decision-makers treated them as mutually exclusive, assuming that to adopt neither would compromise Britain's position via a vis America and that to pursue both would provoke Washington too dangerously. By June 1921 the Cabinet preferred to renew the alliance and continued to defer any naval decisions. However, under Dominion pressure Britain reversed its policy. It abandoned the idea of immediately renewing the alliance and prepared to enter a conference which would settle all the strategic differences between Britain, America and Japan.41 Simultaneously, the Cabinet authorised the navy to build four battlecruisers. Whereas the Admiralty intended to complete this programme, the Cabinet regarded it as a 'bargaining factor' to gain American naval concessions at that conference.42 The Washington conference eased immediate tensions in east Asia and led to improved Anglo-American relations, but at a heavy price. Japan, the third naval power, ceased to be an ally to Britain and the two island empires could easily become enemies. This was the heaviest, however indirect, maritime blow which Britain suffered through the conference. Against this, the incipient arms race ended with Britain scrapping only obsolescent warships while America and Japan sacrificed modern ones. The Washington naval treaty established a 5:3:1.75 ratio in the total tonnages of battleships, battlecruisers and aircraft carriers between Britain and America, Japan, and France and Italy. After the signatories completed their approved programmes, they would replace these battleships and battlecruisers according to a defined schedule between 1927 and 1945. Individual limits of tonnage and gunpower were imposed on all future battleships, battlecruisers, aircraft carriers and cruisers.43 Britain, however, withstood the American demand that the principle of mathematical parity be extended to cruisers and other lighter warships. It remained

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free to construct whatever it liked in these classes of warship, which had acquired enhanced importance as means to exercise the functions of seapower. The question is whether the treaty compromised Britain's ability to secure its strategic aims through maritime means. The phrase 'Britannia rules the waves' is the title of a song, not a definition of British naval history. Britain had never done so during those years in which it had fought to achieve sea supremacy. Between 1650 and 1815 Britain had possessed the strongest fleet, although one rarely much larger than those of its greatest enemies. Through its usually victorious navy Britain acquired more at sea than other states, although maritime force alone was never enough to achieve its strategic aims. Britain did little more than dominate most European and some extra-European seas and often failed to do even this; indeed, it frequently sailed close to maritime disaster. Between 1815 and 1890, however, British seapower was blessed by an exceptional condition which has come to be seen as its normal state. No power seriously sought to challenge the RN. Since Britain easily dominated European waters, which remained the world's centre of seapower, it was best placed among the nations to achieve certain ends elsewhere with limited naval forces. All this ended between 1890 and 1900. As the European states built large fleets, Britain's hold over these waters was challenged. With the rise to maritime power of America and Japan, Britain could no longer 'command' every sea simply by dominating European ones. Seapower was becoming regionalised, since a state based in one ocean could not easily concentrate its navy in another. The value of seapower for Britain and its relative naval strength alike were shrinking, while the United Kingdom's industrial decline was slowly eroding the foundation of its maritime position. This posed serious but not insurmountable problems for Britain. After all, it faced not simply a naval but a strategic difficulty, which could be resolved through gaining allies no less than by maritime means. Between 1890 and 1919, such a combination of means maintained Britain's vital interests at sea although, in the process, many lesser ones were sacrificed. Britain remained upon a maritime plateau, after declining from its peak of the nineteenth century. The Washington naval treaty did not alter this position.

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When considering the consequences of Anglo-American naval relations between 1919 and 1921, especially the idea of maritime parity, historians have confused the symbolic and the substantive aspects of seapower. What holds true for one of these two need not do so for the other. In symbolic terms, the naval treaty was a public admission that Britain felt itself unable to maintain its rule over the waves. Contrary to the hopes of all British statesmen, Churchill's 'terrible day' when Britain ceased to be 'supreme at sea' had dawned.44 This defeat stemmed, however, not from a new weakness but an old one - because, as it could have done throughout the past generation at least, the United States was no longer willing to concede the principle of British sea supremacy. In any case, this symbolic change was more important as a gain for America than as a loss to Britain. Although this admission weakened British prestige, nothing indicates that it did so significantly, or that in itself this led other states to perceive a substantial decline in Britain's status as a power or increased the scale of challenges to its interests. Moreover, in strategic terms it was irrelevant whether the RN and the USN were equal in strength or if one was somewhat stronger. The clashes of Anglo-American interests were not at all likely to turn upon the use or the threat of force. Should that have happened, in all probability this standard could have sustained neither a British nor an American victory. The only certain damage which the United States could inflict upon the British Empire for many years during a war, military action against Canada, could have been done just as easily without a single warship as with naval equality. Even with the two-power standard advocated in 1919, the RN could scarcely have defeated America. The one-power standard was necessary for British prestige. As Churchill wrote, any external perception that the RN was 'definitely inferior' in strength to the USN would 'undoubtedly affect our whole position and indicate to our Dominions that a new centre had been created for the Anglo-Saxon world.'45 However, that standard did not measure Britain's maritime needs. The latter could only be gauged, as Herbert Richmond noted, on the scale of 'reasonably probable' risks.46 This required an ability to meet the most serious of likely dangers, which, after 1919 was a simultaneous naval threat in Europe

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and the Pacific. The most reasonable criterion for maritime security would have been a two-power standard excluding the USN, the standard which Hankey advocated:47 an ability to deter and to surmount a combined attack from the navies of Japan and any one European power at their selected moment. Britain could legitimately have relied on diplomacy to avert still worse circumstances, such as began to arise by 1936. This standard need not have implied the ability to shatter at sea both the French and the Japanese navies at the beginning of a war. A long period of germination is required before one can garner such fruits of seapower. That standard simply required the means to prevent Japan and any one European naval power from inflicting irreparable harm upon Britain until 'we are able to achieve victory by bringing the mobilised war power of the Empire to bear'.48 During the 1920s Britain had the resources needed to sustain this standard, and the Washington naval treaty did not subvert her ability to do so. Indeed, the treaty institutionalised such a two-power standard. The most striking thing about that treaty is not how much but how little it changed. It did not inaugurate a new order of seapower. It simply reinstated in a new form an order which had emerged between 1890 and 1906, in which various states dominated their own special seas. The treaty did not alter the existing balance of maritime power. Each state continued to control precisely those areas which it had come to do between 1890 and 1906, with Britain still dominating Lloyd George's 'etc', the bulk of the world's seas. The loss of sea supremacy did not lose Britain a single sea; in an important sense this simply forced Whitehall to refine its definitions of seapower. Nor in reality did the treaty alter Britain's relative naval strength. Although in 1919 the RN reached its greatest relative size in history, that was a wasting asset. The construction of modern warships would have rendered obsolete much of every existing fleet. Instead, the naval treaty maintained at a lower level of absolute strength as favourable a naval balance as Britain could have retained had the maritime powers continued their construction programmes. This bargain suited Britain. It would have had to spend a fortune to maintain its existing position during an open-ended arms race, all the while haunted by the possibility that it might fail to do so. Britain could have gained one thing alone from a continuation of naval

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construction: more modern and perhaps larger numbers of battleships and battlecruisers. However, its problem in this regard stemmed from the decisions not of 1921-22 but of 1929-30. It was, of course, dangerous in principle for an empire founded on seapower to define its naval strength by treaty rather than by necessity, and in practice certain aspects of this agreement did hamper Britain. The hiatus in the construction of battleships and battlecruisers harmed its armament industry, just as it did with Japan and America. As Japan and Italy violated some treaty clauses, Britain's maritime position became slightly worse than had been envisaged in Washington.49 Moreover, Britain equalled two naval powers excluding the USN at their selected moment largely because the European fleets were obsolete. Unless it was careful, this might decline to a two-power standard simply on paper when France and Italy built modern battleships and battlecruisers, as they were entitled to do after 1927 while potential enemies like Russia and Germany could also expand their fleets. As Britain's battleships and battlecruisers were older than those of Japan and America, it would suffer more than they, should the reconstruction schedule of the 1930s be abandoned. British naval decisions in 1929-30 ensured that these potential problems would contribute to the decline of its seapower. This, however, was not foredoomed. In itself, the naval treaty maintained British maritime security and did not prevent Britain from continuing to do so. After 1922 it remained free to bolster its strategic position by gaining allies. It retained the world's greatest mercantile marine and network of overseas bases, the largest shipbuilding capacity and the strongest navy at sea. It had a decided qualitative and quantitative lead in naval aviation and in the crucial class of cruisers and enough other lighter warships to meet its needs. In the naval staff's opinion it had a 'slight superiority' over the USN in the real strength of battleships and battlecruisers:50 its fleet was certainly better balanced than that of its only peer. Whether Britain would continue to retain these assets was uncertain. The naval treaty did not prevent it from doing so. By 1922 British statesmen could justifiably breathe a sigh of relief as they looked upon the waves. For two generations past they had confronted a maritime nightmare: the danger that

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Britain would fail to match the naval forces of real threats. They shrugged off that fear by 1919 only to find a new one: that America would strive to achieve maritime supremacy, thus compromising Britain's status as a great power. Instead, the naval treaty left Britain living no more on the sufferance of America than of France and Japan: no more than was normal in its history. Britain had lost its special position at sea in principle while retaining that status in practice. It remained by far the greatest seapower, one well able to defend its maritime interests. Rather than being a defeat, the Washington naval treaty was Britain's last victory of the First World War. The trident crossed the Atlantic not in 1919 but in 1939.

NOTES 1.

I am grateful to M. L. Dockrill and Elizabeth Herbert for comments on earlier drafts of this chapter, to Andrew Lambert for sharpening my understanding of the nature of British seapower during the 1920s, and to Gwen Ferris and Hank Hoekstra for guidance in the physical layout of this paper. This chapter is in part derived from John Robert Ferris, The Evolution of British Strategic Policy, 1919-1926 (University of London Ph.D. thesis, 1986). All references to Ferris, Evolution, refer to this thesis. 2. The best accounts from the American side are Harold and Margaret Sprout, Toward a New Order of Seapower (Princeton, 1940); W. Braisted, The United States Navy in the Pacific, 1901-1922 (Austin, TX, 1971); and J. J. Safford, Wilsonian Maritime Diplomacy, 1913-1921 (New Brunswick, NJ, 1978). And from the British viewpoint, Arthur Marder, From Dreadnought to Scapa Flow. The Royal Navy in the Fisher Era, Vol.V: Victory and Aftermath (January 1919-June 1919} (Oxford, 1970); S. W. Roskill, Naval Policy Between the Wars, Vol. I: The Period of Anglo-American Antagonism, 1919-1929 (London, 1968); and J. K. MacDonald, British Naval Policy and the Pacific and Far East: From Paris to Washington, 1919-1922 (Oxford D.Phil, thesis, 1975). D. F. Trask, Captains and Cabinets. Anglo-American Naval Relations, 1917-1918 (Columbia, MO, 1972) treats this issue as one in which the foreign and naval policies of both Britain and the United States were dialectically related. Ferris, Evolution describes British naval and foreign policy toward the United States within the context of overall British strategic policy. 3. Roskill, Naval Policy, I, 21, 219-21. For a discussion of the flaws in both the understanding and meaning of individual service standards and of the general role of standards in the historiography of British strategic policy during the 1920s, cf. Ferris, Evolution, 30-31.

78 4. 5.

6. 7. 8. 9.

10.

11. 12.

13. 14. 15. 16. 17. 18. 19.

20. 21.

The Symbol and the Substance of Seapower Brackenbury to Lansdowne, 29 Nov. 1891, Lansdowne Papers (India Office Library), D.558, Vol. 21. 150th Meeting of the Committee of Imperial Defence, 23 Nov. 1921, CAB (Cabinet Archives, Public Record Office, London) 2/3. For discussions of the idea of sufferance and its influence, cf. Ferris, Evolution, 61-2; and idem, 'The Theory of a "French Air Menace": Anglo-French Relations and the British Home Defence Air Force Programmes of 1921-25', Journal of Strategic Studies, 10 (1987). Balfour telegram to Curzon, 24 Nov. 1921, in Documents on British Foreign Policy, 1st Ser., Vol.14 (London, 1966), No. 448. Cecil memorandum, 10 Apr. 1919, Lloyd George Papers (House of Lords Record Office, London) F/6/6. 134th Meeting of the CID, 14 Dec. 1920, CAB 2/3. C. Barnett, The Collapse of British Power (London, 1970), 258-63; D. Cameron Watt, Succeeding John Bull: America in Britain's Place, 1900-1975 (Cambridge, 1984); and Ferris, Evolution, 145-6. Watt has unsuccessfully attempted to transplant to different historical soil a model which does in fact have value as a means to categorise British perceptions of the United States between 1925 and 1929; cf. B. J. C. McKercher, The Second Baldwin Government and the United States, 1924-1929: attitudes and diplomacy (Cambridge, 1984). Curzon to Selborne, 9 Apr. 1900, Curzon Papers (India Office Library, London) F . l l l , Vol. 181; 134th Meeting of the CID, 14 Dec. 1920, CAB 2/3. Ferris, Evolution, 144-52. Barnett, Collapse, 258-63; and P. M. Kennedy, The Realities Behind Diplomacy: Background Influences on British External Policy, 1865-1980 (London, 1981), 259-63. See Ferris, Evolution, 148 for a refutation of the thesis of Roberta Allbert Dayer, 'The British War Debts to the United States and the Anglo-Japanese Alliance, 1920-1923', Pacific Historical Review, 45(1976). Long to Lloyd George, 16 Feb. 1919, Lloyd George Papers F/33/2. Cabinet Meeting, 16 June 1921, CAB 23/26. Braisted, United States Navy, 440. Selborne to Curzon, 19 Apr. 1901, Curzon Papers, F.III, Vol. 181. Churchill memorandum, undated (probably Jan. or Feb. 1928), in the Maurice Hankey Papers (Churchill College, Cambridge) HNKY 5/1. Salisbury to Lytton 22 Mar. 1877, Lytton Papers (India Office Library) E. 218, Vol. 4A. Wemyss minute, 26 Feb. 1918 passim, ADM (Admiralty Archives, Public Record Office, London) 116/1748; passim ADM 116/1745; memorandum P.D. 0129, 11 Nov. 1918, Sidney Freemantle Papers (National Maritime Museum, Greenwich) FRE 311; Admiralty Operations Committee meeting, 20 Nov. 1918, ADM 137/834; memorandum M.0366, ADM 167/57; and Admiralty Board Meetings, 6 Feb. and 13 Feb. 1919, ADM 167/56. Cabinet Paper G.T. 6979, CAB 24/76; and Long to Lloyd George, 7 Mar. 1919, Lloyd George Papers F/33/2. Madden to Jellicoe, 29 Nov. 1918, and Jellicoe to Long, 3 Mar. 1919,

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22.

23. 24. 25. 26. 27. 28. 29.

30. 31. 32.

33.

79

both Admiral John Jellicoe Papers (British Library, London) Add MSS 49009; Madden to Beatty, 26 Nov. 1918, Beatty Papers (National Maritime Museum, Greenwich) BTY 13/29; Madden to Beatty, 28 Mar. 1919, Beatty to Admiralty, 1 Apr. 1919 passim, both ADM 167/2017; and Board Meeting, 6 Mar. 1919, ADM 167/56. Freemantle minute, 9 Apr. 1919 FRE 315 indicates that there was an Admiralty file on this issue, which has apparently either been 'weeded' or retained by the Admiralty. In order to simplify the analysis in the text, the above evidence has been ordered by topic rather than on a chronological basis. It should be noted that these arguments for the distribution of the German fleet were advanced and rejected in four entirely separate waves: by Madden in November 1918; by Long and Jellicoe in early March 1919; by Madden and Beatty in late March and early April; and by the naval staff branch in Paris during May 1919. It is interesting to consider what might have happened had these arguments all been raised at the same time instead of sputtering intermittently throughout November 1918-May 1919; and, in particular, had Beatty and Madden submitted their views on this question at a time when Long was still leaning toward similar ideas, instead of doing so only after he had definitely abandoned them. Freemantle minute, 9 Apr. 1919 FRE 315; minute by DOD (F), 2 Mar. 1919, ADM 116/2017; memorandum No. 755, ADM 167/57; and Wemyss to Hope, 6 Jun. 1919, Wester Wemyss Papers (Churchill College, Cambridge) WYMS Vol. II I. Long memorandum, 25 Mar. 1919, ADM 167/58. Long to Lloyd George, 8 Apr. 1919, Lloyd George Papers F/33/2. Jellicoe to Long, 3 Mar. 1919, Jellicoe Papers Add MSS 49009. Long to Lloyd George, 7 Mar. 1919, Lloyd George Papers F/33/2. Lloyd George memorandum, 7 Mar. 1919, ibid. F/147/1. Lloyd George to Bonar Law, 31 Mar. 1919, ibid., F/30/3. Braisted, United States Navy, 426-40; and MacDonald, British Naval Policy offer sound although not complete accounts. Neither of them, for example, has discovered Wemyss' own report on the so-called 'naval battle of Paris' (which generally confirms the description emanating from American sources). The basic British sources for these negotiations are; Cecil Diary, 8 and 10 Apr. 1919, Cecil of Chelwood Papers (British Library, London) Add MSS 51131; and Long to Lloyd George, 6 and 8 Apr. 1919, F/33/2, Cecil to Lloyd George, 10 April 1919, F/6/6, and unsigned memorandum (but Wemyss from internal evidence), 23 Mar. 1919, F/192/1, all Lloyd George Papers. Cecil diary, ibid. Long to Lloyd George, 2 May 1919, Lloyd George Papers F/33/2; Board Meetings, 29 May 1919 and 18 June 1919, ADM 167/56; and Cabinet Paper GT 6517, CAB 24/82. Churchill to Lloyd George, 1 May 1919, Lloyd George Papers F/9/1; Hankey memorandum, 17 July 1919, HNKY 8/18; and Bars tow memorandum, 29 June 1919, T(Treasury Archives, Public Record Office, London) 1/12369. Grey memorandum, 29 July 1919, Lloyd George Papers F/12/1; Grey

80

34.

35.

36. 37.

38. 39. 40.

41. 42. 43. 44. 45. 46. 47. 48. 49.

50.

The Symbol and the substance of Seapower

memorandum, 5 Aug. 1919, Curzon Papers F.I 12, Vol. 211; and Foreign Relations of the United States. The Paris Peace Conference, 1919, Vol.XI (Washington, DC, 1943), 620-23, 630-31. Cabinet Meeting, 15 Aug. 1919, CAB 23/15. For the origins and influence of the so-called 'ten years rule', cf. J.R. Ferris, 'Treasury control, the ten year rule, and British service policies, 1919-1924', Historical Journal, 30(1987). Long to Lloyd George, 22 Sept. 1919, Lloyd George Papers F/33/2; memorandum FC (18), CA 27/72; memorandum M.03710, ADM 1/8549; and Admiralty Board Meetings, 18 Aug. 1919 and 22 Sept. 1919, both ADM 167/56. Curzon to Grey, 13 Sept. 1919, Curzon Papers F.I 12, Vol.211; and FRUS, Vol.XI, 675-6. Beatty to de Robeck (from internal evidence), 4 Jan. 1920, John de Robeck Papers (Churchill College, Cambridge) 6/30; Beatty memorandum, 7 Jan. 1920, ADM 167/61; Board Meeting, 14 Jan. 1920, ADM 167/60; CID Paper No. 253-B, CAB 4/7; and Long to Lloyd George, 17 Dec. 1920, Lloyd George Papers F/34/1. Cabinet Paper 645, CAB 24/98; and Parliamentary Debates (Commons), Vol. 126, columns 2300-2301 (17 Mar. 1920). Barstow memorandum, 18 July 1921, T 161/119 S.9627 1; and 135th CID Meeting, 23 Dec. 1920, CAB 2/3. Field to D'Eyncourt, 14 May 1920, Tennyson D'Eyncourt Papers (National Maritime Museum, Greenwich) DEY 27; Beatty minute, 8 July 1920, ADM 1/8602; Board Meeting, 13 Oct. 1920, ADM 167/60; Cabinet Paper 2176, CAB 24/115; and N.J.M. Campbell, 'Washington's Cherry Trees. The Evolution of the British 1921-22 Capital Ships', Warship. A Quarterly Journal of Warship History, Vol. 1, nos 1-4 (January-August 1977). Ferris, Evolution, 120-28, 144-52. Cabinet Meeting, 20 July 1921, CAB 23/26; and Cabinet Meeting, 1 Nov. 1921, CAB 23/27. Cmd. 1627. 134th Meeting of the CID, CAB 2/3. Report of the Churchill committee, 4 Feb. 1922, CAB 27/164. Herbert Richmond, Statesmen and Sea Power (Oxford, 1946), 328. Hankey memorandum, 17 Jul. 1919, HNKY 8/18. Report of the Churchill committee, 4 Feb. 1922, CAB 27/164. A. Preston, Cruisers. An Illustrated History, 1880-1980 (London, 1980), 74-5, 83. Sperling minute, 1 Feb. 1924 FO (Foreign Office Archives, Public Record Office, London) 371/9616.

3 Between Two Giants: Canada, the Coolidge Conference,, and AngloAmerican Relations in 1927 B. J. C. McKercher As Canadians we can only seek to do all that lies in our power to fulfill our role as friendly interpreters of Britishers and Americans alike in a manner which may substitute goodwill for ill-will. Mackenzie King, September 19271 1927 proved to be a difficult year in the efforts of William Lyon Mackenzie King, the Canadian prime minister, and his foreign and naval policy advisers to make their country 'one of the powers of the world'.2 This arose from the established Canadian policy of trying to balance diplomatically in international politics between Britain and the United States, something seen by Mackenzie King's remark about Canada's role as a 'friendly interpreter'. A nationalist and a politician sensitive to the domestic political base of his Liberal government in French Canada, the Prime Minister had long opposed a single foreign policy voice for the British Empire.3 In reality, such a voice would emanate from London, whilst the dominions and colonies, like some corps d'opera, would be expected to give vocal support and occasional physical exertions to augment the efforts of the aging prima donna at centrestage. This had been the tenor of British policies regarding the Turkish crisis in 1922, when David Lloyd George's ministry struck a discordant policy note with Mackenzie King and his Cabinet by assuming publicly and without prior consultation 81

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that Canada would support Britain over the Chanak incident. Mackenzie King refused to help and, over the next few years, his government sought to distance Canada from the notion of a single Imperial foreign policy. At the 1926 Imperial conference, in large part because of Mackenzie King's efforts for five years, the British conceded formally that the dominions were 'autonomous communities within the British Empire, equal in status, in no way subordinate to one another in any aspect of their domestic or external affairs, though united by a common allegiance to the Crown, and freely associated as members of the British Commonwealth of Nations'.4 In practical political terms, this translated into British recognition of the right of Canada and the other dominions to pursue independent foreign policy. Accordingly, in early 1927, Mackenzie King's government completed the first exchange of permanent diplomatic missions with a foreign power, the United States, and by the end of the year efforts were underway to do the same with France and Japan. By the autumn, Canada moved further into the international community by winning one of the non-permanent seats on the Council of the League of Nations. Whilst extra-hemispheric diplomatic initiatives were crucial for Canada's drive for recognition of its independent status, relations with the United States were fundamentally important because of geography, increasing trade, the level of American investment in Canada, and the growing Americanisation of Canadian culture. At this time a number of bilateral Canadian-American issues - the Chicago water diversion project, fisheries, liquor-smuggling, and the proposed St Lawrence seaway - had yet to be settled. This does not mean that the Canadians intended to jettison their established ties with Britain; they did not. On the basis of autonomy granted at the 1926 Imperial conference, Mackenzie King's government attempted to lend force to the revised intra-Imperial relationship. Throughout 1927, the Prime Minister lobbied for the posting to Ottawa of a British High Commissioner to handle the purely diplomatic side of Anglo-Canadian relations; the role of the Governor-General, which had caused Mackenzie King profound political problems in 1926, was to be only that of the monarch's representative. These events in 1927 occurred in an atmosphere of increasing bitterness in Anglo-American relations caused by the naval

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question. Between 20 June and 4 August, a naval arms-limitation conference met at Geneva to extend displacement and gun-calibre maxima, as well as the building ratio for capital ships and aircraft carriers, enshrined in the Washington treaty of 1922 to lesser craft - cruisers, destroyers, submarines, and auxiliary vessels. The American president, Calvin Coolidge, had called this conference. Mackenzie King's government participated in its deliberations as a member of the British Empire Delegation - Canada's first multilateral conference after the British concession made at the Imperial gathering the previous year. Although their country's naval forces were minimal, Mackenzie King and his advisers worked to ensure that Canada's diplomatic and naval interests were not compromised by negotiations amongst the great powers. This involved protecting the autonomy in foreign policy that had been granted at the 1926 Imperial conference whilst ensuring that Canada determined its own naval requirements to meet Canadian needs. It entailed cautious diplomacy, balancing between Britain and the United States in the run-up to the conference and during its deliberations. But the Coolidge conference failed, and failed spectacularly, through the inability of the British and Americans to compromise over cruiser limitation.5 As AngloAmerican relations plummeted to one of their lowest points in the twentieth century amid mutual British and American recriminations for the failure, the Mackenzie King government suddenly confronted the spectre of Britain and the United States at odds over a major foreign and defence policy issue. The efforts that Ottawa had been making to nurture good relations with both London and Washington since before the 1926 Imperial conference were now jeopardised. The Canadian Prime Minister and his advisers had to respond wisely or risk alienating either or both of Canada's great power friends.6 II

To appreciate the Canadian pursuit of foreign and naval policy in 1927, it is important to understand the attitudes of the small group of men responsible for that policy: Mackenzie King, who served as both Prime Minister and Secretary of State for External Affairs; Ernest Lapointe, the Justice Minister, the leader

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of the powerful Quebec wing of the Liberal Party, and a strong supporter of the League of Nations; Colonel James Ralston, the Minister of National Defence, who believed in a measure of armed strength for any state intent on having some international influence; Oscar Skelton, the Under-Secretary of State for External Affairs and a dedicated exponent of Canadian independence from Britain in foreign policy; and Commodore Walter Hose, the director of the Canadian Naval Services, who saw any success that his forces might achieve tied to cooperation with the Royal Navy.7 Except for a brief Conservative interregnum in the summer of 1926 in the wake of a constitutional crisis at Ottawa, the Liberal Party led by Mackenzie King dominated Canadian government from December 1921 to July 1930. When rising to the premiership in 1921, Mackenzie King added the Department of External Affairs to his responsibilities. He wanted to force the country's foreign policy in the direction of autonomy. Just as important, he also reckoned that his position as party leader would be made more impregnable by adding to his policymaking power.8 When forming his second government in October 1926, he continued doubling as his own foreign minister, this to sustain the independent diplomatic course he had earlier been charting. Thus, Mackenzie King stood at the apex of the Canadian foreign-policy making elite for most of the 1920s. His ideas about what Canadian foreign policy should achieve are well-known.9 His chief concern centred on the autonomy issue, since Canadian interests were not necessarily those of Britain. In essence this meant distancing Canada from military commitments which Britain decided to make to protect its own narrow national interests; Chanak can be understood in this context, as can Canadian reluctance to adhere to the Locarno treaty in 1925.10 Constantly at the fore in the Prime Minister's thinking was the Great War's political impact on Canada. The decision of the Conservative government in 1917 to introduce conscription had seen both riots in Quebec, in response to the notion that French-Canadians should fight and die for Britain in Europe, as well as an anti-Quebec backlash in most of the rest of the country. This 'conscription crisis' threatened national unity and subsequently, making national unity one of his primary political goals, Mackenzie King had no desire through imprudent diplomacy to reopen the wounds

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that crisis had created. Moreover, as a politician, he knew his party's House of Commons majority derived from massive support from Quebec. Still, Mackenzie King had no desire to diverge too sharply from Britain. He considered himself to be 'British' as much as anything else, and the political repercussions in English Canada of remaining too aloof could not be overlooked.11 It followed that there had to be balance between the quest for autonomy in foreign policy and the Canadian connection with Britain. For Mackenzie King, relations with the United States also remained an issue of principal importance. He could not ignore a power possessing ten times Canada's population, whose extra-territorial investment played a major part in the Canadian economic prosperity enjoyed in the post-Great War period and with which Canada shared a 3000 mile undefended border. Mackenzie King liked and appreciated many things about the United States. He had travelled widely in that country, received his Ph.D. from Harvard, worked for a time for his friend, John D. Rockefeller, II, and counted amongst his acquaintances a range of influential Americans in educational, financial, and political circles. With both the Canadian and American publics to a degree sharing a belief in the need for political isolation from European affairs as a result of the carnage inflicted on the belligerents in the Great War, Mackenzie King sought to keep Canadian-American relations on an even keel after he assumed control of Canadian foreign policy. But despite his efforts to ensure close ties with the United States, Mackenzie King had no desire to achieve autonomy in foreignpolicy matters from Britain only to have Canada dominated by its powerful southern neighbour. What he sought was Canada as 'one of the powers of the world', admittedly one of the second rank, and to do so meant pursuing a middle road between the United States and Britain. Canada could do this by being the 'friendly interpreter'. It became the cardinal element of Canadian foreign policy in the Mackenzie King era to balance between Britain and the United States, a task essential for the preservation of an autonomous Canadian voice in international politics, but one made difficult by the inherent distrust of the two great powers for each other. Within Mackenzie King's Cabinet, Ernest Lapointe enjoyed increasing eminence during the 1920s. As the Prime Minister's

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chief lieutenant from the powerful Quebec wing of the Liberal Party, he naturally had a political position strong enough to influence the direction of domestic and foreign policies.12 However, added to the political dimension of Lapointe's bond with Mackenzie King was a personal one. In several respects the two men possessed differing character traits that complemented each other; for instance, where Mackenzie King tended to dither over policy responses to issues, Lapointe rarely equivocated. This seems to have strengthened their relationship, so that the longer the two men worked together, the stronger were the bonds that joined them.13 Respecting foreign policy, Lapointe wholeheartedly supported Mackenzie King's quest for autonomy because he felt it best protected Canadian interests. He put this forcefully to a Canadian audience in 1928: Some people seem to be afraid of seeing Canada occupying herself with world affairs, and to believe that it would be better that she should remain apart from all international activities, on account of the obligations she may incur. I reply, in the first place, that under the old system, we were obligated without having a word to say. The engagements contracted by ourselves voluntarily offer, beyond question, fewer dangers than those which might have been imposed upon us without any expression of our will.14 Lapointe's leading role in making and implementing Canadian foreign policy was evidenced throughout the 1920s. He conducted the final negotiations and then signed the 1923 Halibut treaty with the United States, the first treaty signed by a Canadian without the counter-signature of a British diplomatic agent.15 He also believed strongly in Canada's full participation in the League because such a tack would show other powers the country's independence in world affairs - he led those in the Cabinet who pressed for Canada's pursuit of the nonpermanent seat on the League Council.16 This was coupled with his service as Canada's representative at the 1922 League Assembly and, more important, the chief Canadian delegate at the Coolidge conference in 1927, a conference that was an adjunct of the League-sponsored Disarmament Preparatory Commission. Perhaps more than any other Canadian minister in the 1920s, Lapointe held true internationalist views and, as

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the decade unfolded, he used his powerful position to foster his ideas about how Canadian foreign policy ought to evolve. After a varied career in the army, law, and Nova Scotia provincial politics, James Ralston entered the Cabinet for the first time as Mackenzie King's handpicked Minister of National Defence following the election of September 1926.17 His appointment came because the Prime Minister wanted a department head capable of standing up for his ministry in a period distinguished by severe retrenchment imposed on the Canadian fighting services; this is heavily ironic in that Mackenzie King's first government began the slashing of arms spending in 1922. Within six months of entering the Cabinet, Ralston seemed to be meeting the Prime Minister's expectations in confronting other ministers intent on enforcing further budget restraints on the army, navy, and air force.18 In fact, for the four years of Mackenzie King's second government, Ralston's departmental appropriations rose steadily, from $12.5 million annually to $21 million, leading the pacifist left to make regular calls for the Prime Minister to 'transfer his Minister of National Defence to a department where his great ability and driving force will be of greater benefit to Canada'.19 Ralston's ideas about foreign policy conformed with those dominating the Mackenzie King government in the 1920s. Writing to his son two years after being elevated to the Cabinet, Ralston remarked on the achievements of past Canadian leaders in bringing about 'Canada's self-reliant status of today'.20 These were not in any sense steps 'to independence as some would make us believe every move against the interference of Great Britain is', he wrote and, yet, 'the Empire continues and will continue'. This did not mean that he wanted his country to withdraw from Imperial affairs. But a new international order had emerged after 1918, and it could not be ignored that in this new order, Canada's two principal friends, Britain and the United States, did not agree on crucial issues like naval arms limitation. At Montreal in April 1928, he echoed Mackenzie King when discussing efforts made since the war to achieve arms limitation as the best insurance for international peace and security: I believe that Canada is probably nearer to Great Britain and the United States, the two greatest Powers in the World,

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Between Two Giants than any other nation. Not only is Canada a friend of them both whom they both trust, but they also know that we have no special axe to grind in this matter of International Peace and World Security.21

Whilst having 'no special axe to grind', however, Canada did have interests to protect. As the Minister of National Defence, Ralston knew that if Canada had any hope of defending those interests should an international crisis occur, the paring of defence-spending to the degree that happened in the four years prior to his appointment could not continue. This thinking ran counter to that within the Cabinet that had shaped defence policy prior to October 1926.22 This sentiment in Cabinet, allied to strong isolationist and pacifist feelings in the Commons and elsewhere, meant that Ralston had his work cut out. He therefore worked hard to impress on his colleagues and Canadians as a whole that there had to be a measure of effective Canadian armed strength. 'Man is a combative animal', he also told that Montreal audience. 'Nature changes very slowly and the change in man is almost imperceptible as the generations pass . . ,'23 Hence, whilst every effort had to be made to ensure that arms limitation agreements and peaceful methods to resolve international disputes were found, Canadians should not be unprepared for a crisis. For James Ralston, there had to be balance between idealism and realism in ensuring the defence of Canada. Within the second echelon of the Canadian foreign-policymaking elite, the civil service advisers, Oscar Skelton occupied a position of decided importance. This derived as much from his analytical and organisational skills as it did from the fact that he had the ear and respect of Mackenzie King. His rise as one of the Prime Minister's closest advisers on a range of issues touching both foreign and domestic policy has been welldocumented.24 In 1908, at just thirty years of age, he had become one of Canada's youngest full professors with an appointment at Queens University at Kingston, Ontario. Holding strong nationalist views in terms of the need to achieve full political autonomy from Britain, Skelton believed passionately in Canada striking out on its own in foreign policy. Honed by his political studies, the disruption to Canadian unity caused by the war, and the concern with which he viewed British

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diplomacy in the immediate post-Great War period, these beliefs were enunciated publicly in January 1922 in a speech at Ottawa on 'Canada and Foreign Policy'.25 .This constituted a clarion call for those who supported the country's full autonomy in conducting its external affairs and, as luck would have it, one of his listeners was Mackenzie King, then in office just a month. Skelton impressed the new prime minister, who noted later that day: 'Skelton's address would make an excellent foundation for Canadian policy on External Affairs, and Skelton himself would make an excellent man for that department.'26 Mackenzie King's favourable reaction to this speech began a series of events that led to Skelton becoming the Undersecretary at External Affairs by March 1925: being consulted by Mackenzie King; accompanying the Canadian delegation to the 1923 Imperial conference; and, in 1924, taking a year's leave from Queens to work at External Affairs at Ottawa. Whilst little doubt exists that the course of Canadian foreign policy was set by Mackenzie King throughout the 1920s, little doubt also exists that Skelton occupied a central position in the policymaking process. The Prime Minister's diary from March 1925 onwards shows that Skelton saw Mackenzie King several times a week and sometimes, given the issues being considered, several times a day. Concerning foreign policy, Skelton's advice remained unswerving: Canada had to avoid any risk that British foreign and Imperial policies might involve its undertaking commitments that would undermine Ottawa's efforts to achieve autonomy.27 At the same time, Skelton endorsed any diplomatic initiative that would make other powers cognisant of Canada's independent status. In early 1925, for instance, when a Canadian diplomatist had the opportunity to assume the presidency of the annual League Assembly, Skelton remarked that 'the choice of a Dominion's representative as President of the Assembly would be a very notable recognition of the distinct status of the Dominions in the League'.28 Despite some major differences of opinion between the two men, such as Mackenzie King being less distrustful of the British,29 Skelton shared his political master's conception of Canadian diplomatic autonomy - the 1922 Ottawa speech existed as the touchstone to test the purity of subsequent policies. So Mackenzie King might set the foreign-

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policy lines to follow, and Skelton might follow, but, as one perceptive observer has remarked, Skelton remained 'the keeper of [Mackenzie] King's conscience'.30 Commodore Walter Hose presided over that branch of the Canadian armed forces which suffered the heaviest retrenchment following the war. In fiscal 1921-22, the Navy's budget stood at $2.5 million, the legacy of the Conservative ministry which had already imposed spending cuts because of the return to peace.31 The next fiscal year, a result of Liberal economising, the budget fell 40 per cent more, to $1.5 million; it remained frozen there in 1923-24, only to be decreased to $1.4 million the next year. It rose to $1.48 million in 1925-26, the last year of the first Mackenzie King government, but this still remained below that of 1922-23. In terms of fighting capacity by 1925, the Royal Canadian Navy had been reduced to two destroyers, four minesweepers, and some auxiliary craft.32 These unhappy events might suggest that Hose lacked the necessary political muscle to get a fair hearing for his service in policy debates within government. This proved not to be so. He showed decided skill as a bureaucratic infighter after 1922 when he had to decide what shape this drastically reduced Canadian navy would take. He had funds to keep one cruiser going there existed some prestige in having such a vessel afloat - but to do so would have meant scrapping all other significant warships. Thus, Hose opted to keep two destroyers as Canada's principal warships - one could be based on each coast - and to do away with both the cruiser and his only two submarines. This had the merit of freeing funds which he used to create a volunteer naval reserve. This body, by 1924 comprising 70 officers and 830 men in several companies across the country, was in addition to the regular reserve of 70 officers and 430 men.33 Hose's purpose in adding to the reserve was outlined later by a subordinate: A small Navy is of no value as an educative measure as its personnel live in the neighbourhood of the naval bases; but a reserve force distributed across Canada would bring the Navy home to a great number of inland people . . . would give the Director of the Naval Service opportunity to visit the Reserve Centres throughout the country and address Chambers of Commerce, Rotarian Clubs, etc., on the

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elements of Naval Defence; would provide in the Reserve Centres a subject for articles in the press; would be the first step in the conversion of Quebec . . . 34 General opinion holds that Hose's strategy provided Canada with the nucleus for what became an effective navy after the outbreak of the Second World War.35 But in more immediate terms, it provided Hose in the mid-1920s with a louder voice than might be expected in the councils that made foreign and defence policy. Coupled with the rise of Ralston - which led to a naval budget of $3.6 million by 1930-3136 - the navy had not been eliminated from the policymaking process during the second Mackenzie King government. Hose was actually a British subject who had joined the Royal Navy as an officer cadet in 1890.37 In 1911, he was seconded to the Canadian service to captain a destroyer. His staff work began in 1917 - he had resigned from the Royal Navy in 1912 - which saw his quick rise, by January 1921, as director of the Canadian Naval Service. With his background and career, Hose tended to see the Royal Canadian Navy as a component of the wider Imperial naval efforts as considered by the Admiralty at London. This was not unusual since, like Hose, a number of Canadian officers were formerly with the Royal Navy but decided to pursue their careers in Canada. But Hose also remained sensitive to the political winds that blew out of the Prime Minister's office and Cabinet room at Ottawa. He appreciated that as the Liberals were pursuing autonomy in foreign policy, Canadian naval policy had to develop along similar lines. This attitude surfaced with the failure of the Coolidge conference. Given that the British and Americans were at odds, Hose surmised that his officers could serve as a bridge between the Royal and United States navies. He put this to Skelton: '[W]e, who know the U.S., should be in a position to give advice which may prevent the British Cabinet being led into playing the U.S Big Navy Party's game by the Admiralty.'38 Hence, whilst working within the Canadian government to ensure that the Service did not decline to a level where it could not function in a moment of crisis, Hose sought to give Canadian naval authorities a voice abroad in the councils of Empire and, if the opportunity arose, in the wider world.

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Without question, therefore, the dominant thinking within the Canadian foreign-policymaking elite in the late 1920s concerned ensuring that the new Imperial structure of equal and autonomous states established in 1926 was maintained. Beyond this general consensus, however, there existed differing views about how Canada's position in both the new Imperial edifice and the international community should be maintained. At the second level, Skelton and Hose were as far apart as two men could be when considering how policy ought to develop. This was as much as a result of their different backgrounds and beliefs as it was of their departmental responsibilities. At the first level, Lapointe and Ralston might concur in maintaining 'Canada's self-reliant status of to-day', but they were at odds on what should be done to give force to the country's post-1926 status. Lapointe advocated Canada's political rather than military commitment to the League; Ralston held that a degree of political commitment, no matter how small, involved a degree of military commitment. Above all this hovered Mackenzie King. His control over Canadian foreign policy in this period is not in question: he set the programme to which his ministers and advisers adhered. But he was not a dictator. Whilst having a clear idea of what he wanted, he had to weigh Cabinet views and the mood of the country when deciding what diplomatic strategy to follow. That he did not always get his own way is seen in late 1927, with his decision to bow to the wishes of Lapointe and others over the matter of a League Council seat. The Prime Minister remained pragmatic in foreign policy, balancing between realism and idealism in attaining diplomatic objectives. In the late 1920s, such pragmatism meant keeping alive some crucial ties with Britain. As Mackenzie King and each of his ministers and advisers understood, achieving full autonomy from Britain served no useful purpose if Canada then fell under American dominance. The United States shared the same continent with Canada, was investing heavily in the Canadian economy, and entertained strong political isolationist views in terms of European affairs.39 Consequently foreign policy did not possess a single dimension, the autonomist one; rather, it had others, the most important being the balance between Britain and the United States.

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III It is telling that the first major foreign-policy problem faced by Mackenzie King's government after the 1926 Imperial conference concerned maintaining Canada's newly-granted autonomy as Britain and the United States fell out with one another thanks to the failure of the Coolidge conference. With his colleagues and advisers, Mackenzie King realised that the disparate views of the British and Americans on naval limitation were a diplomatic danger for Canada. Given Britain's Imperial, League, and other commitments, and the need to keep open maritime routes to both the Empire and foreign markets, this immediately brought to the fore how Canada should fit into the naval defence of the Empire. The Mackenzie King government wanted to maintain Canadian autonomy but, at the same time, not to antagonise Britain unduly, which would have domestic and international repercussions. Just as crucial, the United States had to be handled with care, this for economic reasons and others touching those outstanding issues yet to be resolved in Canadian-American relations. Thus, balancing between Britain and the United States became the sine qua non of Canadian foreign policy throughout 1927: in the months preceding the conference, during its twisted course, and in its immediate and bitter aftermath. On 10 February 1927, the Coolidge Administration issued invitations to the other four principal naval powers - Britain, France, Japan and Italy - to have their delegations to the Disarmament Preparatory Commission meet with that of the United States for separate naval limitation talks.40 The idea was to extend the sorts of class tonnages and displacement and gun-calibre maxima that had been agreed at the Washington conference of 1921-22, for capital ships and aircraft carriers, to lesser craft. The Commission had been meeting for more than a year to produce a draft disarmament treaty as the basis for discussion at an eventual world disarmament conference. By early 1927, through the inability of the British and French to compromise on several points touching air and land disarmament, this body seemed near collapse. The Americans saw this worsening situation at Geneva as an opportunity to score international kudos in upstaging the League by attaining at least naval limitation - the League sponsored this body and,

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because of its importance, non-League members like the United States were forced to attend - and there might also be residual domestic benefits for the Republican Party, Coolidge's party, in the 1928 elections. The thinking at Washington held that as the greatest naval powers would limit naval arms in separate talks, they could then force their proposals on the Commission. But parallel naval discussions could not occur at the next session of the Commission, scheduled for March. The French and Italians refused to attend because of their mutual suspicions in the Mediterranean and North Africa. As the Japanese delegation had already departed Japan, Tokyo wanted to send a different delegation, primed with specific instructions and the latest information. British agreement to participate was delayed until the end of February because of the need to consult the dominions. Accordingly, it was decided to hold a separate tripartite naval conference at Geneva in the summer - Britain, the United States, and Japan were the three leading naval powers - so that the fruits of these deliberations could be put to the Commission. When the Canadian government received formal British notification that an American invitation had been received and that London intended to participate, Mackenzie King and Skelton conferred. On 21 February the British government, led by Stanley Baldwin, learned that consistent with Canada's support of the League, Ottawa endorsed separate naval limitation discussions amongst the maritime powers.41 Importantly, however, the Canadian message emphasised that Mackenzie King's government held the American invitation as one directed solely to 'His Majesty's Government in Great Britain'. It could not be construed that Canada had been in any way covered by it, though this did not mean that Canadian delegates would not attend. 'If the question of a formal Conference and an agreement applying to Dominion navies arises, and, if an invitation to participate is extended', the British were informed, 'His Majesty's Government in Canada would have pleasure in appointing representatives.' Against the background of events that led to the decision to hold a full tripartite conference and, thereafter, in the preparations leading to it, Canadian efforts divided into two areas: the diplomatic ones revolving around the determination of Mackenzie King and Skelton to ensure no dilution of auton-

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omy; and the naval ones, preoccupying Ralston and Hose, entailing a delineation of what precisely Canadian naval requirements were and how these could be squared with the desiderata of Imperial defence. The diplomatic dimension remained relatively straightforward: Canada had to have a separate invitation before it would attend. Problems here stemmed from an American reluctance to issue invitations to the four dominions because of Washington's belief that their navies were part and parcel of the Royal Navy. This became clear from a report sent by the Canadian Legation at Washington in mid-March indicating that Coolidge had told American journalists that he saw 'no reasons why the various dominions should get separate invitations, because, in his viewpoint, any war vessel flying the British flag is essentially a British craft, whether it is owned by one of the dominions or by the empire [sic] as a whole . . ,'42 This interview constituted a rather transparent negotiating tactic by the Americans, but one directed towards the British. Mackenzie King could not permit decisions that would diminish Canada's amour propre as an emerging power, or its national interests tied to naval strength and Ottawa's determination to decide how that strength should be employed, to be made by other powers. The autonomous nature of Canadian foreign policy had to be spelled out clearly to both London and Washington. Mackenzie King moved cautiously. Working with Lapointe, he used a scheduled Commons debate on the government's report of the 1926 Imperial conference to put the government's views about autonomy indelibly on the public record, the assumption being that their words would be reported fully to the relevant authorities at London and Washington. On 29 and 30 March, the two men delivered uneqivocal statements that every aspect of intra-Imperial relations had changed because of the British concession granted in 1926.43 Lapointe used blunt language with the statement that 'the problems of 1927 must be settled in the light of conditions which exist in 1927; that the questions of to-day must not be settled as they would have been settled by the men who lived $ixty years ago, but as they would have been settled had those men been living to-day.' There could be no doubt in Canada, let alone London and Washington, that Mackenzie King's ministry would not allow other powers, no matter how friendly, to make decisions

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which might affect adversely Canadian foreign and defence policy interests. Public pronouncements are essential in diplomacy, but as important are behind-the-scenes pressures. The day after Lapointe's speech, the Irish Free State sought Canada's position respecting the naval talks.44 Dublin informed Ottawa that the British had to support the desire for separate dominion delegates, and that the Irish would probably boycott any talks unless a specific invitation reached Dublin. More important was the implication that the Free State would not be bound by any agreements which a British delegation might make in its absence. The latter threat portended a devastating blow to Imperial unity. Suddenly, Mackenzie King had an ally. He responded to the Irish telegram by agreeing that if a 'formal conference' convened, separate dominion invitations would have to be forthcoming - he, too, implied that Canada might not attend.45 The Irish had already put their concerns before the Baldwin government but now, armed with Canadian support, they remained firm in a correspondence with the British that stretched into April.46 This suited Mackenzie King, happy to let the Free State do the hard running in the negotiations. The Anglo-Irish correspondence lasted until 21 April and produced a formula for separate dominion representation. Two days after that correspondence ended, Leo Amery, Baldwin's Dominions Secretary, sent a circular telegram to the dominion governments pointing out that the proposed conference would not be 'one summoned by [a] Foreign Government to meet at its own capital nor is it convened by or under the auspices of the League of Nations'.47 Consequently, 'it would appear that no question of a formal invitation arises and that H. M. Governments have a free hand as regards representations'. Baldwin's government was interpreting the American invitation to Britain as one directed to all of the Imperial governments. Thus, each dominion 'should do precisely what we [the British] propose to do ourselves, namely, nominate Plenipotentiaries and arrange for notification to be made to [the] United States Government'. By 5 May, Australia, New Zealand, and South Africa replied that they would nominate representatives by this formula.48 Canada and the Free State refused to reply until the Americans indicated that they would accept separate dominion

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representation; this came on 7 May in a terse statement from Washington.49 Only after receiving the formal American concession did Mackenzie King and Skelton consider who should' represent Canada.50 As no other heads of government contemplated going, Mackenzie King could not attend. Lapointe seemed the obvious choice as Canada's chief delegate, but the Justice Minister was in Australia representing Canada at celebrations at Canberra. Mackenzie King wanted someone at Geneva whom he trusted and, as important, who shared his ideas about how Canadian foreign policy ought to evolve. Following a week of thought and realising the importance of the Coolidge conference, Mackenzie King wired Lapointe asking for his willingness to represent Canada.51 As getting from Australia to Switzerland was time-consuming - sailing to Europe via Singapore, India, and the Suez Canal - Lapointe was told that one of Canada's representatives abroad, likely Walter Riddell, the observer at the League, could substitute for him until his arrival. Lapointe agreed without delay and, also appreciating the importance of the conference, asked if Hose might be seconded to his staff.52 At first, National Defence proved reluctant to let Hose serve on the Canadian delegation.53 This derived from Ralston and Hose being in the midst of delineating precisely Canadian naval requirements and determining how they fitted into British Imperial defence. Reaching a peak just as the Americans issued the invitation, this constituted the naval dimension of Canadian preparations for the Coolidge conference. An efficient and dedicated minister, Ralston had immersed himself in the work of his department over the winter of 1926-27 and, in this time, developed a good working relationship with Hose. The two men shared a concern about the navy and itj^ lack of a clearly-defined role in national policy.54 The last time an attempt had been made to do this occurred in 1919 with the mission to Canada of Admiral Lord Jellicoe, a former British First Sea Lord. Jellicoe's purpose was to make suggestions for a coordinated Imperial naval policy; his report proposed a minimum naval requirement for Canada - four destroyers, eight submarines, and twelve auxiliary craft - as well as a degree of autonomy from Britain in deciding how Canadian vessels should be employed.55 But the heavy retrenchment after

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1921 killed Jellicoe's proposals, forcing Hose to adopt his strategy of keeping a minimum naval force of two destroyers afloat until a better day returned, this whilst building up public support for the navy across the country. Ralston's appointment suggested that that day had arrived and, by March 1927, the new minister and Hose had chosen the route they would follow to improve Canadian naval effectiveness. This involved increased appropriations and, based on the fact that destroyers were the most potent Canadian warships, fashioning a general strategy using this class of vessel. This became the sine qua non of National Defence naval planning during the first period of Ralston's tenure as minister. In March 1927, the Cabinet considered departmental estimates for the budget to be presented to Parliament the next month. After discussion with his naval staff, Ralston decided that he should ask for more funds than he knew he could get, the logic being that no matter what reductions the Cabinet secured, the sum would exceed that granted the year before. He therefore proposed acquiring a fleet of five destroyers by 1933, tied to additional spending on reserves, dockyards, and the like. These tactics won Mackenzie King's approval: 'At [Cabinet] I supported increase in naval program [of] 5 destroyers over 6 years. Was practically alone save Ralston and Forke [Minister of Immigration and Colonisation]: May get through as coastal patrols.'56 Prominent amongst Ralston's arguments, it seems, was that increased spending, especially on dockyards, would be a boon to the economies in the regions of the main ports.57 Ralston's Cabinet performance presaged an equally aggressive defence of his ministry's funding demands when they were laid before the Commons in April.58 This manoeuvring saw an increase of $225000 over the preceding year's naval budget, an increment of about 13 per cent.59 Whilst this budgetary offensive was underway, determining the strategic role of the Royal Canadian Navy began in earnest. Attempts had been made to do this between 1921 and 1926, when heavy retrenchment enforced from above restricted the Service's fighting capacity. In a number of memoranda penned during this difficult time, which he supplemented by meeting with British naval authorities from time to time, Hose endeavoured to keep before his political masters what precisely the navy could and should do.60 This revolved around protecting

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Canadian waters in the event of an international crisis and doing some fleet work with the Royal Navy. About the latter point, however, Hose lamented that suggestions for fleet work with the Royal Navy, made by the British, were 'governed more by the idea of augmenting the sea-going forces available for operations in any theatre of the globe, which would be available to the Admiralty in a maritime war, than by important Canadian requirements'. Moreover, British needs did 'not specifically set the actual conditions of risk to Canadian interests'. As the quest for autonomy in foreign policy dominated Mackenzie King's thinking until 1926, the precise details of Imperial naval cooperation became secondary to the struggle by the Prime Minister and Skelton to prevent any British dictation of what Canadian naval forces should do in the event of a war.61 These developments resulted in the strategic role of the Canadian navy being unclear by late 1926. Ralston's appointment changed this as it brought a dynamism that breathed life into the dusty recesses of National Defence. The Minister and Hose recognised that if destroyers were to be the basis of Canada's navy, then these ships would have to be the best possible. Although Ralston did not win Cabinet approval for five destroyers over six years, he garnered support for two new ones to replace the obsolete ones in service. But the new destroyers would not be ready for two or three years: Canadian specifications would have to be decided - for instance, extra-thick hulls for patrols in icy seas - and tenders put out and assessed. Construction would probably not begin until late 1928. Canada needed efficient destroyers now, so Ralston won Cabinet approval to approach the British Admiralty for the loan of two Royal Navy destroyers until the new Canadian ones were operational. The Canadian request was telegraphed to London on 1 April 1927, just as the diplomacy surrounding the convening of the Coolidge conference heated up.62 In this way, these naval talks were forcing both the political and naval aspects of the country's foreign policy on to the same plane. The events surrounding Mackenzie King's decision to send Hose as the naval adviser to Lapointe shows this. As soon as all of the dominions indicated formally that they would attend the conference, Amery sent a circular telegram outlining a proposed Imperial bargaining position which encapsulated the

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thinking of the Plans Division of the Admiralty.63 It discussed generally British limitation goals, everything from seeking modifications to the capital ship and aircraft-carrier agreements made at Washington to new proposals to limit auxiliary craft. For the Canadians, the destroyer proposals were the most important and, here, the Admiralty was 'prepared to agree to a limitation in regard to destroyers, subject to reasonable agreement in regard to the number of submarines'. Moreover, in terms of the Imperial navies, the Admiralty argued that 'a single quota should be fixed for all parts of the British Empire as under the Washington Agreement'. Given Coolidge's March remarks, the Admiralty position as endorsed by Baldwin's Cabinet was dictated as much by political matters as strategic ones.64 This telegram prompted Hose to press Skelton to have a senior Canadian naval officer serve as an adviser to Lapointe and Riddell: '[The] Admiralty recommendations, while perhaps endeavouring to recognise special Dominion conditions, are bound to be dominated by their view of Empire trade defence requirements as a whole, and the peculiar conditions and requirements of any one Dominion are likely to be subordinated to Imperial defence.'65 Hose did not deprecate a unified position on defence but, with the minimal naval resources at his disposal, he had to ensure that Canadian interests were not subsumed by a British desire to achieve a measure of naval limitation with the Americans and Japanese. 'Don't you think that the predominating Imperial outlook of the naval advisers at Geneva is liable to have an unfortunate effect on our delegates and place them in a difficult position', he warned Skelton, 'unless they are able to support their views on the correct naval policy for Canada with the technical arguments as well as political ones.' What Hose had in mind was the effort of the Canadian Naval Service to use its limited resources to defend the country's coastal waters should a war in which Canada and the Empire were neutral break out, especially a Japanese-American war. He had prepared a paper two years earlier on this subject, one in which he pointed to the danger of belligerents using the island-strewn coast of British Columbia as a safe haven from which to launch submarine attacks against the enemy's sea routes in the area.66 By early June 1927, the Admiralty at London and the Naval Service at

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Ottawa were beginning to settle on a strategy to have units of the British West Indies Station of the Royal Navy based at Esquimault should war in the Pacific erupt.67 This remained a crucial aspect of Ralston and Hose's efforts to fashion a naval strategy based on destroyers. At the same moment that Amery's telegram arrived and the Esquimault negotiations began, the Admiralty debated whether to acquiesce to the Canadian request for the loan of two British destroyers. This transfer remained uncertain given some opposition within the Admiralty of staff officers who saw Canada as 'a new Country' lacking specialists to handle the technical details of modern warships. Admiralty planners were reluctant to make a decision 'until the result of the Coolidge conference is known'.68 Hose wished to ensure that his department's manoeuvring to regain some naval effectiveness was not scotched by political discussions at London and Geneva in which the participants might not be fully aware of the Royal Canadian Navy's strategic considerations. This admonition impressed Mackenzie King and Skelton, leading to Hose's despatch to Geneva as the expert adviser to the Canadian delegates.69 Canadian concerns respecting both the preservation of autonomy and destroyer limitation were resolved within two weeks of the beginning of the conference. Four days before the scheduled first Plenary Session, and prior to Hose reaching Europe, the British and most of the dominion delegates met in London to settle on a unified Imperial negotiating position. This put pressure on Mackenzie King and Skelton who had not yet decided the precise Canadian policy respecting the balance they wanted between autonomy in foreign and defence policy and the level of cooperation in Imperial affairs. Accordingly Riddell, deputising for the absent Lapointe, attended with instructions to impress on the chief British delegates, Sir William Bridgeman, the First Lord of the Admiralty, and Lord Cecil, the minister responsible for disarmament, that Ottawa required more information about limiting destroyers.70 Anxious about autonomy, Mackenzie King also wanted to postpone a decision concerning a single Imperial quota for these and other vessels. Supported by telegrams from Mackenzie King to the Baldwin Cabinet, Riddell followed Ottawa's bidding, so that Bridgeman had to speak in generalities about destroyer limitation and obfuscate about an Imperial quota when he put the

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Empire's case before the first Plenary Session of the conference on 20 June.71 But neither of these issues so important to Canada could continue unsettled for long given the desire of the British, Americans, and Japanese to get on with the negotiations. With confidence in Hose to look after the purely technical side of destroyer limitation, Mackenzie King and Skelton concentrated on the quota question. As late as the 1926 Imperial conference, Mackenzie King had attended a premiers meeting and did not dissent during a general discussion that concluded that a single quota for the Empire should be the basis for future naval limitation agreements.72 Eight months later, his opinion had changed. Adding to the Prime Minister's dilemma in June 1927 was National Defence's view that a single quota would not be detrimental to the exercise of Canadian naval power.73 Whilst not downplaying the obvious advantages of a single quota, for instance, that it 'would be interpreted by the public as indicating our proper and acknowledged share in naval defence, and any programme falling short of this would give opening for criticism', there were other considerations. Foremost amongst these was- that a 'single British Empire naval quota implies that the "British Empire" is the international unit and that there is a single foreign policy, which is quite contrary to the position the present Government has taken'. Mackenzie King seemed at a loss over what to do, a function of his being so far from the conference. He therefore decided that Lapointe should assess the situation at Geneva as soon as possible after his arrival and, on the basis of this, determine what position Canada should take - a letter to Lapointe containing relevant papers and the Prime Minister's views had already been despatched to Geneva so that he would know Ottawa's general thinking on the matter.74 This was relayed to Riddell, who succeeded in getting the Empire delegates to wait for Lapointe before making a decision on the matter.75 On 27 June, a week after the conference began, the Justice Minister arrived at Geneva and immediately held discussions with the British and Empire delegates, as well as with Hose and Riddell.76 It became clear that the Canadian delegation could not insist on a separate quota for its warships. There were two convincing reasons. First, individual quotas for each Imperial Power would, in aggregate, 'mean large naval arma-

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merit'. Obviously, this militated against the purpose of the naval talks. Second, and more important in Lapointe's mind, was that demanding a separate quota would be politically damaging to Canada's position within the Empire as this diverged too sharply with the views of Britain and the other dominions. Lapointe reported that as the resulting treaty would be signed by the King in the name of each dominion, and as each dominion, including Canada, would agree within the Empire delegation to a specific number of ships per class, then, in reality, 'Canada binds herself not to have in excess of [the] quota allowed to the group'. 'It appears to me [a] better solution', Lapointe emphasised, 'and safeguarding [our] constitutional status.' Mackenzie King relented. With this political question resolved - and Lapointe even managed to get some dominion representation in the senior deliberative committee within the conference77 - the technical aspects of limitation as far as the Empire's destroyer forces could be tackled. After the first Plenary Session, the delegations agreed on the structure of the conference: an executive committee comprising senior representatives of each delegation; a secretariat; and a technical committee where the naval experts could thrash out the precise agreement on each class of vessel.78 If problems arose within the technical committee, the idea was that any difficulty could be referred to the arbitration of the executive committee. The opening statements by Bridgeman, Hugh Gibson, the chief American delegate, and Admiral Saito, the senior Japanese representative, indicated that problems involving the limitation of cruisers, plus a British suggestion to modify the Washington treaty maxima for capital ships and aircraft carriers, would delay the progress of the talks. Thus, after a week of inconclusive discussion and the exchange of position papers, Bridgeman managed to get Gibson and Saito to tackle first the limitation of submarines, destroyers, and auxiliary craft.79 Whilst this occurred, parallel discussions might begin over limiting larger craft. This decision came just as Lapointe's 28 June telegram reached Ottawa. Thus, the way was now clear for the technical committee actively to pursue destroyer limitation. Discussion in this committee about limiting these warships - and Hose attended as the sole Canadian representative on this body - led to an agreement by 2 July. As the experts had already made some headway in the matter

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of restricting submarines, it proved relatively easy to settle on maxima for destroyers. There would be two classes of this warship: leaders, displacing no more than 1800 tons, and regular vessels of 1500 tons maximum; both classes could mount no guns exceeding a calibre of five inches.80 Consistent with the Washington treaty building-ratio for capital ships, the British Empire and the United States would be allowed 250000 tons each and Japan 150000 tons, and in this no more than 16 per cent of the total could be used as leaders. Age maxima before replacement could occur were also established. In all of this, Lapointe, Hose, and Riddell seem to have represented Canadian interests with prudence and quiet force. As far as protecting the operational function of the Royal Canadian Navy, Hose, in Lapointe's view, 'was a useful adviser concerning the intricate questions of naval matters'.81 The result for Canada was that the kind of naval force envisaged by Ralston and Hose, and to which the Cabinet had agreed in March, was not endangered. Thus, the problem that Hose foresaw might happen after seeing Amery's 2 June telegram did not materialise because the three Canadians put their government's political and technical views across clearly and with force to both the British and the other delegates. As Lapointe's post-conference assessment stressed: In order to work in harmony as much as could be done, the delegations representing His Brittannia [sic] Majesty's Governments established a system of meetings which were called upon the request of the delegations and generally before every plenary or executive Committee sessions and at such intervals as thought necessary to keep in touch and to be well posted concerning their intended actions or proposals. Real entente based on frank statements of the different points of view and an open discussion prevailed throughout these meetings at which were present the Ministers, Naval Experts, and Secretaries.82 But the difficulty for the delegations at the conference and, thus, for Canadian foreign policy came after the agreements were reached on submarines and destroyers. The problem concerned cruiser limitation. At the first Plenary Session, Bridgeman and Gibson made statements that suggested an under-

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standing on this type of vessel would be difficult to arrange.83 Gibson proposed that Britain and the United States accept a class tonnage between 250000 and 300000 tons each, that cruisers be defined as warships displacing between 3000 and 10000 tons and carrying no more than eight-inch guns, and that, consistent with the Washington treaty ratio, Japan have between 150000 and 180000 tons. Less specific than Gibson, Bridgeman agreed that the Washington ratio be applied to cruisers; but, in a crucial departure, the British wanted only heavy cruisers, those over 7500 tons with eight-inch guns, limited. Hence London wanted the conference to create formally a new cruiser class - light ones, below 7500 tons with six-inch armament - that would be unlimited in number. Whilst refusing to specify what total tonnage Britain sought, Bridgeman did not hide that an absolute level existed below which the Empire could not go. Saito supported the British idea about special needs being most important in arranging limitation, but he implied that Japan required a cruiser tonnage above the Washington ratio. In the end it proved impossible to achieve an agreed cruiser tonnage because of British and American differences.84 The British wanted seventy cruisers, most of which would be light ones, actually 6000 tons each with six-inch guns - about 500 000 tons; the Americans sought only 400 000 tons, 60 per cent of which would be heavy cruisers, 10 000 tons with eightinch guns. As the American fleet, based around twenty-five heavy cruisers, would have greater firepower, this would put the British cruiser fleet, with a projected fifteen heavy cruisers, at a strategic disadvantage. The meetings between the British and American delegations degenerated into shouting matches, as each side refused to budge and attitudes hardened.83 At London and Geneva, British leaders perceived the American proposals as a naked attempt to achieve formal naval parity on the cheap, and to do so in a way that might prevent the Royal Navy from being able to protect the Empire and maritime trade routes.86 Several British leaders, moreover, reckoned that the American proposals were designed to get 'a navy second to none' more for reasons of prestige than defensive necessity. American leaders, on the other hand, saw the British stance as the opposite of limitation; and because they could see no potential British naval adversaries other than themselves

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and the Japanese, both of whom would sign an agreement with Britain, they beheld Britain as seeking to perpetuate its naval preponderance over the United States.87 Stripping away the emotion surrounding the cruiser debate, there remained a fundamental strategic difference separating the British and American proposals. With their recent wartime experience, where their seaborne lifelines were threatened by the enemy, and where they successfully applied maritime blockade against the Central Powers, the British wanted a large cruiser fleet to enforce the doctrine of maritime belligerent rights.88 Conversely the Americans, drawing on their experience between 1914 and 1917, when their trade suffered at the hands of the British blockade, wanted to ensure that in the future their navy could enforce the freedom of the seas for neutral American shipping. Official attitudes hardened. This was compounded by a large number of journalists in Geneva, notably some anglophobic American ones in the pay of United States steel, shipbuilding., and armament firms anxious to have the conference fail, whose reports home enflamed public opinion in both Britain and the United States.89 With the impasse in negotiations, the hard feelings between the British and American delegations and governments, and the irritation felt by public opinion in both countries, it is not surprising that the conference ended on 4 August without result, but with soured Anglo-American relations. The increasing antipathy between the British and Americans at the conference was not appreciated initially at Ottawa. At the end of June, reckoning that the negotiations concerning destroyers would soon end successfully, Mackenzie King wired Lapointe to return as soon as possible because of pressing domestic questions. However, the politically sensitive Lapointe, only at Geneva a few days, realised the gravity of the situation facing Canadian foreign and naval policy at that juncture. He replied immediately, saying that he should stay as long as the conference lasted as he believed it 'very important being here until the [the] treaty [is] drafted and signed'.90 Thus he, Hose, and Riddell continued in their work of attending British delegation sessions, sitting on other deliberative bodies, and representing Canada's interests as the cruiser question forced Britain and the United States to opposite poles on the limitation question.91 With this, Mackenzie King and Skelton began to

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appreciate the enormity of the crisis and what this implied for the country's external and defence policies. Subsequent analyses of unfavourable American press reaction to British policies at the conference, despatched to Ottawa by the new Canadian Legation at Washington, confirmed this.92 By late July the diplomatic problem of worsening AngloAmerican relations directly affected Mackenzie King as his government prepared for an official visit by Baldwin accompanied by the Prince of Wales and his younger brother, Prince George. The British party was to arrive on 30 July. One of the proposed items on their itinerary had been attendance at the official opening of the new Peace Bridge between Canada and the United States at Buffalo, New York. Because Coolidge had decided not to attend - on his annual holiday in South Dakota, the President refused to interrupt it for matters of state93 - it was decided that the official Anglo-Canadian party could safely avoid the Peace Bridge ceremonies. But in midJuly the American Vice-President, the anglophile General Charles Dawes, suddenly decided that he should travel to Buffalo to represent his government at the opening. Believing that the failure of both the British Prime Minister and the heir to throne to travel to the Peace Bridge would be interpreted in the United States as a calculated slight against the Coolidge Administration at the moment the naval conference crashed to a halt, the British ambassador at Washington, Sir Esme Howard, urged Mackenzie King to have a high-level AngloCanadian party attend.94 Doing this would not only prevent a further tattering of the fabric of good Anglo-American relations, it would also allow the existing tear to be more easily repaired. Mackenzie King and Skelton grasped immediately the wisdom of Howard's words and arranged for the Canadian Prime Minister to attend the opening ceremonies with Baldwin and the prince.95 Having such a high-level Imperial party participate at this function would do much to maintain the balance the Canadians needed in their relations with both the British and the Americans. The importance of this decision, in Ottawa's view, was underscored when Mackenzie King met with Baldwin after the British visitors disembarked at Quebec City on 30 July: 'Spoke then of "the Americans" & failure of Geneva conference - the American press which has been "damnable"[.] Baldwin was very bitter on the behaviour of

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the Americans.'96 In the week before the ceremony, Mackenzie King took every opportunity to lobby Baldwin privately about the need to ameliorate Anglo-American differences. Mackenzie King even suggested that in his speech at the Peace Bridge he might propose 'a treaty of Perpetual Peace - between U.S. & Gt. Br. - Go the Americans one better on their disarmament scheme.'97 Needless to say, Baldwin 'did not seem to favour the idea'. Still, thanks to efforts by Mackenzie King and Howard, the latter travelling from Washington to Buffalo, the opening ceremonies on 7 August passed off smoothly in public.98 In private, the attitudes of leaders on both sides remained as hard as ever. Mackenzie King witnessed Baldwin's iciness. 'The whole attitude of the British delegation was not at all what I would have liked', he lamented, 'they hate the Americans (except the prince who likes them) and feel all incensed over Geneva.'99 For their part, the Americans, especially Kellogg, were equally frosty in private.100 Mackenzie King now confronted a major foreign-policy problem. His relationship with the British remained as warm as ever, a result of his government's decision to support British limitation policies at Geneva, coupled with the efforts of Lapointe and Hose. At the same time, Canadian-American relations had not suffered. Indeed Kellogg, erroneously, believed that the Canadian and other dominion delegations at the conference had been dragged along by the British into supporting the 'Imperial' position over cruisers.101 But the situation remained fluid. Every chance existed that Anglo-American relations could deteriorate further. The result of this would not only be the danger of a rupture in Anglo-American relations but that, if this occurred, Canada might be forced to choose between these two powers and then suffer the consequences of falling out with the one on the outside. The diplomatic consequences of this were too horrible to imagine and, domestically, his government would assuredly pay the price with a large bloc of Canadian voters. Mackenzie King realised that he could do little to alter the attitudes of Britain and the United States so as to reduce the tensions between them. Therefore, Canada had to pursue its own interests, which translated into maintaining good relations with both countries and, as the naval question had created this strain, ensure that the policies undertaken by Ralston and Hose were not dam-

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aged. For the remaining months of 1927, this strategy involved ensuring that Canadian-American relations remained as firm as ever, whilst normal lines of communication and cooperation with Britain remained untouched. The immediate problem concerning Anglo-Canadian relations centred on acquiring those two British destroyers. During the final days of the Coolidge conference, on orders from Ralston, Hose approached the naval members of the British Delegation to discover the Admiralty terms for replacing the two obsolete Canadian destroyers.102 The British delayed answering until the conference ended and then, with the naval situation somewhat clearer, informed Hose on 12 August that the two replacement vessels could be taken over for £86 000 each. Hose also learnt that the two replacement vessels had begun service at the end of the Great War, hence, they each had about seven years of 'official life' left. Mackenzie King's Cabinet accepted this British offer so that, by May 1928, these two new warships were on station at Halifax and Esquimault.103 Ralston and Hose's plans were moving along. This success fostered the more vexing question in AngloCanadian relations that confronted Mackenzie King: the degree of Canada's involvement in British maritime Imperial defence. Four days after the Coolidge conference ended, the Baldwin government pressed Ottawa to approve the earlier proposal for basing 'British naval forces at Esquimault in the event of a war involving operations in the North-East Pacific'.104 Channelled to National Defence for renewed study, the idea was endorsed by Ralston and Hose in late September: the commander of the British America and West Indies Fleet should 'fly his flag on the shore at Esquimault in order to direct the Imperial Naval Forces operating under his command and that the Commander-in-Chief should take his position as soon as convenient after a state of hostilities has been declared in Canada'.105 Given that this operation should accord as much with Canadian as British needs, National Defence also advised Mackenzie King that all details be worked out between Hose and the British commander. Enclosed in the documents sent to the Prime Minister was a draft letter, outlining all of this, for signature and speedy despatch to London. But Mackenzie King delayed, not moving on the issue until March 1929 -

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eighteen months after the concurrence of National Defence and almost a year after a missive from Ralston to do something 'to consider this matter, which is of considerable importance'.106 This delay occurred because Mackenzie King had no desire in the winter of 1927-28 to create unfavourable images of Canada within the United States. The failure at Geneva ranked high as the reason: Washington should have no reason to believe that Canada was lining up with Britain in what might be perceived as an anti-American naval strategy just as the cruiser question embittered Anglo-American relations. Additionally at that juncture, those outstanding bilateral questions involving Canada and the United States had yet to be resolved. It was clear that the most important of these in American eyes - the notion of building a seaway along the St Lawrence River to permit ocean-going ships access to the Great Lakes - would not be supported by Mackenzie King's government.107 It served little Canadian purpose for Ottawa both to scupper the St Lawrence project and, at the same time, publicly announce that Anglo-Canadian plans now existed for basing British warships on the west coast of Canada - astride American .sealanes running north to Alaska and adjacent to those extending into the northeastern Pacific. In fact, when Mackenzie King finally approved the Esquimault proposal, he modified it so that Canada would only countenance this transfer of British warships if Canada had first declared war.108 The desire to show autonomy shone through at all times. This political manoeuvring in no way suggests that the Prime Minister was less committed after Geneva to the efforts that Ralston was making to beef up the Royal Canadian Navy. When a section of the Cabinet moved in October 1927 'to let our naval policy go to the wall' by not building the two new destroyers, Mackenzie King put all of his authority behind the Minister of National Defence successfully to extinguish this minor rebellion.109 But the point remains that in the immediate aftermath of the Coolidge conference, Anglo-Canadian relations were as close as ever, or at least as close as Mackenzie King and Skelton would allow, and the Baldwin government could complain little about the focus of Canadian foreign policy. Tellingly, as Canada took its seat on the League Council in the autumn of 1927, London saw Mackenzie King's government as a potential ally in League politics,110 an act showing that

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the British side of Mackenzie King's balance remained as firm as ever. The American side remained a different proposition. As indicated earlier, Canadian-American relations were not threatened seriously over the failure of the Coolidge conference; in fact, the Coolidge Administration, represented by Kellogg, saw Canadian policy at Geneva to be controlled to a degree by the British. But Canada had formal ties with Britain via the Imperial structure which Mackenzie King could and did exploit when necessary to get the British to see the international situation through Canadian eyes - his private discussions with Baldwin in early August when he suggested the treaty of perpetual peace comes quickly to mind. However, no such bonds existed with the United States. Exchanging diplomatic missions earlier in 1927 provided a mechanism to better represent Canadian interests at Washington, it was true, but this did not mean that in moments of international difficulty, like that created in the North Atlantic triangle by the cruiser deadlock, that Canada would necessarily get a fair hearing at Washington. Personal intervention by someone of high political rank in Canada, pressing the Canadian case at Washington, could have a better chance of ensuring the right tone in Canadian-American relations. Accordingly, in September 1927, Mackenzie King decided that if good Canadian-American relations were to be assured, this could be done by high level visits to the American capital to ameliorate Anglo-American differences. It was at this time that the Canadian Prime Minister made that comment about being a 'friendly interpreter', and this became the focus of his American policy for the remaining months of 1927. In late November 1927, Mackenzie King travelled to Washington on an official three-day visit, the purpose of which centred on formally inaugurating Canada's independent representation. Symbolising the emergence of Canada as a sovereign member of the North Atlantic triangle, this visit saw Mackenzie King, with Massey, being entertained at the White House and the British Embassy and, in return, hosting the political and social elite of Washington at the Canadian Legation.111 Mackenzie King used this time profitably by conversing privately with Coolidge, holding diplomatic discussions with Kellogg, and consulting with Howard. With the two

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American leaders, he gently fobbed off entreaties about the St Lawrence project whilst putting forward his own ideas about reciprocity and tariffs. When seeing the British ambassador, talk ranged over a variety of Canadian-Anglo-American issues. Just as important in the context of his seeking to put Canada in the best light possible in the United States, Mackenzie King took the opportunity to meet senior Cabinet members, chiefly Andrew Mellon, the Secretary of the Treasury, and Herbert Hoover, the Commerce Secretary who, because Coolidge had decided not to seek another term as president, seemed the likely nominee of the Republican Party in the 1928 presidential elections. On his return trip to Canada, Mackenzie King stopped for two days in New York City, taking the opportunity whilst there to spend several hours with his old employer, John D. Rockefeller II. Although the two men talked generally about the need for morality in business, it was clear that the Prime Minister was ensuring that Canadian affairs were brought to the attention of this especially important American. Consequently, no one in positions of influence in the United States government or in high financial circles in New York City could be unaware of the good relations that Canada desired with its great-power neighbour. Admittedly, nothing of substance transpired during Mackenzie King's five days in the United States - the St Lawrence seaway, for instance - but that was not his purpose. He intended only to ensure that CanadianAmerican relations would not be endangered by any political repercussions from the failure of the Coolidge conference. In this respect, he succeeded. He arranged for Kellogg to travel to Ottawa in early February 1928 - a goodwill mission and no more - and in doing so Kellogg willingly delayed consideration of an important foreign-policy initiative respecting France in order to assuage Canadian sensitivities.112 As Kellogg told Mackenzie King in late 1927: We are both aware that there is in both countries a commendable spirit of national pride but we should not allow national pride to grow into antagonism and the more our people visit Canada and the Canadian people visit the United States the better the understanding and the less the liability to any national antagonism.113

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Clearly, Washington worried as much about Ottawa about the need to sustain good Canadian-American relations. Mackenzie King's public relations efforts respecting the United States in the immediate post-Coolidge conference period only began with the prime-ministerial visit to Washington. They were concluded in early December when Lord Willingdon, the Governor-General, also travelled to Washington. Whereas Mackenzie King's visit had been long-planned - at least in the sense that there had to be an official prime-ministerial visit to open the Legation - that involving the GovernorGeneral came about in response to the Geneva failure. Indeed, this viceregal trip became integral to Ottawa's efforts to show Canadian autonomy in foreign policy. The decision to send Willingdon, the planning of his itinerary, and deciding on the protocol surrounding his entertainment, was all determined by Canadian authorities without reference to London - Massey seems to have done much in this regard without consulting fully either Mackenzie King or Howard.114 Although this Canadian independence brought private protests from King George V because of the monarch's worry that his position as head of the Empire might be compromised,115 the Canadians were determined that Canada, not Britain, had to be responsible for sending the Canadian head of state on this visit. The point was to create in the United States the belief that Canadians looked after Canadian interests so that, whilst Willingdon could talk generally about the importance of Canada in the North Atlantic triangle, Canada's image in the United States improved further. 116 Equally important was the desire of Mackenzie King to have Canadians function as the 'friendly interpreters' to the British and Americans alike. Following on the heels of the Canadian Prime Minister's success at Washington, Willingdon's efforts in the American capital helped to do this in a major way. When Willingdon was in the United States, Mackenzie King looked at the general situation and remarked that: 'It has been an awful year in relations with Canada & the U.S.'.117 Two days later, when Massey's report of what had happened at Washington reached Ottawa, the Prime Minister observed sanguinely: 'It appears to have been a real triumph for Canada [,] an historic entry of the Dominion into the arena of international politics.'118 Howard's assessment, despatched to the Foreign Office at London, did not dissent

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from this. 'The national spirit in Canada is stronger than ever,' Howard observed, 'and, if the remarkable reception accorded to the Governor-General by the President and Government of the United States helps, as I hope and believe it may, to strengthen and confirm it still more, nothing but good will come from the visit.'119 More crucially, Howard opined 'that both Lord and Lady Willingdon made a most excellent impression here on all those with whom they have come into contact here, and they will, I am convinced, have helped not a little to promote good relations between the United States and Great Britain'. Though 1927 proved to be a difficult year for Mackenzie King's foreign policy, such objective assessments show that he had succeeded in making Canada 'one of the powers of the world'. IV

Mackenzie King's success, and that of his foreign and naval policy advisers, in 1927 was monumental, and the ability of the Canadian government to maintain the difficult balance in its diplomacy between the opposing poles represented by the foreign and naval policies of Britain and the United States the more so. The overriding purpose of Mackenzie King's foreign policy had been to preserve the autonomy granted at the 1926 Imperial conference. All else flowed from this. During the preparations for the Coolidge conference, its proceedings, and aftermath, the Canadians had not allowed this precious commodity to be sullied; importantly, in some key respects, both the British and American governments were made to appreciate that Canada's position in international politics had changed irrevocably. Ottawa's hard line over the issuing of dominion invitations to the naval conference had not been lost on Washington, whilst the planning of the Mackenzie King and Willingdon visits to the American capital, especially the latter, had impressed on London that Canadians were going to pursue their interests in their own way. To give Mackenzie King, Lapointe, and Skelton credit, none of this was accomplished in a way that antagonised either of Canada's two main friends. By the end of 1927, both the Baldwin ministry and the Coolidge Administration had moved in their own ways to align

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with the Mackenzie King government because of their separate recognition that Canada played an integral part in their overall diplomatic strategies. As important for Mackenzie King's government, the definition of Canada's naval policy - the decision to pursue a strategy based on destroyers within the confines of British Imperial defence - and the fact that this had not been imperilled by Anglo-American deadlock at Geneva existed as testimony to the diplomatic skills of Mackenzie King, Ralston, Lapointe, and Hose. Canada remained as firm as ever to those general policies of Imperial defence defined before the summer of 1927, and at Geneva those policies had not been undercut by Canada weakening, by choosing to align with the United States against Britain. But as an indication of the balance in Canadian foreign policy in 1927, the Americans did not see their country threatened by Canadian adherence to the general naval precepts of the Empire. Kellogg might perceive that Canada was dragged along by the British to a degree but, dragged along or not, Canada's place in the north Atlantic triangle, despite Canada's formal ties to Britain, was recognised in Washington as a fact of international life. Mackenzie King's trip to Washington in November, followed by Willingdon's two weeks later, was undertaken to ensure that the Americans had nothing to fear from Canada in the post-Coolidge conference period, indeed, that they had much to gain by being close to Canada. By the same token, London did not feel that Canada was distancing itself from Britain. With influential men like Howard supporting the Canadian drive for autonomy in international politics, and by reporting to his superiors in London that Canadian policies were doing much to neutralise the charged atmosphere in which the two great powers found themselves operating, the notion of Canada as a 'friendly interpreter' remained as firm as ever. In his year-end assessment of his government's record on 31 December 1927, Mackenzie King observed that: the year drawing to a close has been a good one for the country[,] a good one for me personally . . . The appointment to Washington of Massey, of Phillips to Ottawa & the purchase & opening of our Legation in the United States with important international visits inaugurated . . . withal

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there has been increasing prosperity & increasing contentment in all parts of the Dominion & better relations between all parts of the Empire.120 Whilst perhaps imbued with a little too much self-satisfaction, the Canadian Prime Minister spoke the truth. Along with his senior foreign and naval policy advisers, he had responded wisely to the international situation, preserved and extended Canada's position as an emerging power, and not alienated either or both of Canada's two great-power friends.

NOTES 1. 2. 3.

4.

5.

Mackenzie King to Thomas King [a friend], 1 Sept. 1927, Mackenzie King MSS [at the National Archives of Canada, Ottawa] MG 26 Jl Vol. 44. Mackenzie King diary, 16 July 1927, Mackenzie King MSS MG 26 J13 1927. Except where noted this and the next two paragraphs are based on C. Bissell, The Young Vincent Massey (Toronto, Buffalo, London, 1981), 112-23; G. P. de T. Glazebrook, A History of Canadian External Relations, Vol.11: In the Empire and the World 1914-1939, rev. ed. (Toronto, 1966), 52-105; N. Hillmer, 'A British High Commissioner for Canada, 1927-28', Journal of Imperial and Commonwealth History, 1(1979), 339-56; J. L. Granatstein, I. M. Abella et al., Twentieth Century Canada (Toronto, 1983), 179-209; R. M. Dawson, William Lyon Mackenzie King, Vol.1: 1874-1923 (London, 1958), 377^80; H. B. Neatby, William Lyon Mackenzie King, Vol.II: 1924-1932 (London, 1963), 3-272; C. P. Stacey, Canada in the Age of Conflict. A History of Canadian External Policies, Vol.II: 1921-1948. The Mackenzie King Era (Toronto, Buffalo, London), 3-97; J. H. Thompson and A. Seager, Canada 1922-1939. Decades of Discord (Toronto, 1985), 1-137; R. Veatch, Canada and the League of Nations (Toronto, Buffalo), 3-90; and P. G. Wigley, Canada and the Transition to Commonwealth. British-Canadian Relations 1917-1926 (Cambridge, 1977), 67-283. This quotation is from Cmd. 2768: Summary of the Proceedings of the Imperial Conference, 1926, 9. Also see D. Hall, 'The Genesis of the Balfour Declaration of 1926', Journal of Commonwealth Political Studies, 1(1963), 161-93; and A. J. Toynbee, The Conduct of British Empire Foreign Relations Since the Peace Settlement (London, 1928). Cf. R. Cook, 'A Canadian Account of the 1926 Imperial Conference', Journal of Commonwealth Political Studies, 3(1965), 50-63. On the Coolidge conference, see D. Carlton, 'Great Britain and the

B.J. C. McKercher

6. 7.

8. 9.

10. 11. 12.

13. 14. 15. 16.

17. 18. 19.

117

Coolidge Naval Conference of 1927', Political Science Quarterly, 83(1968), 573-98; L. E. Ellis, Frank B. Kellogg and American Foreign Relations, 1925-1929 (New Brunswick, NJ, 1961), 164-84; C. Hall, Britain, America and Arms Control, 1921-37 (London, 1987), 39-58; B. J. C. McKercher, The Second Baldwin Government and the United States, 1924-1929: attitudes and diplomacy (Cambridge, 1984), 55-76; and S. W. Roskill, Naval Policy Between the Wars, Vol.1: The Period of Anglo-American Antagonism, 1919-1929 (London, 1968), 498-516. Dawson, Mackenzie King, I, 406; and Stacey, Age of Conflict, II, Chapter I. Although there has been no specific study of the Canadian foreignpolicymaking elite, the general concepts respecting the British case can easily be transferred to Canada; see D. C. Watt, 'The Nature of the Foreign-Policy-Making filite in Britain', in D. C. Watt, Personalities and Policies. Studies in the formulation of British foreign policy in the twentieth century (London, 1965), 1-15. Dawson, Mackenzie King, I, 360. See note 6, above, plus J. Eayrs, In Defence of Canada. From the Great War to the Great Depression (Toronto, 1964), 20-22; Glazebrook, External Relations, II, Chapter 16; and C. P. Stacey, Mackenzie King and the Atlantic Triangle. The 1976 Joanne Goodman Lectures Delivered at the University of Western Ontario (Toronto, 1976), 1-45. Cf. T. B. Slobodin, 'A Tangled Web: The Relationship Between Mackenzie King's Foreign Policy and National Unity' [unpublished Ph.D. dissertation, Queens University, 1986], especially the historiographical discussion outlined on pp.vii-xviii. Stacey, Age of Conflict, II, 77-82. Also see Mackenzie King diary, 1 May 1926, Mackenzie King MSS MG 26 J13 1926. For an indication, see Mackenzie King diary, 8 June 1927, ibid., 1927. Mackenzie King diary, 10 Dec. 1921, ibid., 1921. There is little scholarly study of Lapointe and his political career other than occasional reference in works that touch tangentially his career. But for insight into the man and the politician, see P. Bychok, ' "La Muraille Qui Vous Protege": Ernest Lapointe and French Canada, 1935-1941' [unpublished MA thesis, Queens University, 1984]. J. W. Pickersgill, The Mackenzie King Record, Vol.1: 1939-1944 (Toronto, 1960), 287. See the draft of this speech, simply dated '1928', in Lapointe MSS (National Archives of Canada, Ottawa] MG 27 III BIO Vol. 63 JB2. Stacey, Age of Conflict, II, 50-55. See the draft of Lapointe's speech on the 'League of Nations', Sept. 1927, in Lapointe MSS MG 27 III BIO Vol. 63 +B4. Cf. Mackenzie King diary, 4 Sept. and 18 Oct. 1927, both Mackenzie King MSS MG 26 J13 1927. Dawson, Mackenzie King, I, 165-6, 173^1; and Mackenzie King diary, 21 Sept. 1926, Mackenzie King MSS MG 26 J13 1926. Mackenzie King diary, 7 and 16 Mar. 1927, both ibid., 1927. Eayrs, Defence of Canada, 306-9. Also see 'Estimates and Expenditures, 1910-1940', in G. N. Tucker, The Naval Service of Canada. Its Official

118

20. 21. 22.

23. 24.

25. 26. 27. 28. 29. 30. 31.

32. 33. 34. 35.

36.

37.

Between Two Giants History, Vol.1: Origins and Early Years (Ottawa, 1952), Appendix X, pp.408-9. Ralston to Stuart, his son, 28 Oct., 1928, Ralston MSS [National Archives of Canada, Ottawa] MG 27 III B l l Vol.3. Ralston speech on 'Phases of Disarmament', 2 Apr. 1928, ibid., Vol.6. See Dandurand [minister without portfolio] to Mackenzie King, 12 Sept. 1923, Mackenzie King MSS MG 26 Jl Vol.85 and Dandurand's comments on 2 Oct. 1924 in League of Nations, Records of the Fifth Assembly, Plenary Meetings. Text of the Debates (Geneva, 1924), 222. See note 21, above. See N. Hillmer, 'The Anglo-Canadian Neurosis: The Case of O. D. Skelton', in P. Lyon (ed.), Britain and Canada: Survey of a Changing Relationship (London, 1976), 61-84; J. L. Granatstein, The Ottawa Men. The Civil Service Mandarins, 1935-1957 (Toronto, 1982), 28-36; and W. A. Mackintosh, 'O. D. Skelton', in R. L. McDougall (ed.), Our Living Tradition, 5th Series (Toronto, 1965), 59-77. O. D. Skelton, 'Canada and Foreign Policy', The Canadian Club Yearbook, 1921-1922 (Ottawa, 1922), 58-69. Mackenzie King diary, 21 Jan. 1922, Mackenzie King MSS MG 26 J13 1922. For example, Skelton memorandum, 2 Oct. 1923, ibid., MG 26 J4 Vol.85. Skelton to Riddell [Canadian observer, League of Nations, Geneva], 20 Apr. 1925, Documents on Canadian External Relations (hereafter DCER), Vol.111: 1919-1925 (Ottawa, 1970), 433. See Stacey, Age of Conflict, II, 12-14. Quoted in Thompson and Seager, Canada, 41. This and the next two sentences are based on Appendix X, in Tucker, Naval Service, I, 408-9. Also see O. Parkes and M. Prendergast, (eds), Janes Fighting Ships 1921 (London, 1921), 130-34; and O. Parkes (ed.), Janes Fighting Ships 1922 (London, 1922), 90-92. Eayrs, Defence of Canada, 168-71 is also helpful. O. Parkes and F. E. McMurtrie (eds), Janes Fighting Ships 1926 (London, 1926), 103-5. These statistics are in O. Parkes and F. E. McMurtrie (eds), Janes Fighting Ships 1924 (London, 1924), 93. This is from J. A. E. Woodhouse, the then Naval Secretary, quoted in Eayrs, Defence of Canada, 171. Cf. H. F. Pullen, 'The Royal Canadian Navy between the Wars, 1922-39', in J. A. Boutillier (ed.), The RCN in Retrospect, 1910-1968 (Vancouver, London, 1982), 65; Stacey, Age of Conflict, II, 17; and Tucker, Naval Service, I, 337-9. Tucker, Naval Service, I, 408. See also: 'I must say it is a fortunate matter, first of all that we have a Minister who is tackling the subject of the Navy in all seriousness . . .'; in Hose to Brodeur [senior naval officer, Halifax], 29 Mar 1928, Brodeur MSS [National Archives of Canada, Ottawa] MG 30 E312 Vol.3, File 28. The Canadian Who's Who, Vol. Ill: 1938-1939 (Toronto, 1939), 333; and Tucker, Naval Services, I, 151-2.

B.J. C. McKercher 38.

119

Hose to Skelton, 17 Oct. 1927, Skelton MSS [Department of External Affairs Records, National Archives of Canada, Ottawa], RG 25 Dl Vol. 765, File 302. 39. See 'Canadian External Trade - Statistics of Imports and Exports', in Stacey, Age of Conflict, I and II, 358-9 and 434-5, respectively. Of course, the United States was not isolationist in terms of economic diplomacy; see J. Brandes, Herbert Hoover and Economic Diplomacy: Department of Commerce Policy, 1921-1928 (Pittsburgh, 1962); M. J. Hogan, Informal Entente: the private structure of cooperation in Anglo-American economic diplomacy 1918-1928 (Columbia, Mo., 1977); C. P. Parrini, Heir to Empire: United States Economic Diplomacy. 1916-1923 (Pittsburgh, 1969); and J. H. Wilson, American Business and Foreign Policy, 1920-1933 (Lexington, Ky, 1971). 40. This paragraph is based on the following: for the Preparatory Commission, Cecil of Chelwood, A Great Experiment (London, 1941), 171; F. P. Walters, A History of the League of Nations (London, 1960), 363-76; and J. W. Wheeler-Bennett, Disarmament and Security Since Locarno, 1925-1931 (London, 1932), 43-102; for the American invitations, see Kellogg [US secretary of State] to Herrick [US ambassador, Paris] (mutatis mutandis to London, Rome, Tokyo), Papers Relating to the Foreign Relations of the United States 1927 (hereafter FRUS), Vol.1 (Washington, 1942), 1-5; and Castle [chief, Western European Division, State Department] memorandum, 5 Mar. 1927, State Department [National Archives, Washington, DC] Decimal File 500AISA 1/22; for British acceptance, Cadogan [Foreign Office Western Department] memorandum, 11 Feb. 1927, Documents on British Foreign Policy (hereafter DBFP), Series 1A, Vol.III (London, 1970), 566-8; Campbell [head, Foreign Office Western Department] memorandum, 12 Feb. 1927, ibid., 568-71; and Cabinet Conclusion 10 (27)1, plus Appendix, CAB[inet Minutes, Public Record Office, London] 23/54; and on London keeping Ottawa abreast of developments, Amery [Dominions Secretary] telegram to Willingdon [Governor-General, Canada], 17 Feb. 1927, External Affairs [Records, National Archives of Canada, Ottawa] RG G1/1412/96G. 41. Clerk of the Privy Council to Skelton, 21 Feb. 1927, and Willingdon to Amery, 21 Feb. 1927, both External Affairs RG 25 G1/1412/96G. 42. Mahoney [Canadian Legation, Washington] to Mackenzie King, 16 Mar. 1927, with enclosure, ibid. 43. See Mackenzie King's speech of 29 Mar 1927, in Canadian Hansard, II: 1926-1927, 1644-61; and Lapointe's speech of 30 Mar. 1927, ibid., 1701-17. 44. Walshe [Irish Free State] telegram (unnumbered) to External Affairs, 31 Mar. 1927, External Affairs RG 25 G1/1412/96G. 45. Desy [External Affairs] telegram (unnumbered) to Walshe, 1 Apr. 1927, ibid. 46. See Healey [Governor-General, Irish Free State] despatches (81 and 112) to Amery, 28 Mar. and 21 Apr. 1927, and Amery despatch (95) to Healey, 5 Apr. 1927, all enclosed in Amery despatch (unnumbered)

120

47. 48. 49. 50. 51. 52. 53. 54. 55.

56. 57. 58. 59. 60.

61. 62. 63. 64. 65.

Between Two Giants to Willingdon, 30 Apr. 1927, Skelton MSS RG 25 Dl Vol.765 File 302. Amery telegram (unnumbered) to Willingdon, 23 Apr. 1927, External Affairs RG 25 G1/1412/96G. Amery telegram (unnumbered) to Willingdon, 5 May 1927, Skelton MSS RG 25 Dl Vol.765 File 302. Amery telegram (unnumbered) to Willingdon, 7 May 1927, ibid. Skelton despatch (146) to Massey, 23 May 1927, External Affairs RG 25 G1/1412/96G. External Affairs telegram (unnumbered) to Lapointe, 16 May 1927, ibid. Lapointe telegrams (unnumbered) to External Affairs, 17 and 18 May 1927, both ibid. Desbarats [National Defence] to Skelton, 11 May 1927, ibid. Mackenzie King diary, 16 Mar. 1927, Mackenzie King MSS MG 26 J13 1927. Tucker, Naval Service, I, 304-22. Cf. B. D. Hunt, 'The Road to Washington: Canada and Empire Naval Defence, 1918-21', in Boutilier, RCN in Retrospect, 44-61; and Lord Jellicoe, 'Naval Policy of the Empire - the Need for Co-operation', in A. Richardson and A. Hurd, (eds), Brassey's Naval and Shipping Annual. 1926 (London, 1926), 58-78. Mackenzie King diary, 7 Mar. 1927, Mackenzie King MSS MG 26 J13 1927. This is implied in Mackenzie King diary, 16 Mar 1927, ibid. Canadian Hansard, II: 1926-1927, 2231-83. Cf. ibid., 2275-6; and Tucker, Naval Service, I, 408-9. For instance, see Hose, ''Notes on Naval Defence Policy', 27 Sept. 1923, DCER, III, 348-50; Devonshire [Colonial Secretary] despatch (unnumbered) to Byng [Governor-General, Canada], 15 Dec. 1923, enclosing memorandum on 'North America and West Indies Station. Coordination of Imperial and Dominion Navies in time of war', no date; Hose to Deputy Prime Minister, 5 Jan. 1924; Macdonald [Minister of National Defence] to Mackenzie King, 16 Jan. 1924; Mackenzie King minute, no date; and Desbarats to Skelton, 7 Feb. 1924, all National Defence [Records, National Archives of Canada, Ottawa] RG 24 3828/1015-3-6; and Hose memorandum on 'Naval Policy', 30 Jul 1926, DCER, IV, 322-5; and Hose 'Notes on meeting of Committee of Imperial Defence', 15 Nov. 1926, ibid., 331-3. For example, Skelton to Governor-General's Secretary, 8 Jan. 1926, External Affairs RG 25 Gl/1375/566. Willingdon telegram (unnumbered) to Amery, 1 Apr. 1927, DCER, IV, 334-5. The copious documentation on this issue is in National Defence RG 24/3833. Amery telegram (unnumbered) to Willingdon, 2 June 1927, External Affairs RG 25 G1/1412/96G. Admiralty Plans Division memorandum, 14 Apr. 1927, CID Paper 808B, CAB 4/16; the Cabinet discussion is in Cabinet Meeting 34(27), held on 26 May 1927, CAB 23/55. Hose to Skelton, 7 June 1927, External Affairs RG 25 G1/1412/96G.

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66. Hose memorandum, 2 Mar. 1925, Skelton MSS RG 25 Dl Vol.765 File 302. 67. Amery to Willingdon, 28 June 1927, enclosing Admiralty memorandum on 'Policy to be followed in the fitting out of, and the details of equipment required by, Armed Merchant Cruisers', 27 June 1927, External Affairs RG 25 Gl/1475/743. 68. For an indication of the debate within the Admiralty, see Field [Deputy Chief of the Naval Staff] minute, 12 Apr 1927; Director of] P[lans] minute, 25 Apr. 1927; Carter [Director of Naval Equipment] minute, 21 Apr. 1927; and Egerton [Director of Plans] to Field, 22 Apr 1927, all ADM[miralty Archives, Public Record Office, London] 116/2567/02306. 69. External Affairs telegram (unnumbered) to Riddell, 14 June 1927, Skelton MSS RG 25 Dl Vol.765 File 302. 70. External Affairs telegram (unnumbered) to Riddell, 15 June 1927, and Riddell to Skelton, 20 June 1927, both ibid. 71. See Bridgeman's speech in Cmd.2964: Geneva Conference (Naval Armaments). Speeches at the Plenary Sessions by the Rt. Hon. W. C. Bridgeman. M.P., First Lord of the Admiralty (June-August 1927). Cf. Bridgeman diary, 18-20 Jun 1927, BGMN [Bridgeman MSS, Churchill College, Cambridge] 4; and Tyrrell [Foreign Office] telegram (76) to Geneva, 21 June 1927, Fforeign] O[ffice] Archives, Public Record Office, London] 412/115. 72. Committee of Imperial Defence Meeting 217(2), CAB 2/4. This meeting was held on 11 November 1926. 73. This and the next two sentences are based on Desbarats to Skelton, 20 June 1927, and Skelton to Desbarats, 21 June 1927, both Skelton MSS RG 25 Dl Vol.765 File 302. 74. Skelton to Lapointe, 16 June 1927, ibid. 75. External Affairs telegram (unnumbered) to Riddell, 10 June 1927, Riddell telegram (unnumbered) to External Affairs, 17 June 1927, and Riddell to Skelton, 20 June 1927, all ibid. 76. Lapointe to Mackenzie King, 28 June 1927, ibid; and Bridgeman diary, 27 June 1927, BGMN 4. 77. Cf. Bridgeman diary, 29 June 1927, ibid; and Lapointe telegrams (2) 28 and 29 June 1927, to External Affairs, both Skelton MSS RG 25 Dl Vol.765 File 302. 78. Bridgeman diary, 20 and 21 June 1927, BGMN 4. 79. On the outline of the American, British, and Japanese proposals, see League of Nations, Records of the Conference for the Limitation of Naval Armament Held at Geneva from 20 June to 4 August 1927 (Geneva, 1927), 20-28. On tackling the limitation of smaller vessels first, see Bridgeman to Baldwin, 27 June 1927, FO 412/115. Also see Gibson to Kellogg, 22 June 1927, State Department Decimal File 500A15A1/314; and Kellogg to Coolidge, 22 June 1927, and Gibson to Kellogg, 26 June 1927, Coolidge MSS [Manuscript Division, Library of Congress, Washington, DC] Case File 20. 80. For records of the deliberations, see the minutes of the fifth and sixth sessions of the Technical Sub-Committee (30 June and 1 July) in

122

81. 82. 83. 84. 85.

86.

87.

88. 89. 90. 91. 92. 93. 94. 95. 96. 97. 98. 99.

Between Two Giants Records of the Conference. Cf. Riddell telegrams (2), 1 and 2 Jul 1927, both Skelton MSS RG 25 Dl Vol.765 File 302. See Lapointe's untitled and undated report on the Conference - probably for presentation to Cabinet but never circulated - Lapointe MSS MG 27 III BIO Vol.9. Ibid. See note 79, above. See note 5, above. Gibson to Kellogg, 9 July 1927, State Department Decimal File 500A15/389; Bridgeman to Baldwin, 12 July 1927, FO 371/12671/6509/61; and Campbell [British Delegation, Geneva] to Villiers [Foreign Office Western Department], 16 July 1927, FO 371/12673/7207/61. This and the next sentence are based on the following, which are representative: Stamfordham [Private Secretary to King George V] to Bridgeman, 3 July 1927, BGMN 1; Chamberlain to Cecil [British delegate, Geneva], 5 July 1927, Chamberlain MSS [Public Record Office, London] FO 800/261; and Amery to Baldwin, 21 Jul 1927, Baldwin MSS [the University Library, Cambridge] Vol. 130. For example, see Schofield [naval expert, American delegation, Geneva] diary, 9 July 1927, Schofield Papers [Navy History Division, Washington Navy Yard], Case 101, Series VI:3; Gibson to Kellogg, 18 July 1927, State Department Decimal File 500A15A1/448; and Kellogg to Coolidge, 22 July 1927, Kellogg MSS [Minnesota Historical Society, St Paul] Microfilm Reel 27. This and the next sentence are based on McKercher, Second Baldwin Government, 77-92. See D. Cameron Watt, Succeeding John Bull. America in Britain's Place 1900-1975 (Cambridge, 1984), 58-9. Lapointe telegram (unnumbered) to Mackenzie King, 30 June 1927, Skelton MSS RG 25 Dl Vol.765 File 302. For instance, see Riddell telegram (unnumbered) to Mackenzie King, 6 July 1927, ibid.; and Riddell to Skelton, 15 July 1927, External Affairs RG 25 G1/1412/96G. For example, Canadian Legation, Washington despatch to Mackenzie King, 9 July 1927, External Affairs RG G1/1412/96G. Kellogg to Howard, 13 July 1927, Kellogg MSS Reel 26. Howard telegram (unnumbered) to Mackenzie King, 19 July 1927, Mackenzie King MSS MG 26 Jl Vol.144. Mackenzie King diary, 20 July 1927, ibid., MG 26 J13 1927. Also see Willingdon to Howard, 25 July 1927, and Howard to Willingdon, 30 July 1927, both Chamberlain MSS FO 800/261. Mackenzie King diary, 30 July 1927, Mackenzie King MSS MG 26 J13 1927. Mackenzie King diary, 4 Aug. 1927, ibid. See Howard despatch to Chamberlain, 11 Aug. 1927, with minutes, FO 371/12059/4928/4021. Mackenzie King diary, 7 Aug. 1927, Mackenzie King MSS MG 26 J13 1927.

B.J. C. McKercher 123 100. 101. 102. 103. 104.

105. 106. 107.

108. 109. 110. 111. 112. 113. 114. 115.

116.

117. 118.

Kellogg to Coolidge, 10 Aug. 1927, Kellogg MSS Reel 27. Kellogg to Phillips [American minister, Ottawa], 9 Aug. 1927, ibid. This and the next two sentences are based on British Delegation telegram (unnumbered) to Admiralty, 30 July 1927, and Admiralty to Hose, 12 Aug. 1927, ADM 116/2567/02306. Tucker, Naval Service, I, 333-4. Lovat [Dominions Office] despatch to Mackenzie King, 8 Aug. 1927, enclosing memorandum on 'Esquimault - Questions which may occur on the outbreak of War', May 1927, Admiralty, External Affairs RG 25 Gl/1475/743. Desbarats to Skelton, 22 Sept. 1927, with encolsure, ibid. Ralston to Mackenzie King, 20 June 1928, ibid. Kellogg to Mackenzie King, 13 Apr. 1927, DCER, IV, 412-13; Mackenzie King to Kellogg, 12 July 1927, ibid., 415-16; Massey to Kellogg, 31 Jan. 1928, ibid., 420-26; and Kellogg to Redding [businessman], 3 Oct. 1927, Kellogg MSS Reel 28. Cf. Stacey, Age of Conflict, II, 109-13. Mackenzie King diary, 21 Oct. 1927, Mackenzie MSS MG 26 J13 1927. Skelton to Desbarats, 26 Mar. 1929, and Skelton to Amery, 9 Apr. 1929, both External Affairs RG 25 Gl/1475/743. Lovat to Chamberlain, 22 and 30 Nov. 1927, and Chamberlain to Lovat, 25 Nov. 1927, all Chamberlain MSS FO 800/261. Except where noted the next two sentences are based on Mackenzie King diary, 22-26 Nov. 1927, Mackenzie King MSS MG 26 J13 1927; and Mackenzie King to Kellogg, 10 Dec. 1927, Kellogg MSS Reel 29. Kellogg to Phillips, 17 Dec. 1927, Kellogg MSS Reel 30. Kellogg to Mackenzie King, 22 Dec. 1927, ibid. Mackenzie King diary, 2 Dec. 1927, Mackenzie King MSS MG 26 J13 1927. Cf. C. Bissell, The Young Vincent Massey (Toronto, Buffalo, London, 1981), 128-9. Howard telegram (435) to Foreign Office, 4 Oct. 1927, FO 371/12020/5837/14; Chamberlain telegram (unnumbered) to Howard, 13 Oct. 1927, and Howard telegram (unnumbered) to Chamberlain, 14 Oct. 1927, both FO 371/12021/6056/14; Stamfordham to Edgcumbe [Dominions Office], 8 Oct. 1927, Edgcumbe to Waterhouse [Baldwin's secretary], 11 Oct. 1927, with enclosure, Selby [Chamberlain's secretary] to Stamfordham, 27 Oct. 1927, and Stamfordham to Selby, 27 Oct. 1927, all Chamberlain MSS FO 800/261. Howard to Chamberlain, 9 Dec. 1927, Chamberlain MSS FO 800/261; British Library of Information, New York despatch to Foreign Office, 9 Dec. 1927, FO 371/12021/7298/14; and Howard despatch to Chamberlain, 8 Dec. 1927, FO 371/12021/7332/14. On Howard's support for Canadian autonomy in foreign policy, see B. J. C. McKercher, Esme Howard. A Diplomatic Biography (Cambridge, 1989), 324-8. Mackenzie King diary, 11 Dec. 1927, Mackenzie King MSS MG 26 J13 1927. Mackenzie King diary, 13 Dec. 1927, ibid.

124 119.

Between Two Giants

This and the next sentence are from Howard despatch to Chamberlain, 8 Dec. 1927, FO 371/12021/7332/14. 120. Mackenzie King diary, 31 Dec. 1927, Mackenzie King MSS MG 26 J13 1927.

4 The House of Morgan in Financial Diplomacy, 1920-1930 Kathleen Burk The decade of the 1920s was a decade of money, with questions about raising it, lending it and spending it occupying the forefront of politics. Finance was at the centre of the geopolitical stage because of the course and outcome of the First World War. First Europe had to be reconstructed, trade had to be financed and currencies had to be stabilised; and secondly, there were war debts owed by the victors to each other which had to be funded, and reparations to be paid by the losers to the winners. All of these goals required money. Money of a dependable sort - based on gold, that is - was only really obtainable on any scale from one place, and that was the United States. But the American government was absolutely not going to provide public money for these types of projects, be they ever so desirable. What the American government wanted was for private money to make itself available for such borrowings. The British government, too, saw many of the goals stated above as desirable and even vital, but even less than the US could it contemplate using public money. Like the US, it preferred to encourage private money to fund reconstruction, for example. The financial world to which Treasuries and central banks were turning so hopefully was in an uncertain state, with the guideposts of the past having been destroyed by the war. The most obvious casualty was the stability of the major European currencies: sterling had officially gone off the gold standard in March 1919, although it had required direct dollar support since the summer of 1917, while the franc and the lira had been supported by the pound and dollar during most of the war. Thus currencies fluctuated: and this meant that the ability of sterling to finance trade in the dependable manner of yesteryear was gone. Another obvious change was in creditor/debtor 125

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relationships, and in particular the decline of France and Britain and the rise of the US. France had lost over half of her foreign holdings, which had largely been Russian bonds, by the Revolution in 1917; Germany lost virtually all of her overseas holdings either through wartime sale or peacetime confiscation; while Britain had liquidated about 15 per cent of her investments largely through sales of American securities during and just after the war. In addition, they had all contracted wartime debts.1 The US, conversely, had become the creditor of the Entente powers through the war debts, and had also bought many of the investments sold off by the European powers. A third change was in the rise of a new, internationally important, money market in New York. The prewar New York market had been subordinate to the London one, and American investors were comparatively inexperienced in investing in foreign issues. Nevertheless, it was a market awash with money and labouring under few restrictions, and could only be seen as a threat by London. The whole question of the financial dimension of the AngloAmerican relationship is a more open historigraphical question than is often believed. One of the more influential articles on the subject has Anglo-American conflict as its theme,2 and certainly conflict was present: there was conflict over specific interests, such as oil and rubber, and perhaps in the minds of some on grand lines, such as future American financial dominance. But the reality was more subtle than the focus on conflict alone suggests. The Anglo-American political and financial axis forged during the war was still strong. The American and British Governments often had the same ends in view: what they frequently differed over were means. When it came to matters involving finance, there was often a lot of shadowboxing, because ultimately, neither government would, or could, control their respective financial sectors. At the same time, there was ultimately more Anglo-American cooperation in financial matters because the British and American banking communities wished to work together. They knew and understood each other, and there was often more sympathy bankerto-banker than banker to respective politician. Therefore, if one looks at bankers' papers as well as politicians' papers, what is striking is the amount of Anglo-American amity and cooperation rather than conflict.

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Now, if one looks at the politics and diplomacy of finance within the larger context of Anglo-American relations during the 1920s, there is no escaping the fact that one bank towers above all, and that is the House of Morgan. By this time, the centre of the firm was in New York, although the American bank had begun life as the daughter of the London bank. But the influence of J. P. Morgan, plus the resources of America's booming economy, ensured that the centre of gravity was in the New World. But within the context of Anglo-American relations, one source of the Morgan strength was access to Europe and particularly to London. There were Morgan firms in Paris and London, Morgan, Harjes et Cie and Morgan Grenfell & Co.: the firm of J. P. Morgan & Co. was a partner in the London and Paris firms (although the London and Paris partners did not have reciprocal advantages). What this meant was that uniquely amongst New York firms, J. P. Morgan & Co. had continuous and reliable information on European and other overseas conditions and issues; further, it had, within the London bank, experienced and widely-connected partners who commanded the respect of the Bank of England, the Treasury and the City. New York still looked to London for expertise and judgement, and Morgans could claim it. In London, Morgan Grenfell were by no means isolated in their grandeur in the same way that J. P. Morgan & Co. were in New York. They had been going through a very uneasy and unprofitable period before the war, and while they were amongst the major merchant banks or acceptance houses in London (along with Barings, Hambros, Rothschilds, Schroeders & Lazards), 3 it was their linkage with the American Morgan's which was responsible for their importance in international diplomacy. The fact that the senior partner, E. C. Grenfell, had worked closely with the British government during the war, and the fact that he had been a director of the Bank of England since 1905, contributed to his personal influence in political discussions. The relationship between the London and New York banks, in short, was a symbiotic one: New York had the money and London had the experience and expertise in international finance. The importance of the House of Morgan was that it strode both sides and all three firms worked closely together. It might, therefore, be worth while to look at what Morgan's

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were doing during this period. The decade has not lacked its chroniclers, and Morgan's have frequently played rather more than a walk-on role. But the argument could be made that without them, much of what was accomplished could not have been. It is true that there were many firms eager to lend money or to negotiate: but it is also true that rightly or wrongly, governments were known to believe that without the involvement of the House of Morgan, an issue would not succeed. As the Baron Emile du Marais, a member of a French financial mission, wrote on 24 October 1919 to Raymond Poincare, the president of the French Republic, I have the impression that Morgan's has put together here a group which includes all the necessary elements for the placement of securities, and that one can in no way manage without their support. This is a fact about which we can do absolutely nothing. In these conditions, wisdom seems to dictate that we accept the fait acompli, and try to give Morgan's the impression that we have full confidence in them.4 This was advice which the French government was ultimately forced to accept. This chapter, then, will look briefly at the firms and at three types of work which they were called upon to do: first, their conventional work as merchant or investment bankers: secondly, their activities in the reconstruction of Europe when they were called upon to give advice to individual governments of a strictly financial or economic nature, in particular on the stabilisation of currencies; and thirdly, their involvement with reparations, when, as in the discussions of the Dawes and Young Plans, their work was as financial diplomats. In merchant or investment banking, the abilities of the partners are of particular importance, since individual judgement plays such a decisive role. In the London bank there were three to four partners during the 1920s, while in the New York bank there were several times that many, but in both cases only some of them are relevant to the themes of this chapter. In New York they were T. W. Lament, Dwight Morrow, Russell Leffingwell and, most important of all, J. P. Morgan, Jr himself. Each brought something different to discussions of the firm's business. Thomas Lamont had a wide knowledge of foreign countries and their politicians, and his diplomatic skill

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made him the natural leader in delicate foreign negotiations, although his was seldom the final word on the issue price of a bond or its acceptability to the investor.5 Dwight Morrow was a francophile, and had valuable close contacts with certain French politicians, such as Clementel. However, he resigned from the firm in 1927 to become US Ambassador to Mexico.6 Russell Leffingwell was the tough-minded partner, a profound and rigorous banking analyst. He had been Assistant Secretary of the Treasury, 1917-20, and to the end of his working life he published articles on economics and banking. The other partners greatly respected his views on the problems of currencies and stabilisation and other such topics; as J.P. Morgan noted about one of LefrmgwelPs memoranda, he didn't really understand it, but he agreed with it.7 Leffingwell was the partner who repeatedly restrained the other partners when they, through a desire to help or a soft heart, were tempted to pass on a plan preparatory to raising a loan for a government. Primus inter pares was J. P. Morgan, Jr, anglophile, sentimental and philanthropic. It was an anonymous donation by him (and Thomas Lamont) in March 1929 which enabled the National Trust in Britain to purchase the land around Stonehenge to save it from development,8 and it was his personal devotion to Montagu Norman, the Governor of the Bank of England, which provided one of the closest links between Morgan's and the Bank. In the London house, the senior partner was E. C. Grenfell. He, of course, provided a very direct link with the Bank of England. During the First World War Grenfell had been the chief liaison between the Bank of England, the British Treasury and the London and New York houses, but in 1922 he entered politics as a Member of Parliament. Even after 1922 he took part in crucial meetings at the highest levels, but his day-today activities in the area of international finance were largely taken over by another London partner, Charles Whigham. Whigham was a man of sound judgement, with the ability to draft a cable or a memorandum of remarkable lucidity. The latter talent was very useful to the firm when decisions were being taken on the basis of transatlantic cables. It is sometimes easy to forget that Morgan's were first and foremost private bankers, in which their duties would include issuing loans, both to foreign governments and to businesses,

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and financing foreign trade through trade credits. Governments took an interest in these activities because of their trade implications: countries and corporations which borrowed money in a country more often than not spent it there as well, and in short, trade followed the bank. Private banking both in New York and London had been transformed by the financial results of the First World War, but in opposing ways: New York now had much more capital and could aspire to replace London as the major money market, while London had the expertise and tried to retain clients and markets. There were a number of reasons why New York had so much more capital to invest than London. First, compared to Europe and Latin America, the supply of savings was large compared to investment opportunities, and this required 'international financial intermediation on a large scale' in order to channel it to where it was required.9 Secondly, the US had emerged as a creditor nation from the war: by the end of 1919 she had invested abroad, on private account, some $6.5 billion, while her long-term liabilities were substantially reduced through having bought back during the war large amounts of American securities held abroad. This meant that she was receiving substantial remittances, which could be reinvested, rather than sending them out. During the 1920s, in fact, America's long-term investment rose by nearly $9 billion and 'accounted for about two-thirds of world new investment'. Britain's total overseas investments were less than half of those of the US. And thirdly, the US economy during the 1920s was basically a booming one. London, conversely, was in a much worse state after the war. She had, as noted above, been forced to liquidate about 15 per cent of her overseas investments, primarily through the sale of American investments, and thus lost the income from interest and dividend receipts. Britain also suffered from the deterioration in the commodity balance of trade, mainly because of difficulties in her export trade.10 But the City of London was also held back because of controls on capital exports - that is, restrictions on lending abroad - stemming from the decisions of the Governor of the Bank of England, Montagu Norman, whose main concern was the position of the pound. In March 1919 Britain had been forced off the gold standard, and the primary goal of the Bank of England, as

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well as of the British Treasury during the 1920s, was to return the pound to gold and to keep it there. This required limitations on the outflow of capital. It was generally accepted that the City of London's preeminence before the war had been largely dependent on the strength and position of the pound, and on the willingness of the City to make foreign loans. Under the new conditions obtaining during the 1920s, it seemed that either the strength of the pound or London's command of international lending would have to be sacrificed. While the overriding concern of Montagu Norman was to maintain and improve the position of the pound, he did not wish to destroy London's position as a foreign lender, and when possible, he encouraged the City to remain in the market. Thus in August 1924 the Morgan cables note the heavy commerical credits being extended to Germany by other banks,11 and this was done with Norman's approval, in an attempt to capture the German market for London.12 In fact, the weapons which Norman had to control foreign lending and defend the pound were few and weak. A high bank rate would tend to discourage foreign lending, but it would also wreak havoc on domestic borrowing. Legislative prohibition of foreign lending was considered to be out of the question.13 So, by and large, what Norman called personal influence, what Moggridge calls moral suasion,14 and what the Americans call 'jawboning' was his major weapon. Its success was uneven. From 1920 to 1925 Norman imposed an 'embargo' of sorts on foreign loans in aid of the attempt to return to gold. He asked bankers in early 1920 to issue no short-term foreign loans, short-term being defined as having a maturity of less than twenty years. By April 1924, finding that nevertheless, too many issues were taking place, Norman decided that foreign lending should be limited to reconstruction loans, which he defined as those guaranteed by the Treasury or supported by the League of Nations. After Britain returned to gold, the Committee of Treasury of the Bank of England still thought in April 1925 that it would be necessary to 'discourage foreign issues and investment by all possible means'.15 In October of that year the Chancellor of the Exchequer told Norman that he hoped that no loan would be floated on behalf of any

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country which had not settled its inter-allied debt with Britain, and in fact, an embargo in this form remained until October 1928. Nevertheless, for the market at large, the Chancellor removed the general embargo on foreign loans in a public speech in Sheffield on 3 November 1925. As a result, foreign lending took off. Norman did little to hamper foreign loans, except those considered for Russia and Germany, on which he issued strong, if private, warnings, until 1930, when he obtained the agreement of the Chancellor of the Exchequer to a policy of only allowing such foreign loans as he, the Governor, approved. It was only in 1933 that a strict embargo on overseas lending was imposed, with the Empire exempt.16 Now, it is possible, by reading Morgan cables, to see exemplified both the success and the failure of Norman's policy. On the one hand, time and again Morgan Grenfell have to refuse participation in suggested loans because it is 'business which Morgan Grenfell & Co cannot at present entertain';17 these include, for example, an issue by International Telephone and Telegraph in the United States in December 1923, a Belgian loan denominated in dollars in September 1924, and a Tokyo loan in October 1925. But these refusals drop off, and the next one occurs in February 1930, when they decide that Treasury restrictions preclude Morgan Grenfell from handling a public issue of Italian roadbuilding bonds in London.18 Thus, Morgan Grenfell tried to conform to the Bank's desires, probably, no doubt, because of the responsibility they felt as one of the major private banks in London, to set a good example. Yet evidence in the cables indicates that the Governor's policy was not working very successfully. In the same cable in which Morgan Grenfell refuse participation in the Belgian loan of September 1924, for example, they add sourly that others in London will probably participate. Norman himself admitted in February 1925 that 'The demand for Foreign Issues in London cannot long be prevented by the present method of so-called persuasion.'19 D. E. Moggridge has pointed out that Norman's controls indeed did not prevent investors, especially big institutional investors, from subscribing to foreign issues, and that the main effect was to divert commissions from London firms to New York firms.20 It is clear that Morgan Grenfell themselves were investing in the United States on some scale via J. P. Morgan & Co.

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One reason for borrowing in one market rather than another is the differential cost of the loan. Historians have differed as to whether New York or London was the cheaper market;21 of course, it is necessary to know the date of an issue of a loan, since rates varied over time. Short-term rates were often higher in London in an attempt to lure money to London and keep up the rate of the pound; on the other hand, long-term money rates were usually cheaper in London because brokerage rates were lower.22 (Consider the differences in distances involved in distributing issues, for example.) If the occasion warranted it, however, this American disadvantage might be overcome, as Paul Einzig, a contemporary financial journalist of some perception, described: The American banker is at a disadvantage in international competition in the margin of profit he requires: overhead charges are higher in New York than in any other centre and banks there are accustomed to substantial profits on domestic banking business. They are reluctant to work for the same narrow margin as their European rivals. This does not mean that it is an easy task to defeat American bankers in a rate-cutting contest. If it comes to that, they are prepared to work without any profit or even at a loss in the field of international business, and to make up for their losses in the field of domestic business.23 But this sort of sacrifice could not become a regular occurrence. Even so, cheapness was not necessarily always the determining factor. For example, even after the change in relative interest rates between London and New York in 1924 which made New York the cheaper centre in which to borrow, it was still necessary for the British authorities in November 1924 to impose informal controls over the flotation of new foreign issues in the London capital market in the attempt to restrict the outflow of funds (preparatory to returning to the gold standard). 24 Einzig also complained about another growing American habit, that of issuing a foreign loan in New York and then placing a substantial amount of it in London. The problem for New York was that the US lacked a sizeable investing public for foreign issues. He noted that a half-dozen New York firms maintained branches in London for the express purpose of

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distributing the issues for which they had taken responsibility with insurance companies and other big investors. By issuing the loan in the first place, New York received the commission income and the US received the subsequent income from the trading contracts, while Britain received neither. The British position was further damaged, according to Einzig, because these American issues absorbed funds which would otherwise be available for lending by British banks on their own account. Instead, they had to decline proposals and send the rejected customers to New York.25 Certainly, in some of the Morgan loans, it was a requirement that the American distributors not attempt to unload their shares on London.26 It should be noted that Morgan Grenfell, because of their relationship to J. P. Morgan & Co., suffered less than other London banks from the tendency for business to be transferred to New York. This is exemplified by the episodes of Australian loans. When Montagu Norman decided on priorities for foreign loans, reconstruction loans for Europe and loans to the Dominions and Colonies were rated the most important.27 Traditionally, of course, the Dominions had always borrowed in London, but even so Canada and Australia now began to turn to New York for their funds. Thus, the agent for Australia opened negotiations in London for the issuing of a loan in New York but, part-way through, the Minister in Australia decided that they would prefer to negotiate as well as to borrow in New York and thereby save on commission fees in London. Morgan Grenfell did their best to ensure that J. P. Morgan & Co would fall heir to any business.28 This was reciprocal, of course, since the New York house regularly ensured that Morgan Grenfell would lead in the issuing of any London tranche of a Morgan loan. Joint issues, in fact, became the norm for many of their loans, a procedure which benefited both sides of an issuing group: London alone could not provide funds on the scale required, but their participation was appreciated by New York bankers as constituting an imprimatur of quality. American investors, according to J. P. Morgan & Co., would more readily invest in a foreign loan when they knew that London was involved as well.29 On both sides of the Atlantic, banking groups habitually worked together in making these issues. In New York, Morgan's worked with the First National Bank and the National

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City Bank, the three of them constituting the Trio of the cables. In London, Morgan Grenfell usually worked with Barings, Rothschilds and Hambros, with the Westminster Bank joining Barings and Morgan Grenfell for Belgian business; on occasion, and when it was necessary, Lazard's was allowed to join, especially where they had a claim, as it was put. Claims usually arose over French issues, since Lazard's did work for the government in France. (Interestingly, Lazard's differed from Morgan Grenfell in their utilisation of American contacts. Lazard's, like Morgan's, had houses in Paris, London and New York, but unlike Morgan Grenfell, made relatively little profit from their New York connection.) But because Morgan houses had a self-denying ordinance to refrain from German business, a portion of the ferocious competition over issue-making passed them by. Morgan's concentrated on work in the Allied countries, and except for Austria, left the work in Germany and the succession states to their rivals.30 London in the 1920s was a contracting market, but habit and closeness still drove many companies to borrow in London. Nevertheless, the fact that much more money was available in New York drew more and more borrowing in that direction. But the pain for the City of London was somewhat mitigated by the fact that large issues were frequently joint issues: as Einzig remarked, 'In international loan operations of any considerable size it was difficult to form a financial group without the participation of London banks.'31 A second aspect of Morgan activities was their work as Fiscal Agents. This chapter will look specifically at their attempts to help individual countries to stabilise their currencies, either in preparation for, or in conjunction with, a return to gold, a necessary prerequisite, it was generally believed, for a stable financial and trading system. Certainly both the British and American governments, and especially their central banks, supported the efforts of Morgan's, with which they tended to cooperate, if they did not actually initiate them. It is not the intention to describe the various episodes in detail, but rather to make a number of general points about the activities and intentions of Morgan's. In these episodes Morgan's act almost as a responsible public agency, as, perhaps, an international central bank, at least in terms of power and prestige, if not in actual duties.

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First of all Morgan's were without doubt motivated to a considerable extent by an altruistic concern for their government clients. It can be seen in their discussions about and activities in aid of Britain's return to gold in 1925 in which altruism was combined with a large admixture of anglophilia. The combination in J. P. Morgan has perhaps already been sufficiently stressed, but even the hardheaded Russell Leffingwell could write that 'Could anything be more heartening than for England and America to lock arms for honest money?', adding that he would 'sell his shirt to help old England out of this mess'.32 Affection for Montagu Norman played its part in facilitating the arrangements.33 But Morgan supported Britain's return to gold for a solidly practical reason: as the centrepiece of the prewar financial system, her return to a position of financial rectitude would immensely strengthen a rebuilt international financial system. Unlike in France, most (although not all) influential officials, politicians and bankers in Britain united in believing that Britain should at some point return to the gold standard,34 although there was a good deal of disagreement over just when it should happen. Norman saw the return to gold as the culmination of Britain's postwar efforts to restore its position as a major centre of international trade and finance. But it seems clear that at least as influential in driving Britain back on to gold was fear of the consequences if she did not. Germany and Hungary were due to return to gold after the Dawes settlement in the summer of 1924; Australia and South Africa were threatening to do so without Britain; Holland and Switzerland wished to do so, and Sweden got tired of waiting and went back on to gold in March 1924 without Britain. In other words, as Benjamin Strong, the Governor of the Federal Reserve Bank of New York, pointed out to Norman, Britain was getting pretty far back in the queue. Strong, in fact, pushed hard for Britain to return to gold, and in particular to return when she did. He felt that the stabilisation of sterling would be the key to eliminating fluctuating exchange rates which discouraged trade; he wanted trade to expand because he believed it would increase demand for American goods and in particular for American farm goods, and would therefore help the American farmer. He also felt that sterling's return to gold would give New York an oppor-

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tunity to increase its position as an international financial centre: the cooperative arrangements between Britain and the US to facilitate the return would include arrangements to maintain higher interest rates in London than in New York to lure funds to Britain - but the result would be lower rates for foreigners to borrow in New York. Finally, Strong hoped that the return to gold would reduce the threat of domestic inflation by encouraging gold to flow out of the US.35 Conditions in late 1924 seemed propitious to Strong for the stabilisation of sterling although several Directors of the Bank of England and Sir Otto Niemeyer of the Treasury were doubtful. After the settlement of the Dawes Plan in the summer of 1924, money had flowed to Europe and the exchanges were strong. The return and threatened return to gold of so many countries alarmed the British officials, who did not wish Britain to lag behind. The wartime power to embargo gold was due to run out at the end of 1925, so a decision would have to be made. Speculators believed that Britain would return to gold and this money in fact helped push the currency up to parity in the spring of 1925. In short, events appeared to drive the decision along.36 Strong seems also to have been responsible for bringing Morgan's into the matter. He thought that there should be private credits extended to the British government and the Bank of England as well as a Federal Reserve Bank of New York credit to the Bank of England; once this was accepted by the British - and Niemeyer was never really reconciled to it - they would of course turn to their Financial Agents in the US.37 When J. P. Morgan was in Britain in November 1924, he and Norman discussed the matter, a topic which was taken up again when Norman visited New York in January 1925. Besides Morgan's, Norman discussed the matter with Strong and Andrew Mellon, the American Secretary of the Treasury, and one or two others. The upshot of the discussions was a plan for Anglo-American cooperation at both private and central bank level.38 A credit of $200m would be extended by the Federal Reserve Bank of New York to the Bank of England, while a credit of $100m would be extended by J. P. Morgan & Co. to the British government: the point was not to use the funds to push sterling up to parity, but rather for the arrangement to act as a warning to speculators that the parity would

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be maintained. In the event, neither credit was ever drawn on over the two-year period of their existence. The negotiations over the credits were reasonably straightforward, with decisions having to be taken over the amount, the form they would take and their duration. There was, however, some quibbling over the commission charged, which Niemeyer, for one, thought ought to be eliminated (he feared trouble with Parliament). Lament in fact had eventually to write a memorandum for Norman to show Niemeyer justifying a commission, and in the end Morgan's agreed to halve interest and commission on the $100m credit for the second year if the British government wished to cancel it before it was due to run out. They did not, and Morgan's received over the twoyear period $500 000 (roughly £100 000) in commission as a management fee plus their share of the $2m commitment fee.39 But the feeling that bankers receive money for old rope is not an unusual one, and the quibble hardly upset relations between Morgan's and the British government. Altruism as well is shown very clearly in their ill-received attempts to convince France to stabilise her currency. In December 1925 the cables began to flow between New York, Paris and London, when the assessment was that French financial affairs were in a mess.40 One problem was that the French Treasury refused, as Morgan's put it, to obey the laws of public finance, and tried to pay less than the market price for money; thus they always had problems borrowing.41 But beyond that, and worse, the financial community in France was divided, private bankers among themselves, private bankers from the Banque de France, and both the Banque and private bankers from the Finance Minister of the government.42 Amidst the internal Morgan discussions in April 1926, Russell Leffingwell had a 'brainstorm' as New York called it: Morgan's should try to help France, Belgium and Italy return to gold together, with France as the leader. Thus by appealing to France's desire to regain financial leadership on the Continent, perhaps a French will to pull together and reform could be stimulated.43 The main problem with this plan was that large sections of the French financial community wanted neither to stabilise nor to return to gold just yet - one strong opponent in fact was Edouard de Rothschild, a Regent of the Banque de France and

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member of a major private banking house.44 Morgan's attempted to create a desire to stabilise in a government which was very weak at best. The upshot was that opponents of the government attacked Morgan's: they were allegedly trying to impose an Anglo-Saxon plan on France, even helping the Bank of England 'to make a Branch Bank out of the Banque de France'. It was plausibly claimed that Morgan's well-known anglophilia prevented them from giving France sound, unbiased advice.45 In this atmosphere, Morgan's found that competitors such as Dillon, Read & Co. and Lazard's were attempting to move in on Morgan's French government business.46 Although Morgan's denied the charge of bias, there is no doubt that they considered the French manner of conducting public finance to be less than sound. It seemed to Morgan's that political considerations, rather than purely financial ones, controlled the making of French financial and economic policy.47 In the circumstances, they drew the conclusion that no matter how well intentioned, no outside agency could create in France the political desire necessary to bring her public finances into order. Therefore Morgan's dropped the whole subject of French stabilisation,48 and, in fact, France stabilised in 1928 without Morgan's help. The question of Belgian stabilisation illustrates another problem in the relationship between private bankers and governments: that is, what are the proper limits of a bank's control or imposition? The plan to stabilise originated within Belgium, and Morgan's were mildly encouraging.49 But the crucial preconditions, before the necessary stabilisation loan and credit could be extended, were that Belgium should balance her budget and fund her floating debt. The Belgian government's freedom to do this was limited by internal political considerations, and it seemed that no matter what proposals they made, the Morgan partners were not satisfied.50 The stumbling block was Leffingwell, who did not believe that the budget sheet as proposed told the whole story.51 Finally Morgan's learned that the Belgian Finance Minister was slashing the budget more than he believed to be politically or economically wise, purely to gain a loan from Morgan's. At this point Morgan's realised that they were getting excessively involved in political matters and chose to terminate the negotiations.52 Stabilisation was deferred for a year until conditions were more satisfactory, and

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finally carried through in the autumn of 1926, when Morgan's issued the private loan to the Belgian government which accompanied the central bank credit extended to the Belgian central bank.53 Morgan's had always to walk a tightrope between wanting to do the best possible deal for their client governments, but not allowing anything to be agreed which would be detrimental to the private investor, to whom Morgan's felt an equal, if not greater, responsibility. Because their power in the market was so great, their responsibility was commensurately great. Leffmgwell expressed this position in a letter to one of the Paris partners in August 1926, in this case with regard to a possible French loan: In other words, it seemed to me that our position in America is such that whenever we ourselves believe that France has turned the corner . . . , at that moment it will be in our power to float a loan for France. This opinion is based upon the fact that the American investment community believes in us and will take our word for it whenever we are in a position to give our word that France has turned the corner.54 The question of Italian stabilisation shows Morgan's in yet another light - that of helping to further central bank cooperation, a project dear to the hearts of Strong and in particular Norman.55 Repeatedly they acted as intermediaries between the Governors of the central banks in France, Belgium, the United States and Britain, but their role is highlighted in the Italian case because, unusually for Morgan's, they found themselves at odds with Montagu Norman and the Bank of England. Italy had consolidated its floating debt in November 1926 and this led Morgan's to consider that the time was ripe for Italy to return to gold. However, Morgan's also considered it vital that a central bank credit be arranged, and here Norman was a stone wall. For Norman, the growth of central bank cooperation was a central consideration, but in order for a central bank to enter the magic circle, it had to be independent of its government. Unfortunately, when Volpi, the Italian Finance Minister, was in London in December 1925, he had shocked Norman by stating in effect that he intended to control the policies of the Banca dTtalia.56 Now Morgan's thought it very

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likely that Norman had misunderstood Volpi - not difficult to imagine, since an Italian and an Englishman were conversing in French - and in fact, Stringher, the Governor of the Banca d'ltalia, had proved himself an excellent Governor, as Benjamin Strong testified. But Norman refused to meet Stringher, until Morgan's were moved to write testily that 'We think the Italian situation is of too great importance to Europe and to us to drop it because the conversations which Montagu Norman had with Volpi last Winter did not give Montagu Norman satisfaction.'57 After repeated urgings from Morgan's, and possibly from Strong, Norman decided that 'in Italy no one is independent' and agreed to meet Stringher.58 Finally, in December 1927, after eight days of meetings in London between Stringher and Norman, Morgan's and later Barings, Rothchilds and Hambros (with whom Morgan Grenfell had a standing arrangement to do Italian business), a credit was agreed,59 and on 22 December the Stabilisation Decree was issued in Rome. For Morgan's themselves, the work they did towards the stabilisation of currencies in the different countries was among their most important - they themselves rated it far above reparations work, not least because they preferred to work with former Allies than with Germans. They saw their work in helping countries return to financial rectitude as the completion of their war work, and, as J. P. Morgan and another partner wrote in October 1925, they 'feel it is of such great importance to the United States and the world in general to add to the number of gold basis countries that we should make every effort. . . .'60 But as J. P. Morgan wrote to E. C. Grenfell in July 1924, 'We must however be very sure not to let our desire to help the politicians to straighten out the tangled affairs of Europe lead us away from the fundamentals. . . .'61 And by fundamentals, Morgan's meant their duty to ensure that any issue which they sponsored rested on so strong a foundation that 'the small private investors of the U.S.A.' would not be led astray.62 Finally, it is necessary to look briefly at Morgan's involvement in reconstruction and reparations, which brought them unambiguously into the sphere of international diplomacy. This is probably the most familiar aspect of Morgan activities in international affairs, thanks to the availability of the Lamont

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and Morrow papers, and the work of Artaud, Costigliola, Hogan, Leffler and Schuker among others.63 There is therefore no need to set the story out again, but it might be useful to indicate points where the activities of Morgan's made a difference. It was the cooperation of J. P. Morgan & Co., Morgan Grenfell & Co., the Bank of England and the Federal Reserve Bank of New York which made possible the loan of 1923 which set Austria on the road to reconstruction and prosperity (at least until 1931). The biographer of the Governor of the Bank of England saw the Austrian episode as a model for international cooperation in dealing with the economic difficulties caused by the war and one which would be followed in organising Hungarian, German, Greek and Bulgarian loans.64 Certainly it was an encouraging precedent for plans for the central and private banks of the former Entente powers to aid a former enemy country: the Austrian attempt encouraged the German attempt. The British government and the Bank of England inherited from the war period an interest in stabilising Austria because the Bank had assumed liability for the acceptances of the Anglo-Austrian Bank of Vienna. After the war this was reorganised as an English bank, and in due course it helped to restore Britain's financial position of the Continent, at the same time stimulating British interest in Austrian reconstruction. As early as July 1919 British officials were discussing various schemes to assist Austria, but the unstable conditions in the country, which Austrian financial officials would or could not remedy, discouraged private investors, and the British government itself was too weak to do much on its own.65 If private financing was vital, it must come in part from American investors, and there were repeated attempts to organise a loan with American participation. This was a central plank in a League of Nations plan for reconstructing Austria. The British presented the Austrian case at an Allied conference in January 1921, arguing for a stabilisation scheme devised by private experts and founded on business principles, which by implication would be politically neutral. This was accepted in March 1921, when Allied financial delegates meeting in London agreed to release the liens on Austrian assets awarded to the Allied Governments under the Treaty of St Germain,

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and urged the Financial Committee of the League of Nations to implement a scheme for Austrian stabilisation. By May the plan was ready. But all went for nought, since the Italians refused to release their liens and palpably wanted control over the Austrian economy.66 In another attempt in late November 1921, the British government approached J. P. Morgan, who was in London, and asked him to consider a proposal for a private loan to the Austrian government. It was to be floated on the London and New York markets, with the Gobelin tapestries as collateral. The answer was discouraging, the New York partners remarking that it 'would create rather a pawnbroking impression' for them to issue such a loan, even if it were possible. Such a loan would not find a market.67 The matter of a loan was not forgotten, and in May 1922 negotiations began in London between representatives of the Austrian Ministry of Finance, the Anglo-Austrian bank, the Bank of England, Morgan Grenfell & Co. and Lament of J. P. Morgan & Co. The group of interested British banks and Morgan's sent G. M. Young, a director of the Anglo-Austrian bank, to Austria to report on the situation. This report was so discouraging that in June the prospect of a loan was again abandoned; one Austrian historian has blamed the failure on 'the [Austrian] government's amateur handling of financial affairs'.68 By early 1923, however, various reforms had been put into effect in Austria and yet another attempt was made to raise a private loan. On 15 January there was a meeting of private bankers at the Bank of England to consider a League of Nations plan for a long-term loan of 650 000 000 gold crowns (approximately £28 million or $130 million). It would be guaranteed by the governments of Britain and several of the European countries and backed by the revenue from the Austrian customs receipts and tobacco monopoly. The British government agreed to guarantee 20 per cent of the issue. Whigham and V. H. Smith of Morgan Grenfell cabled to J. P. Morgan the assessment of Sir Otto Niemeyer of the Treasury (who was also the British member of the League of Nations Financial Committee) that either the plan had to go forward or break down, with all of the consequences that the latter would entail. For themselves, if the other British banks went ahead, Morgan Grenfell would find it virtually impossible to

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stand out. The New York response was firm: there was no possibility of placing any Austrian bond in the US. All that J. P. Morgan & Co. could do was to take some of the burden off Morgan Grenfell if they felt constrained to take more of the proposed issue than was convenient for them.69 Fortunately for Austria, conditions apparently changed over the next few months. The American government refused to join the other countries in guaranteeing the loan, or even to support it publicly, but in due course J. P. Morgan & Co. ceased to find this refusal an impediment. By 10 March 1923 Lament wrote to Grenfell that Morgan's were more than usually interested in the Austrian situation and in April, when the matter was taken up again, J. P. Morgan & Co. became involved; by 10 May they agreed to head a syndicate (Morgan Grenfell would do the same in London). The loan was issued on 11 June 1923, and within minutes the loan was 'heavily oversubscribed' in London and 'vastly oversubscribed' in New York, the latter syndicate receiving subscriptions totalling $125 million by 10.15 a.m. - five times greater than the sum for which the syndicate was committed.70 The results of the issuing of the Dawes Loan were equally outstanding, but if the political and financial negotiations extended over a shorter period, they were much more timeconsuming and intense than those over Austria. The central problem was Franco-German relations, but the immediate crux was how to force Germany to pay reparations. France had occupied the Ruhr in order to force Germany to pay, while Germany had allowed the destruction of her currency through inflation, in great measure to evade reparations. The interrelated problems were the reconstruction of the German monetary system, the withdrawal of France from the Ruhr and the raising of a foreign loan both to back the new German mark and to rebuild the economy so that Germany could pay reparations.71 Theoretically, the private bankers would only be involved in the raising of a loan, but in practice they were in the thick of the political discussions as well. Negotiations over the matter had begun in January 1923, but although they were repeatedly consulted privately, it was only in the summer of 1924 that Morgan partners, in particular Lament and Grenfell, became continuously involved in political as well as financial dis-

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cussions. The major problem was whether or not France would be able to retain the right to impose physical sanctions on Germany if she defaulted on reparations (German default had driven France to occupy the Ruhr in the first place). Morgan's felt very strongly that if France retained this right, there could be no German loan, since the bondholders would hardly want Germany under the threat of an invasion which would probably lead to a default on the bonds.72 By the third week of July the situation was very tense: Morgan's realised that if they continued to insist on France's losing her right to physical sanctions, the French government would probably fall; the London conference discussing the implementation of the Dawes Report would break up and the British government, which was 'very shaky', might fall;73 but if they did not continue to insist on it, there would be no loan. Newspapers were starting to blame 'the bankers' for putting the terms of the loan before political requirements, and the New York partners left at home decided that Lamont and Grenfell should withdraw from talks until the politicians could clarify the situation. Morgan's were not alone in their stance, and Montagu Norman was probably even stiffer than they were in his requirements. The British government, too, backed the suppression of the French rights, to which the French finally agreed.74 Once the political decisions were taken, however, the Morgan role became even more important, if in a different way. That is, a loan could be agreed, but would bankers buy it? J. P. Morgan and Lamont spent over two weeks at the end of September and the beginning of October travelling around the Continent in order to convince bankers that they should take up their share of the loan. France, for example, was scheduled to take £3 million of the total, but the French bankers simply did not want to loan money to Germany: as the two wrote to New York, 'In France, Italy and Belgium it has not as you suggest been a question of how much the Governments wanted them (the bankers) to take but rather how much the Governments could force the reluctant and short-sighted Bankers to take.'75 In order to force the French government to coerce the French bankers, Morgan's told the French Minister of Finance that a $100m long-term loan, which the French government wanted Morgan's to issue in New York, would not be floated unless the French bankers cooperated.76 The prob-

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lems in France were replicated to a greater or lesser extent in most of the other European countries, and as Morgan and Lamont wrote, 'Sweden is literally the only country that we have not had to bleed and die for.'77 Even British bankers were reluctant, leading Norman to summon together representatives of the banks and issuing houses and allocate to each the amount necessary to make up London's share.78 (The result here was that Morgan Grenfell did not get as much as they would have liked. Morgan Harjes et Cie as well were dissatisfied, since they received none of the French share and were reduced to asking for $200 000 of J. P. Morgan's allocation in the US.)79 The loan was finally issued in New York on 14 October and in London and Europe on 15 October 1924. For J. P. Morgan & Co. it was the largest oversubscription they had ever received, with subscriptions totalling $750 million for an issue of $110 million. In London it was oversubscribed by a factor of ten, and in most of the continental markets as well it was oversubscribed, rapidly going to a premium in all markets.80 Thus in the discussions over the Dawes Plan, the 'alliance' of Morgan's, the Bank of England and the British government worked to deny to France the retention of her right to impose physical sanctions on Germany if Germany defaulted on reparations. Looking at it the other way, the Germans found to their delight that the conditions which Morgan's felt it necessary to impose in exchange for floating the German reparations bonds went beyond what Germany felt she herself could achieve. Morgan's were anguished to find themselves in this position, since their political sympathies in general were with France rather than with Germany, but since, in the final analysis, their duty was to float successfully and with a clear conscience the German reparation bonds, they found that the line between finance and politics was one which they - and especially Lamont, Morrow and Grenfell - had continually to straddle.81 The Morgan partners found themselves in this position once again near the end of the decade during the negotiations over the Young Plan and the Bank for International Settlements (BIS). In this case, however, they had to work against rather than with the British government. The Young Plan grew out of the situation arising from the Dawes settlement, in that the temporary arrangements set up by the Dawes Plan, by restor-

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ing confidence, had encouraged a vast outpouring of American and other money. This money had flowed mainly into Germany, and the resulting extravagance and inflation, as well as the growing debt burden, caused S. Parker Gilbert, the AgentGeneral for Reparations, to call for a change in the arrangements by which Germany would make reparations payments. The Dawes Plan provided for protection for Germany in the transfer of funds: Gilbert felt that until Germany had the entire responsibility for making the payments, her financial authorities would not exercise necessary self-discipline. There were other factors involved. Germany wanted the Allied occupiers out of the Rhineland. France regarded this occupation as security for German reparation payments, of continuing importance to her as she had signed (but not yet ratified) an agreement with the United States to fund her war debt. On the more technical side, the Dawes Committee had fixed a schedule of annuities on an interim basis; it would be the duty of the Young Committee to determine Germany's total reparation liability and to propose a definite replacement for the 1921 London Schedule of Payments.82 The whole episode of the Young Plan fell into a number of parts. At the meeting of the Council of the League of Nations in Geneva in September 1928, Germany brought up the question of the occupation of the Rhineland, and this in turn caused France to refer to the question of reparations. The outcome was an agreement to appoint a six-power committee of financial experts to make a report, by this time a hallowed response to a political problem with financial implications. The duty of this committee would be to devise a final reparations plan; the chairman was to be the American industrialist Owen D. Young, who had been a member of the Dawes Committee. The other American representatives on the Young Committee of experts were J. P. Morgan and Thomas Lamont, and their membership ensured that Morgan's were intimately involved in the negotiations as principals, rather than unofficially as with the Dawes negotiations.83 The Committee met during the first half of 1929, presenting its Report on 7 June 1929. Then came the first Hague Conference, which was almost wholly taken up with virulent British objections to the Report and the consequent renegotiations, with the outcome a British victory;84 this outcome was

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enshrined in the Protocol of 31 August 1929. In January 1930 came the second Hague Conference, which formally cancelled the reparations clauses of the Versailles Treaty, regulated nonGerman reparations, provided for the evacuation of the Rhineland and brought into force the modified Young Plan.85 The final step was the issuing of the reparation bonds, the so-called Young Loan, in June 1930. The Young Report had called for a Bank for International Settlements to be established at Basle, which was to act as an organisation to receive and distribute reparation payments and as a forum for international cooperation amongst the central banks, and in short, be their central bank. The Morgan partners, and especially J. P. Morgan, Lamont and Grenfell, were closely involved with the discussions over the Bank: it was the question of the BIS's organisation and standing which involved them in acrimonious debate with the politicians, and especially with the British. The Treasury wanted an organisation which would be limited to reparation duties; they wanted it to be under the control of the national governments; and at one point they wished it to be located in London.86 The Governor of the Bank of England wanted an organisation which would be a politically neutral central bank for the central banks; however, over the period of discussions, he seems to have lost faith in the concept and to have accepted that it would only act as a private meeting place for central bankers to discuss common problems. His disillusionment may have had less to do with the attitude of the Treasury than with the fact that the direction and management would be largely American and French.87 Morgan's, along with most other American and British private bankers, wanted an organisation that was a bank rather than merely a reparations organisation, one that was politically neutral and would deal only with central banks and governments.88 The bankers in particular insisted on political neutrality: without that, no American participation, public or private, would be possible.89 This last argument, of course, was the commanding one, and it forced the British - and the French - to give way on the BIS's neutrality. It is an interesting episode, because now, unlike during the Dawes negotiations, Morgan's were constrained to put pressure on their erstwhile allies, in particular on the British. The fact that the British government was

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Labour was not the crucial question: after all, so had been the government during the summer of Dawes. However, Morgan's suffered from what J. P. Morgan called the Chancellor of the Exchequer's 'extraordinary negotiating methods', of which the prime ingredient was obstinacy; and the Treasury fought hard to try and impose their ideas on the organisation of the Bank.90 In the end they gave way. The Bank was located in Basle, it was to act both as a reparations organisation and as an organisation for central banks, and it was to be politically neutral. But neither was the Bank the threat to the policymaking prerogatives of either the British Treasury or the Bank of England as had clearly been feared. Rather, coming into being as it did at the onset of the depression and conflict, it began its life of useful obscurity, a convenient meeting place for central bankers but with limited funds, and hence powers, of its own.91 And this need for and possession of money is a key to the decade of the 1920s. The fight for financial markets, the stabilisation of currencies and the payment of reparations - all of these required money in some form. The question was, how was money to be funnelled from those who had it to those who required it? The only method was for private bankers to raise money from private and institutional investors, and herein lies their importance for this decade. Preeminent in importance was the Anglo-American financial community. Unlike their respective Treasuries, or their respective political heads, the Anglo-American banking community, small and close-knit, was used to working together, and the members knew and trusted each other. The indispensability of their respective financial communities in working out these great political problems was recognised by both the American and British governments. For both governments, private finance was a tool to be utilised and, in various measures, controlled. But governments recognised boundaries beyond which it was not legitimate, or possible, to control private banks and bankers as they went about their business. Moral suasion was the method, but if bankers chose to ignore governmental pleadings and warnings, there was little either government would do about it.92 Thus, decisions of great political importance were often taken by private bankers, and particularly by the House of Morgan, whose activities are

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therefore the proper concern not merely of the specialist, but also of the general political and diplomatic historian.

NOTES The section on French, Belgian and Italian stabilisation is based on my 'Diplomacy and the Private Banker: the Case of the House of Morgan' in Gustav Schmidt (ed. ), Konstellationen intemationaler Politik 1924-1932 (Bochum: Studienverlag Dr N. Brockmeyer, 1983), pp. 25^-0. Much of this chapter relies on material from the archives of Morgan Grenfell & Co. Ltd of London, and I am grateful for unrestricted access to their papers. The European material from the Thomas Lamont papers can in great measure be found in the Morgan Grenfell Papers. 1. Derek H. Aldcroft, From Versailles to Wall Street 1919-1929 (London: Allen Lane, 1977), pp. 240-41. 2. Frank C. Costigliola, 'Anglo-American Financial Rivalry in the 1920s', Journal of Economic History, 37 (Dec. 1977), 911-34. Michael J. Hogan, Informal Entente: The Private Structure of Cooperation in Anglo-American Economic Diplomacy, 1918-1928 (Columbia: The University of Missouri Press, 1977), 254 pp., places rather more emphasis on cooperation. 3. For Morgan Grenfell's profits and losses, see the author's Morgan Grenfell & Co. Ltd. 1838-1988: The Biography of a Merchant Bank (Oxford: Oxford University Press, 1989), Appendix 2. R. J. Truptil, British Banks and the London Money Market (London: Jonathan Cape, 1936), pp. 137-48. 4. Dan Silverman, Reconstructing Europe After the Great War (Cambridge: Harvard University Press, 1982), p. 209. 5. For information on Lamont see his autobiography, Across World Frontiers (New York: Harcourt, Brace, 1951). The letter from Jay dated 1 June 1926 can be found in file French Stabilisation Loan, Bundle 2, Morgan Grenfell Papers, London (hereafter MGP). 6. For information on Morrow see Harold Nicolson, Dwight Morrow (London: Constable, 1935). 7. This admiration for Leffingwell extended well beyond the firm; Business Week, for example, later (21 Feb. 1948) described him as a 'business intellectual, a man who gains his points by persuasive argument, not by table pounding'. Cited by Stephen A. Schuker, The End of French Predominance in Europe: The Financial Crisis of 1924 and the Adoption of the Dawes Plan (Chapel Hill: The University of North Carolina Press, 1976), p. 142. 8. File JPM Misc 7, MGP. J. P. Morgan also in 1929 facilitated the acquisition by the British Museum of the Luttrell Psalter and the Bedford Hours and Psalter by refraining from bidding for them himself and by advancing the money, interest free, for their purchase. See British Museum Quarterly, Vol. 4 (1929), p. 63.

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9. Harold van B. Cleveland and Thomas F. Huertas, Citibank 1812-1970 (Cambridge: Harvard University Press, 1985), p. 146. 10. Aldcroft, Versailles to Watt Street, pp. 240-42. 11. T. W. Lamont to J. P. M. & Co., 11 August 1924, no. 4943, file 32, Box History 6 (Private Telegrams), MGP. 12. Schuker, The End of French Predominance, p. 349. 13. Sir Henry Clay, Lord Norman (London: Macmillan, 1957), p. 144. 14. D. E. Moggridge, British Monetary Policy 1924-1931: The Norman Conquest of $4. 86 (Cambridge: Cambridge University Press, 1972), Chapter 9. 15. Quoted in the memorandum by Sir Henry Clay, 'Embargo on Foreign Capital Issues', 15 June 1930, Box 34, Clay Papers, Nuffield College, Oxford. This paragraph is largely based on this memorandum, and I am indebted to Philip Williamson for bringing it to my notice. 16. Clay, Norman, pp. 239, 368, 416-17. 17. M. G. & Co. to J. P. M. & Co., 31 Dec. 1923, no. 4991, file 31, Box History 5 (Private Telegrams), MGP. 18. See, respectively, M. G. & Co. to J. P. M. & Co., 31 Dec. 1923, no. 4991, file 31, Box History 5; M. G. & Co. to J. P. M. & Co., 2 Sept. 1924, no. 4979, file 33, Box History 6; J. P. M. & Co. to J. P. M. and G. Whitney, 14 Oct. 1925, no. 2334 and J. P. M. and G. Whitney, to J. P. M. & Co., 14 Oct. 1925, no 4825, both file 36, Box History 6; M. G. & Co. to J. P. M. & Co., 10 Feb. 1930, no. 4588, file 46, Box History 8 (Private Telegrams), all MGP. Whitney was a partner in the New York firm. 19. MN's Commentary, 2 Feb. 1925, Series 172, file 1500A, folio 51, Treasury Papers, Public Record Office, London. 20. Moggridge, British Monetary Policy, pp. 213-14. 21. Aldcroft, Versailles to Wall Street, p. 242 and Cleveland and Huertas, Citibank, p. 385, fn. 19, argue that it was cheaper to borrow in New York than in London; Moggridge, British Monetary Policy, p. 200, states the opposite. 22. Sir Oto Niemeyer of the Treasury certainly believed that long-term loans would always be cheaper in London because of 'our greater skill in the foreign loan business'. Commentary by OEN on the Chancellor's Exercise, February 1925, T. 172/1500A, f. 45. 23. Paul Einzig, The Fight for Financial Supremacy (London: Macmillan, 1931), p. 52. If one substitutes 'Japanese' for 'American' in this quotation, it has a very contemporary ring. 24. Stephen V. O. Clarke, Central Bank Cooperation 1924-31 (New York: Federal Reserve Bank of New York, 1967), p. 77. 25. Einzig, Financial Supremacy, pp. 73-5. 26. With regard to the credit to be extended to the British government in aid of the return to gold, E. C. Grenfell wrote to J. P. Morgan that 'It would be essential that your participants be confined to the U.S.A. without direct or indirect passing on. ' 21 March 1925, no. 4585, File British Government Gold Standard Credit 1925, MGP. With regard to the Dawes Loan, it was 'to be understood as an absolute condition by all underwriters that no participation be passed on to anyone in another country in which an issue of the German loan is also to be made.' M.

152

27. 28.

29.

30.

31. 32. 33.

34.

35.

The House of Morgan in Financial Diplomacy, 1920-1930 G. & Co. to J. P. M. & Co., 8 Oct. 1924, no. 24/5090, file 4, Bundle 54 (German Government Loan in USA 1924), MGP. Clay, Norman, p. 144. See cables on New South Wales Loan, file 39, and cables on Australia, file 40, both Box History 7 (Private Telegrams), MGP. Of course, London continued to be a much more important capital market for Australia than New York; during March 1927-March 1928 Australia borrowed £35m in London and approximately £8m in New York. T. W. L. to J. P. M. & Co., 27 March 1928, no. 4624, file 42, Box History 8. It is also interesting to note that the negotiations for the Commonwealth of Australia 4V2 per cent External G. Loan 1956, issued in New York by J. P. M. & Co. in June 1928, were, at the request of the Australian representatives, carried out entirely in London by M. G. & Co. via cables to J. P. M. & Co. Files 42-43, Box History 8, MGP. J. P. M. & Co. to M. G. & Co., 21 Dec. 1927, no. 2575, file 41, Box History 7. 'Our experience. . . showed that evidence of cooperation with Great Britain particularly was of great influence with the investors throughout this Country'. J. P. M. & Co. to M. G. & Co., 23 Jan. 1924, no. 2050, file 31, Box History 5, MGP. Cleveland and Huertas, Citibank, pp. 139, 145-50. For material on Lazard's see R. H. Brand, 'Memorandum. American Business', 28 Oct. 1924, file 94 and Brand to the Chancellor of the Exchequer, 8 May 1944, file 199, R. H. Brand Papers, Bodleian Library, Oxford; see also material in footnote 25. 'As far as my own views are concerned I have considerable hesitation in undertaking a Loan to an ex-enemy country the very natural reason being the chief, with a secondary reason back of it, which is that our declining to do any ex-enemy business has in my opinion made it very much easier for us to do the Allies' business because our very active minded competitors have been able to turn their attention to Germany and have I think competed not quite as intensely for our legitimate business as they otherwise would have done.' J. P. Morgan to J. P. M. & Co., 30 Sept. 1927, no. 4966, file 41, Box History 7, MGP. Einzig, Financial Supremacy, p. 47. R. C. Leffingwell to J. P. Morgan, 10 Sept. 1923, File British Government Gold Standard Credit 1925, MGP. R. C. Leffingwell wrote to E. C. Grenfell on 15 Aug. 1929, 'You know too that I think Norman has done more to bring order out of chaos since the War than any living man and that I love him. Naturally therefore the question for me is what does he want us to do for him.' No. 2421, File Gold (13-16 Aug. 1929), MGP. Two who did not were J. M. Keynes and Reginald McKenna (Chancellor of the Exchequer 1915-16 and Chairman of the Midland Bank 1919-43). Clarke, Central Bank Cooperation, p. 73; Moggridge, British Monetary Policy, pp. 42-4. Leffingwell thought that McKenna was 'hopelessly unsound on this question'. R. C. Leffingwell to J. P. Morgan, 10 Sept. 1923, File Brit. Govt Gold Credit 1925, MGP. Clarke, Central Bank Cooperation, pp. 72-3, 80.

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36. Clarke, Central Bank Cooperation, pp. 79-80. 37. B. Strong to M. Norman, 9 July 1924, printed in Clarke, Central Bank Cooperation, p. 77. Frederick Leith-Ross of the Treasury wrote to a member of the Japanese Financial Mission on 29 May 1929 that 'as to the credit opened in 1925, I find that, as I thought, the credits were raised partly with the Federal Reserve Bank of New York and partly with Messrs J. P. Morgan to meet the wishes of the Federal Reserve Bank. ' T. 172/1500A, f. 186. 38. M. Norman to J. P. Morgan, 30 April 1925 and J. P. Morgan to E. C. Grenfell, 6 Jan. 1925, both File British Govt Gold Standard Credit 1925, MGP. 39. T. W. L., 'Aide-Memoire', May 1925; E. C. G. Minute, 8 May 1925, both File Brit. Govt Gold Standard Credit 1925, MGP. F. Leith-Ross in 1929 confirmed that Morgan's and their Syndicate cost the British Government £500 000 'in commission'. F. Leith-Ross to Mr Tsushima, 22 May 1929, T. 172/1500A, ff. 184-5. 40. For the whole episode, see file French Stabilisation Loan, Bundle 2, MGP. 41. 'If the franc does follow, as so many now fear, the course of the German mark, France and the world will have to thank for it as much as anything the sublime conviction of the French Treasury and most French financiers that the laws of public finance and political economy are not applicable to France. ' J. P. M. & Co. to H. H. Harjes, 18 Dec. 1925, no. 63470, file French Stabilisation Loan, Bundle 2, MGP. 42. H. H. Harjes to J. P. M. & Co., 21 April 1926, no. 84183, Harjes to J. P. Morgan, 28 April 1926, no. 84193, and Governor Strong to Harrison, Federal Reserve Bank, copy to T. W. Lamont, 21 May 1926, no. 2790, all in file French Stabilisation Loan, Bundle 2, MGP. 43. J. P. Morgan to T. W. Lamont (then in Seville), 22 April 1926, no. 63641, file French Stabilisation Loan, Bundle 2, MGP. 44. T. W. Lamont to J. P. Morgan, 28 April 1926, no. 84194, and T. W. Lamont and H. H. Harjes to J. P. M. & Co., 3 May 1926, no. 84211, file French Stabilisation Loan, Bundle 2, MGP. 45. T. W. Lamont to J. P. M. & Co. Partners and Front Office, 17 May 1926; Memorandum, no name, 20 May 1926; and J. P. M. & Co. to T. W. Lamont, 19 May 1926, no. 2210 (source of the quotation), all file French Stabilisation Loan, Bundle 2; M. H. & Co. to T. W. Lamont, 21 May 1926, no. 2794, file 37, Box History 7, MGP. 46. M. H. & Co. to T. W. Lamont, 17 May 1926, no. 2779; M. H. & Co. to T. W. Lamont, 19 May 1926, no. 2783; summary of telephone message from N. D. Jay in Paris to C. F. Whigham in London, 21 May 1926; M. H. & Co. to T. W. Lamont, 21 May 1926, no. 2794; M. G. & Co. (but probably Lamont) to H. H. Harjes and N. D. Jay, 21 May 1926, no. 1269; T. W. Lamont to H. H. Harjes and N. D. Jay, 21 May 1926, no. 1270; V. H. Smith to J. P. Morgan, 5 Nov. 1926; N. D. Jay to V. H. Smith, 5 Nov. 1926; V. H. Smith to J. P. Morgan, 8 Nov. 1926; J. P. Morgan to V. H. Smith, 8 Nov. 1926; Memorandum of meeting between V. H. Smith and Sir Robert Kin-

154

47. 48. 49.

50.

51. 52.

53. 54. 55. 56. 57. 58. 59. 60. 61. 62. 63.

The House of Morgan in Financial Diplomacy, 1920-1930 dersley (of Lazard's), beginning of Dec. 1926, all file French Stabilisation Loan, Bundle 2, MGP. Smith was a partner in the London firm. T. W. Lamont and H. H. Harjes to J. P. M. & Co., 30 April 1926, no. 84202, file French Stabilisation Loan, Bundle 2, MGP. T. W. Lamont and H. H. Harjes to J. P. M. & Co., 8 May 1926, no. 84234, file French Stabilisation Loan, Bundle 2, MGP. N. D. Jay to George Whitney, 5 Oct. 1925, no. 2431; J. P. Morgan and George Whitney to J. P. M. & Co., 6 Oct. 1925, no. 4806; Belgian plan is in M. G. & Co. to J. P. M. & Co., 6 Oct. 1925, no. 4807, all in file 36, Box History 6, MGP. J. P. M. & Co. to J. P. Morgan and George Whitney, 9 Oct. 1925, no. 2328; J. P. M. & Co. to J. P. Morgan, George Whitney and F. D. Bartow, 14 Oct. 1925, no. 2335; J. P. Morgan and G. Whitney to J. P. M. & Co., 14 Oct. 1925, no. 4824; J. P. Morgan and G. Whitney to J. P. M. & Co., 16 Oct. 1925, no. 4826; J. P. M. & Co. to J. P. Morgan, 5 Nov. 1925, no. 2366; J. P. M. & Co. to J. P. Morgan, 20 Nov. 1925, no. 2389; M. G. & Co. to J. P. M. & Co., 21 Nov. 1925, no. 4876; J. P. M. & Co. and Guaranty Trust Co. to C. F. Whigham, 24 Nov. 1925, no. 2399, all file 36, Box History 6, MGP. Bartow was a partner in the New York firm. Clay, Norman, p. 256. Leffingwell was subsequently proved correct. C. F. Whigham to J. P. M. & Co., 27 Nov. 1925, nos 4887 and 4888; J. P. M. & Co. and Guaranty Trust Co. to C. F. Whigham, 28 Nov. 1925, no. 2416; J. P. M. & Co. to C. F. Whigham, 3 Dec. 1925, no. 2429, all file 36, Box History 6, MGP. For details see files 38-39, Box History 7, MGP. R. C. Leffingwell to B. S. Carter, 5 Aug. 1926, file French Stabilisation Loan, Bundle 2, MGP. Clarke, Central Bank Cooperation, p. 33 and Clay, Norman, pp. 284-6, for example. J. P. M. & Co. to G. Whitney, 23 Oct. 1926, no. 2441; J. P. M. & Co. to J. P. Morgan, 4 Nov. 1926, no. 2483; J. P. Morgan to J. P. M. & Co., 4 Nov. 1926, no. 5015, all file 39, Box History 7, MGP. J. P. M. & Co. to J. P. Morgan, 6 Nov. 1926, no. 2484, file 39, Box History 7, MGP. Clay, Norman, p. 257. Ibid., p. 258. The other partner was George Whitney. M. G. & Co. to J. P. M. & Co., 6 Oct. 1925, no. 4806, file 36, Box History 6, MGP. 17 July 1924, no. 2431, file 32, Box History 6, MGP. J. P. M. & Co. and Guaranty Trust Co. to C. F. Whigham, 24 Nov. 1925, no. 2399, file 36, Box History 6, MGP. Denise Artaud, 'La question des dettes interalliees et la reconstruction de 1'Europe (1917-1929)', 2 vols (Lille: Atelier Reproduction des theses Universite de Lille III, 1978); Frank Costigliola, 'The Other Side of Isolationism: the Establishment of the First World Bank, 1929-1930', Journal of American History, LIX, no. 3 (Dec. 1972), pp. 602-20 and 'The United States and the Reconstruction of Germany in the 1920s', Business History Review, L, no. 4 (Winter 1976), pp. 477-502; Hogan, Informal

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Entente; Melvyn P. Leffler, The Elusive Quest: America's Pursuit of European Stability and French Security, 1919-33 (Chapel Hill: The University of North Carolina Press, 1979); and Schuker, End of French Predominance. Clay, Norman, p. 192. Hogan, Informal Entente, pp. 60-61; Eduard Marz, Austrian Banking & Financial Policy: Creditanstalt at a Turning Point, 1913-1923, trs. by Charles Kessler (London: Weidenfeld & Nicolson, 1984), Part 5, Chapter 2. Hogan, Informal Entente, pp. 61-2. T. W. Lament in Paris to D. W. Morrow in New York, 15 May 1921, file 1, Bundle 156 (Austria. Reconstruction. 1923/43 Loan), MGP. J. P. M. & Co. to E. C. Grenfell, 3 Dec. 1921, no. 2255, file 1, Bundle 156, MGP. T. W. Lament to J. P. M. & Co., 12 May 1922, no. 4715, file 1; M. G. & Co. to Baron Franckenstein, the Austrian Minister of Finance, 22 May 1922, file 1; and G. M. Young to C. F. Whigham, 23 June 1922, file 1, all Bundle 156, MGP. Marz, Austrian Banking & Financial Policy, pp. 480-81. The Lamont cable of 12 May can also be found in Series 2, file 82-17, Austria, Lamont Papers, Harvard Business School. M. G. & Co. to J. P. M. & Co., 16 Jan. 1923, no. 4511, file 2, Bundle 156, MGP. Hogan, Informal Entente, p. 65. V. H. Smith and C. F. Whigham to J. P. Morgan, 16 Jan. 1923, no. 4512 and J. P. Morgan to M. G. & Co., 18 Jan. 1923, no. 2013, both file 2, Bundle 156, MGP. T. W. Lamont to E. C. Grenfell, 10 March 1923, file 2; M. G. & Co. to J. P. M. & Co., 21 April 1923, no. 4585, file 2; J. P. M. & Co. to Austrian Loan Commission, enclosed in T. W. Lamont to J. P. M. & Co., 10 May 1923, no. 82307, file 2; M. G. & Co., to J. P. M. & Co., 11 June 1923, no. 4700, file 3; and J. P. M. & Co. to M. G. & Co., 11 June 1923, no. 2200, file 3, all Bundle 156, MGP. Hogan, Informal Entente, p. 66.' Schuker, The End of French Predominance, passim. 'As regards public offering of German Loan in U. S. A. it is essential that principal European Powers should be bound by Protocol to refrain from any interference with Germany which would impair the security or the service of the loan. ' J. P. M. & Co. to M. G. & Co., 10 July 1924, no. 24/2406; T. W. Lamont cabled J. P. M. & Co. on 15 July 1924 that there would be no possibility of such a Protocol. No. 24/4874. E. C. Grenfell and T. W. Lamont to J. P. M. & Co., 22 July 1924, no. 24/4896, reported that the British contended that the situation would be impossible for the investor should any Allied Power have authority to enforce isolated sanctions. All from file 2, Bundle 54 (German Government Loan in U. S. A. 1924), MGP. E. C. Grenfell and T. W. Lamont to J. P. M. & Co., 23 July 1924, no. 24/4899 and T. W. Lamont to J. P. M. & Co., 20 July 1924, no. 24/4892 for shaky British and French Governments, both file 2, Bundle 54, MGP. D. W. Morrow, T. Cochran and R. C. Leffingwell to T. W. Lamont, 24 July 1924, no. 24/2459 and? T. W. Lamont to J. P. M. & Co., 20 July 1924, no. 24/4892 for M. Norman's stiffness, both file 2, Bundle

156

75. 76. 77. 78. 79. 80.

81.

82.

83. 84.

85. 86. 87.

The House of Morgan in Financial Diplomacy, 1920-1930 54, MGP. Cochran was a New York partner. Schuker, The End of French Predominance, Chapter 8. 8 Oct. 1924, no. 24/5097, file 4, Bundle 54, MGP. Clarke, Central Bank Cooperation, p. 68. 8 Oct. 1924, no. 24/5097, file 4, Bundle 54, MGP. Clarke, Central Bank Cooperation, p. 68. M. G. & Co. to J. P. M. & Co., 22 Oct. 1924, no. 24/2707 and H. Harjes to J. P. Morgan, 13 Oct. 1924, no. 24/2009, both file 5, Bundle 54, MGP. J. P. M. & Co. to J. P. Morgan, 14 Oct. 1924, no. 24/2667 and A. M. Anderson to T. W. Lament, 16 Oct. 1924, no. 24/5172, both file 5, Bundle 54, MGP. Anderson was a New York partner. Clarke, Central Bank Cooperation, p. 69. Schuker notes that Grenfell wrote to Lamont that he could not take an active part in negotiations for fear of political attacks on Morgan's if things went badly; however, this did not prevent Grenfell from keeping his ear to the ground, and he helped Lamont draft many of the cables. The End of French Predominance, p. 291, fn. 198. Clay, Norman, pp. 266-7. Stephen A. Schuker, 'American Foreign Policy and the Young Plan', in Gustav Schmidt (ed. ), Konstellationen internationaler Politik 1924-1932 (Bochum: Studienverlag Dr. N. Brockmeyer, 1983), p. 122. Clay, Norman, pp. 267-8. Sally Marks, The Illusion of Peace: International Relations in Europe 1918-1933 (London: Macmillan, 1976), p. 102. T. W. Lamont wrote to Owen D. Young (via J. P. M. & Co. ) on 31 July 1929 that 'I find very strong criticism here of the plan in so far as it affects British interests and very strong opposition both in political and financial circles. . . I had over an hour with the Chancellor [Philip Snowden] and. . . he says he is determined to improve Britain's percentage and may not hesitate to break the conference on this issue. ' No. 29/4893; J. P. Morgan wrote to Owen D. Young on 9 August that 'Snowden's extraordinary methods of negotiation have thrown the whole thing into such confusion that no one can see his way anywhere and the whole thing is clouded by the fear of the complete rupture of the Conference before it has fairly begun. ' No. 29/4925, both file International Bank (B. I. S. ), Bundle 213, MGP. Marks, Illusion of Peace, p. 104. David Carlton, MacDonald versus Henderson: The Foreign Policy of the Second Labour Government (London: Macmillan, 1970), pp. 40-49. Sir Frederick Leith-Ross, Money Talks; Fifty years of International Finance (London: Hutchinson, 1968), pp. 110-23. Marks, Illusion of Peace, pp. 102-6. T. W. Lamont to P. Quesnay, Personal, 14 Aug. 1929 and 19 Aug. 1929, both file International Bank (B. I. S. ), Bundle 213, MGP. Clay, Norman, pp. 364-7. In his evidence to the Macmillan Committee on 26 March 1930 Norman emphasised how useful the B. I. S. had been in 'taking Reparations from the political arena and putting them into a back room in the B. I. S. ' (p. 243), and in particular how useful the B. I. S. was proving to be as a routine and therefore nearlyunpublicised meeting place for central bankers. His evidence is printed

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as an Appendix in Paul Einzig, Montagu Norman: A Study in Financial Statesmanship (London: Kegan Paul, Trench, Trubner, 1932), esp. pp. 241-7. Costigliola, 'The Other Side of Isolationism', p. 620, emphasises Norman's disillusionment. T. W. Lamont to the Chancellor of the Exchequer, Personal, 20 Aug. 1929 and J. P. Morgan to J. P. M. & Co., 31 Oct. 1929, no. 29/5071, both file International Bank (B. I. S. ), Bundle 213, MGP. T. W. Lamont to P. Quesnay, Personal, 14 Aug. 1929 and T. W. Lamont to the Chancellor of the Exchequer, Personal, 20 Aug. 1929, both file International Bank (B. I. S. ), Bundle 213, MGP. J. P. Morgan to Owen D. Young, 9 Aug. 1929, no. 29/4925, for the quotation and J. P. Morgan to J. P. M. & Co., 31 Oct. 1929, no. 29/5071, both file International Bank (B. I. S. ), Bundle 213, MGP. Costigliola, 'The Other Side of Isolationism', p. 620. For the relations of British and American bankers with their respective governments see Clay, Norman; Moggridge, British Monetary Policy; Leffler, The Elusive Quest; and Burk, Morgan Grenfell; all passim.

5 Anglo-American Monetary Policy and Rivalry in Europe and the Far East, 1919-1931 Roberta Allbert Dayer To understand or explain the Anglo-American relationship in the 1920s, the historian must examine not only political but economic relationships, specifically the political influence of the major investment banks. For the competition between international banks - for influence over their own and other government officials, and for control of investment areas - affected most of the major decisions of the 1920s. Many times the issue at stake was not a government's interests but, rather, a particular bank's interests. Naturally such objectives were carefully camouflaged or disguised as national interests. A group of Anglo-American bankers evolved from the war who shared common values and goals, and a sense of commitment to prevent future wars through cooperating in financial questions.1 These bankers believed that the faster their governments removed themselves from business and monetary affairs, the quicker recovery would take place. They feared postwar inflation and were anxious to see their central banks recover control over currency and stabilise international exchanges by returning to the gold standard.2 They believed that funding debts and returning to gold would prevent the political manipulation of currencies.3 Although a few economists such as John Maynard Keynes, the Cambridge don whose wartime Treasury experience had made him an expert on Anglo-American exchange, were beginning to question the wisdom of permitting market forces to govern, they were vastly outnumbered by establishment figures such as Sir Charles Addis, a Director of the Bank of England, who in 1921 was elected president of the Institute of Bankers. 158

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In 1919 Addis and Sir Montagu Norman, the deputygovernor of the Bank of England, began a friendship which was to have enormous significance for Anglo-American relations in the 1920s. Both men believed that cooperation with the United States offered the best strategy to assure the preservation of the British Empire. As the London manager of the Hongkong and Shanghai Banking Corporation, Addis had acquired wide knowledge of Far Eastern trade and foreign exchange which enabled him to assume the worldwide perspective characteristic of the international financier. In the prewar years, Addis had worked closely with the Foreign Office in organising an international consortium of banks which enjoyed a monopoly over loans to the government of China.4 He had become acquainted with Norman during the war when he became a member of the important Committee on Currency and Foreign Exchanges; but it was only afterwards, when Addis laboured in the Court of the Bank of England, that the two men became intimate.5 Norman, who came from an old English banking family, had served his apprenticeship with E. C. Grenfell at his grandfather's firm, Brown Shipley & Co., the London branch of an Anglo-American merchant bank.6 After spending several years in the New York office of Brown Bros, where he gained valuable expertise in American finance, Norman was elected to the Court of the Bank of England in 1907.7 Addis and Norman both knew the leading partners of J. P. Morgan & Co., as well as Benjamin Strong, the governor of the newly-created Federal Reserve Bank of New York - the FRBNY.8 Addis had worked with Henry P. Davison and his English partner, E. C. Grenfell, since 1910 in the China Consortium. Strong's friendship with Norman provided an important financial link to the American government. The two men began an extensive correspondence and, in the years following the war, visited each other regularly.9 Strong was also a close friend of the leading partners of J. P. Morgan & Co. - Davison and Thomas Lamont. The three men had begun their banking careers together, before Davison and Lamont joined Morgans, and Strong became governor of the FRBNY in 1914.10 But, though friends, the American and British bankers were also rivals, both as representatives of their institutions and as agents of their governments. This aspect of their relationship naturally was not publicised. While Strong and Norman agreed

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that their governments should cease to control currency and exchange, each aimed at establishing his own national currency as the major unit for international trade. So, while they cooperated in encouraging other countries to stabilise their currencies and create central banks, they also competed to convince these governments to keep their reserves in dollars or pounds. Similarly, in their capacity as private bankers, Lament and Addis cooperated to ensure that Consortium's monopoly over China loans but, as representatives of their respective governments, they competed regarding reparations and war debt questions. Documentary evidence reveals the purposeful and articulated coordination of British defensive techniques to protect the Empire from American competition in the postwar period, but the existence of a clearly defined American strategy is not so certain. Unlike Great Britain, where both government and financial planning took place in London, the American ruling establishment was not so small nor so united in purpose.11 Some Americans recognised that United States interests were intricately related to those of the rest of the world, but many - probably most - believed that the United States could 'go it alone'. Even had American leaders agreed on their ultimate objective, both geographical and institutional barriers hindered the kind of planning and coordination which took place in Britain among the various government departments, leading figures of the City, the Bank of England, and academic economists, all of whom regularly saw one another both officially and socially.12 For instance, on a typical business day, Addis normally travelled the few blocks from his office in the City, at the Hongkong & Shanghai Bank, to Norman's office at the Bank of England; he might then walk the relatively short distance to the Treasury, the Foreign Office, Colonial Office, and so forth. Furthermore, he often would see many of the same leaders socially, sometimes at a diplomatic or business dinner at one of the private clubs, at a meeting of the Royal Institute of International Affairs (Chatham House), the Royal Economic Society, or the Tuesday Club, a dinner group which met monthly and included Keynes, Treasury officials, and businessmen.13 In contrast, the American power structure was larger and less unified. While Strong and the Morgan partners consulted regularly, and probably could count on a friendly reception at

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Washington at the Treasury and the State Department, they could not be assured of support from Congress where suspicion of the 'Wall Street interests' remained strong throughout the 1920s. Furthermore the powerful Republican leader, Herbert Hoover, first as Secretary of Commerce from 1921 to 1928 and then as President from 1929 to 1933, distrusted the British and preferred to act independently. Hoover regarded Strong as 'a mental annex to Europe'.14 While it is clear that Strong and Morgans sought AngloAmerican cooperation in the postwar period, questions remain concerning their ultimate objectives. Did Strong deliberately mislead his close friend, Norman, into believing that the Americans would cooperate in central bank operations aimed at assuring international financial stability? Acting on this assumption, the British government returned to the gold standard in 1925. Or did the partners of J. P. Morgan & Co. deceive Whitehall with the assurance that British surrender of the Anglo-Japanese alliance and funding of their war debts ultimately would lead to all-round cancellation of the war debts-reparation question? Perhaps there is no certain answer to such questions since human relations almost invariably involve some degree of deception, exploitation, and moral ambiguity. What is certain is that British leaders believed that Norman and Addis had obtained unofficial but reliable assurances of American cooperation and formulated their policy accordingly. Acting on these assumptions, Whitehall surrendered the Anglo-Japanese alliance and agreed to parity in battleships in 1922, funded the war debt to America in 1923, cooperated in establishing the Dawes Reparations Plan in 1924, and returned to the gold standard in 1925. When subsequently the Americans refused to cancel British war debts or to cooperate in currency regulation but, instead, hoarded gold, the British blamed American policy for their economic problems. Faced with high unemployment and a budget badly out of balance, Whitehall felt betrayed, believed that the Americans had 'let the world down', had not kept their end of the bargain, and, in short, had not 'played the game'.15 They therefore felt justified in 1931 in 'letting the pound go', in abandoning the gold standard, and in adopting a sterling strategy aimed at recovering trade. After 1925, Anglo-American economic relations deteriorated; after

162 Anglo-American Monetary Policy 1929, they disintegrated. Where the responsibility lies is still debated. Britain's postwar strategy was to win American financial cooperation in Europe through offering cooperation in East Asia. Addis's description of the Americans in 1921 reveals the British approach. Writing from New York, he explained: Their whole tradition and outlook are provincial - to keep out of European entanglements - and to convince them that the war has made this forever impossible and that no nation can hereafter live to itself alone requires persuasion and persuasion takes time.16 Thus, to consider how this story unfolded in the 1920s is to evaluate the developments in Europe and in the overall AngloAmerican relationship concerning monetary policy, and to relate this to the British position in the Far East. REPARATIONS, WAR DEBTS AND STABILISATION At the end of the war, the world's financial leaders recognised that funds for European recovery could only come from the United States. The problem was how to convince the Americans - either private citizens or the government - to provide the much-needed loans. The American Treasury had firmly stated that no country could hope to receive new loans until it had settled its war debts.17 However, until they knew what they could expect from Germany in reparations payments, none of the Allies were willing to settle their debts to the United States. In 1919, at the Paris Peace Conference, British financial leaders recommended general cancellation of reparations and war debts but, since David Lloyd George, the Prime Minister, had committed himself to 'squeezing the German lemon until the pips squeak', the issue became so political that it proved impossible to resolve.18 Serving as a financial adviser to the British delegation, Keynes had proposed that the Americans accept German reparation bonds in payment for Allied war debts to America, a plan which would eliminate these divisive issues and pave the way for postwar economic recovery.19 But the American financial advisers, Lamont and Norman Davis,

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opposed Keynes's proposal and convinced Woodrow Wilson not to accept it.20 As a result, the question of how much Germany was to pay in reparations continued to impede the settlement of all other financial questions. At the same time as the Americans criticised their allies for their harsh treatment of the Germans, they refused to consider cancellation of the debts which Britain, France, Russia, Belgium, and Italy owed to the United States. In addition, the American Treasury adamantly insisted that no connection existed between the two questions.21 The explanation for this apparently illogical American stance is that the American investor hoped to penetrate the German and Austrian marketplace and, thus, finance the Central Powers' recovery in the postwar years.22 But new loans could not be provided if resources and revenues, such as those of the German railways, were already pledged as security for former debts, namely reparations. As in any other mortgage, the lender wished to assure first access to available securities. This continuing disagreement over war debts and reparations should be understood as a symptom of the underlying competition between American and British investors to achieve dominance over world markets. During the summer of 1919, Addis and Norman discussed all these financial questions with Strong and Colonel Edward House, Wilson's closest adviser, who had smoothed AngloAmerican difficulties during the war.23 The bankers drew up a plan for war debts and reparations which they hoped House could persuade the President to accept.24 But Wilson had a stroke, House lost his influence at the White House, and the American Treasury rejected all overtures.25 Furthermore, when the United States Senate refused to ratify the Versailles Treaty, the United States did not join the League of Nations. Meanwhile, financiers from most of the leading powers were working on another proposal aimed at promoting European recovery. The 'International Memorial', published in the world's leading newspapers in January 1920, emphasised the urgent need for 'a comprehensive scheme' ol cooperative assistance 'to heal the unprecedented economic evils from which all Europe is now suffering' and offered a very attractive provision that the proposed loan would rank ahead 'of all other indebtedness whatsoever whether internal debt, reparations payments

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or inter-allied debt'.26 However, nothing came of this proposal, perhaps because it did not have Morgan's backing.27 When Norman became Governor of the Bank of England in March 1920, he began to coordinate British financial strategy. After discussing reparation issues with Joseph Avenol, the French financial attache in London, he composed a lengthy memorandum outlining his recommendations for future British reparations and war debt policy.28 In addition to insisting that Britain should not pay the United States any more than she received from Germany, he suggested that the Spa percentages - the percentage of reparations each of the victors was to receive which had been agreed upon at the Spa conference be used to govern the procedure of repayment with the use of German bonds: I understand that as between England and France the proportion of 5 to 11 is pretty well agreed as regards dividing the indemnity. Therefore once the total indemnity shall have been fixed our eventual share in it can be defined and it would not be out of the way to Jix the total so that our share of it would be equal to our War Debt to America. If that could be done in the near future it would only be a question of time before our War Debt to America could naturally be set off against our share of the indemnity in one or other of several possible ways. . . . 29 Norman predicted that, ultimately, the German bonds could be used to offset the war debt payments to the United States. The next objective was to gain Washington's cooperation in these arrangements. Meanwhile, Norman and the British Treasury proceeded to implement an ingenious scheme which Davison had suggested as a means of repaying the Anglo-French loan of 1915 which Morgans had underwritten. 30 Since this loan fell due in October 1920 and Britain and France lacked the resources to make the payment, Davison suggested that Russian gold on deposit in the Bank of France be used for repayment.31 Out of this proposal emerged an elaborate scheme wherein the British Treasury suggested to Washington that $10 million of the Russian gold be kept as a security for a Consortium loan to the Chinese Eastern Railway.32 At the same time as these secret talks were taking place in London, Lamont and Strong were in Japan

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seeking to win the cooperation of that country's leading bankers.33 ANGLO-AMERICAN COOPERATION IN EAST ASIA At this point it is necessary to consider the situation in East Asia. Following the war, the Foreign Office had appointed a blue ribbon committee to examine and make recommendations concerning future Far Eastern policy. This committee concluded that American and British interests were identical and that the government should seek an accommodation with Washington.34 Despite Lloyd George's assurance to the Cabinet that he did not intend to let the Americans 'walk all over us' in China, he was willing to do some bargaining - perhaps agreeing not to renew the Anglo-Japanese alliance, which the Americans bitterly opposed, and accepting naval parity in exchange for favourable treatment on war debts.35 The first objective was to complete the organisation of the Second China Bank Consortium. Addis, who had begun his career in China in the 1880s in the service of the Hongkong and Shanghai Banking Corporation, had been largely responsible for organising the first China Consortium in 1909. In 1911, four national banking groups from Britain, France, Germany, and the United States issued a loan to the Chinese government to build railways.36 A Morgan partner, first Davison and, then Lamont, became the manager of the American group, while Addis managed both the British group and the entire Consortium. A fundamental condition of the Consortium arrangement was that each government gave exclusive support to its respective banking group. In other words, the Consortium made a mockery of the principle of laissez-faire but, in Addis's words, economics and politics could not be separated in running an empire.37 Following the Chinese revolution of 1911, the Consortium was enlarged to include Japan and Russia, becoming a sixpower Consortium, not because Japan and Russia had capital to lend, but in recognition of those powers' political interests in China. After the idealistic Woodrow Wilson was elected President of the United States in 1912, he denounced the Consortium as an instrument of imperialism; this forced the Amer-

166 Anglo-American Monetary Policy ican group to withdraw in April 1913.38 The following November, the five-power Consortium issued a 'Reorganisation Loan' to provide funds for the Chinese President, Yuan Shihk'ai, to defeat his opponents, chiefly the Kuomintang - the Nationalist Party.39 The outbreak of the European war in August 1914, which pitted Britain, France and Russia against Germany, provided the opportunity for the United States and Japan to promote their interests in China.40 While the Foreign Office feared both American and Japanese ambitions, those of Japan seemed to require the most immediate attention. Therefore, the British adopted the strategy of enlisting American help to control Japan.41 Between 1917 and 1920, Addis convinced the Americans, Japanese, and French to pool their concessions and form a new four-power Consortium for China. Britain's great bargaining chip was the fact that the major Chinese revenues — the salt tax and maritime customs - were under the management of British personnel. These revenues were deposited in the Hongkong and Shanghai Banking Corporation, where, after China's debts were paid, the surplus was held in trust for the recognised Chinese government, which was the one sitting in Peking. These funds could only be released with the consent of the Diplomatic Body, the powers' representatives in China, which required a prior explanation as to how such funds were to be used.42 Under the new Consortium, all four partners were to share equally in future loans to the Chinese government. In effect, the Consortium would exercise a monopoly over loans, and each banking group was to receive the full backing of its government. The objective of this second China Consortium was to nationalise and develop the railroads, highways, and harbours of China and to control the government's finances. In other words, in forming the second Consortium, Britain, France, Japan, and the United States had agreed to cooperate in the international control of the government of China. Early in 1920, the State Department dispatched Lamont to Japan to persuade Japanese bankers to join the second Consortium. He succeeded by assuring the Japanese that the other powers - Britain, France, and the United States - did not intend to infringe on Japan's special position in Manchuria and eastern Inner Mongolia. After Lamont returned to the United States, he met with State Department officials and

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worked out Davison's proposal to use Russian gold to pay off the Anglo-French loan, keeping aside $10 million as security for a Consortium loan to the Chinese Eastern Railway - the CER.43 The CER was the eastern portion of the Russian TransSiberian Railway which, crossing Manchuria, terminated at Vladivostok. As a Russian railway, built across Chinese territory but financed by French investors, the CER had been immersed in controversy from the very beginning. After the Japanese defeated Russia in the Russo-Japanese war in 1904-5, the Japanese developed South Manchuria as their sphere of interest in China, investing heavily in the southern extension of the CER, the South Manchuria Railway, which ran from Changchun through Mukden to Port Arthur. Aware that American investors had long been interested in acquiring Russian railways, the British had encouraged the Americans to take over the CER during the war and develop Siberia as their sphere of interest. But Wilson had opposed such proposals. After the Harding Administration came into office in 1921, there seemed more likelihood that such a scheme might be implemented. The bankers and their respective foreign offices hoped that the Consortium Agreement reached in October 1920 would be followed by a corresponding political agreement.44 American leaders knew that they would need British help to convince the Japanese to withdraw their troops from Siberia and Shantung, areas which they had occupied during the war. In 1921 the British encouraged Harding to summon a conference on naval disarmament - which became the Washington conference - a step which was politically popular and advocated by American peace groups and the anglophobic Senator William Borah. Proceeding on these assumptions, plans were drawn up for international control of the CER, to be funded with a Consortium loan.45 In August 1921, Addis and Norman made a secret visit to New York to lay the groundwork for Anglo-American financial cooperation.46 Lament arranged for Addis to discuss the plans for the CER with Harding's Secretary of State, Charles Evans Hughes, in Washington.47 After these friendly conversations, Addis and Norman left the United States convinced they had won American support for an Anglo-American partnership, not

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only in East Asia, but in Europe as well.48 They were mistaken. While the delegates to the Washington conference reached agreement on naval disarmament, substituted a four-power understanding for the Anglo-Japanese alliance, and convinced the Japanese to withdraw their troops from Shantung and Siberia, they were unable to persuade the Chinese delegates to accept international control of their railways. Nor did the Harding Administration cancel British war debts.49 On the contrary, Congress passed legislation which forbade any exchange of German reparation bonds for Allied war debts and created a World War Debt Funding Commission with specific instructions for debt-collection. As these events were taking place in Washington, Addis travelled to East Asia where he conferred with Chinese, Japanese, and British leaders. While in China he announced that loans might be provided to provincial leaders, a policy which the American State Department viewed as a direct violation of the Consortium principle that loans would only be issued to the Peking government. Thus, before the ink dried on the Washington treaties, new suspicions and resentments emerged. Nonetheless, the Europeans continued their efforts to convince the Americans to participate in European affairs, this by inviting them to attend an international conference at Genoa. CENTRAL BANK COOPERATION, 1922-28 It was at this point that Anglo-American economic relations began their slow turn for the worse. Addis had stopped in New York on his way home from East Asia; here he learned that he had been appointed a British financial expert to the Genoa conference. Before leaving for England, he took the opportunity to consult with Strong and the Morgan partners.50 Although the American government refused to send delegates to Genoa, the European financial experts passed resolutions recommending that a conference of central bankers be convened and that the European powers adopt a gold exchange standard.51 Under such a standard, gold does not circulate but is kept as a reserve for currency and used for international settlements, the objective being to prevent a shortage of gold. The Genoa

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recommendations anticipated that each government would establish a central bank which would then cooperate in ensuring exchange stability. Addis and Norman (the latter visited Strong while the conference was in session) believed that Strong and Morgans would ensure American cooperation with the Genoa resolutions.52 However, the war-debt issue continued to cause friction between the two Anglo-Saxon powers. The British government still hoped for generous treatment from the new Harding Administration, expecting that some technique could be devised to link war debts to reparations. In April 1922, the Harding Administration formally requested that the former Allies send missions to fund their debts.53 Still stalling, the Lloyd George government responded by issuing the so-called 'Balfour Note', which informed its allies that Britain would only charge them what it had to pay the Americans.54 This British action put the onus for debt collection on the Americans and, like Keynes' Economic Consequences of the Peace, this announcement created resentment, even fury, in the United States.55 Not until the coalition government of Lloyd George was forced to resign and the Conservative, Andrew Bonar Law, formed a new government, was a debt mission dispatched to Washington in December 1922. The two principal negotiators of the British debt mission were the new Chancellor of the Exchequer, Stanley Baldwin, and Norman. Norman had discussed the matter with Morgan the previous August, afterward noting that Britain should 'delay definite funding and merely talk in Washington. He agrees unless Rep. Schedule can be readjusted first. It can't: Poincare won't.'56 In October, Strong had informed S. Parker Gilbert, the Under-Secretary of the United States Treasury, that he thought that Britain could repay 'the entire debt but not within the limitations of the funding bill'.57 Meanwhile, Keynes presented a series of lectures on war debts, reparations, and British monetary policy to the Institute of Bankers which emphasised that Britain expected important concessions regarding the debt owed to America.58 The Cambridge economist was even franker in a private letter to the American lawyer, Paul Cravath, where he described the debts as 'diplomatic weapons' and said he favoured cancellation so as to avoid repudiation.59

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Strangely enough, although Baldwin had been instructed simply to talk in Washington,60 after a few days of discussion, he and Norman accepted a debt-funding agreement which they recommended to the Cabinet as the most favourable terms possible.61 Furious, Bonar Law ordered them to return immediately. However, the Prime Minister could not carry his Cabinet. Nor could Addis, who also opposed the debt-funding package, convince the Bank of England's Committee of Treasury to oppose Norman.62 Aside from Addis, Keynes, Lord Beaverbrook, and Sir Reginald McKenna, a former Chancellor of the Exchequer, the rest of the British leadership buckled under American pressure and accepted the terms. Nonetheless, the Foreign Office and the Treasury still expected eventual cancellation since the Harding Administration had agreed not to commercialise the debt, that is, not sell bonds to investors.63 One Foreign Office clerk explained: Our real reason for not wishing the bonds to be marketable is to safeguard the possibility of eventual cancellation. This reason can hardly be publicly disclosed. But I understand from Mr. Grigg [a Treasury official] . . . that the American Commission was more or less pledged to give us some more definite safeguard than is now proposed.64 Once again, the British had deferred to American wishes in the expectation of future rewards. Still, the absence of any final agreement on reparations prevented new American investments in Europe. Not until Europe was plunged into chaos by the French invasion of the Ruhr in a misguided attempt to enforce reparation payments, and the subsequent German passive resistance and economic hardship affected American agricultural sales, did Hughes become convinced of the necessity for American participation in solving the reparation impasse.65 Hughes encouraged the Morgan bankers to draw up proposals; in early 1924, American financial experts joined with their European counterparts in formulating a new plan which acquired the name of the chief American delegate, Charles G. Dawes, a Chicago banker. Although Norman played an important role in arranging what became known as the Dawes Loan, Sir Otto Niemeyer, the powerful controller of finance in the British Treasury, referred to it as

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the Americans' 'beastly plan', and he predicted that it would 'tie up the exchanges' without any permanent benefit.66 For the American investor, the Dawes Loan represented a great victory, since the bonds were given first charge on German revenues before the payment of reparations.67 The Reichsbank, Germany's central bank, was placed under international control, with the Reichsmark linked not to the pound but to the dollar. With the provision of such favourable terms, the issue was over-subscribed. Lament jubilantly reported to Hughes that the American market took $125 million as its share.68 Thereafter, American funds began to pour into central Europe, leading to European economic recovery and an easing of political tensions.69 But in many ways the euphoria was false since the settlement was temporary and no final agreement had been reached either on reparations or inter-Allied war debts. The French continued to refuse to settle their debt to America until they knew what they would receive from Germany in reparations. The hope was that economic expansion would provide a solution.70 The final step which completed Britain's compliance with American wishes was the return to gold in 1925. The Americans were exerting pressure on Whitehall since they recognised that their plans for world dominance could be badly skewed if the British did not return to gold but, instead, established an Imperial currency as some were suggesting.71 John Foster Dulles, one of the most knowledgeable American international lawyers, had worked on reparations at the Paris Peace Conference and served as counsel to Bankers Trust, the underwriter for the Dawes Loan. He warned the Coolidge Administration that if the British did not return to gold, 'we could be left with a pile of yellow metal'.72 After conversations in London, Strong wrote to Pierre Jay, the president of the FRBNY: Very confidentially, I have a strong conviction, after an all afternoon discussion with Norman, Revelstoke and Addis (the real ones here) that if the Dawes Report is accepted, we can find a way to deal with the London-New York exchange that will finally do the job. But it is all in future and depends upon that big 'if'.73 A further source of pressure on the British Cabinet came with the appointment in the autumn of 1924 of an American econ-

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omist, Edwin Kemmerer, to advise the South African government on a possible return to the gold standard. Both Addis and Norman feared that if Britain failed to return to the gold standard, British dominions such as Canada and, especially, South Africa might choose to follow the gold dollar rather than an Imperial pound.74 Fortunately for the Americans, the British did not listen to warnings from Keynes and others of the danger of making the British currency dependent on American dictates. As noted already, a general assumption existed that the gold standard was essential to British economic recovery, but some disagreement concerning the timing and at what rate was also present.75 The experts debated the issue in the spring of 1924, and a special committee which held hearings throughout the summer and autumn recommended that the exchange be monitored and a decision be postponed until the next year.76 At this point, Norman took matters into his own hands, joining with Morgans and Strong in making arrangements which both Addis and Treasury officials opposed. Although the new Chancellor of the Exchequer, Winston Churchill, expressed serious misgivings, he was inexperienced in finance and finally accepted Norman's recommendations.77 And so, in March 1925, the government announced that Britain would return to gold at the end of 1925. Because Norman trusted Strong and his friends at Morgans, he believed that central bank cooperation would enable the financiers to administer a gold exchange standard which would prevent a shortage of gold and subsequent price-contraction. In joint testimony with Norman to the Royal Commission on Indian Currency and Finance, Addis assured the commissioners that after the European governments had stabilised their currencies, central bank cooperation provided for by the Genoa resolutions would 'come into play' and 'a deliberate and concerted attempt will then be made by the Central Banks of Europe to prevent undue fluctuations in the future value of gold'.78 But after 1925 the expected central bank cooperation to prevent a shortage of gold did not develop. In 1926-27, both the Norman-Strong friendship and Anglo-American relations in general deteriorated.79 Churchill's public criticisms of the American war-debt policy antagonised the American Treasury and, as Britain's domestic economic situation worsened, the Chancellor urged rate reduction on the Bank of England.80

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When the British Treasury sought American help, Strong failed to respond to British appeals for monetary expansion. Instead he informed Norman in 1928 that he no longer believed a conference on central banking was necessary, did not believe there was a shortage of gold, opposed the Gold Exchange Standard, and felt that the Genoa resolutions were 'no longer operative'.81 From the British Treasury's point of view, cooperation with American financial demands seemed to have produced only domestic hardship and a deficit budget with no relief in sight and increasing political unrest. Nor had AngloAmerican cooperation in East Asia produced the expected Chinese unity and trade. Instead, a new Chinese revolution was underway, dominated by Bolshevik Russian advisers who, in 1925, encouraged the Chinese nationalists to initiate an antiBritish boycott which was crippling the port of Hong Kong and British trade. THE END OF ANGLO-AMERICAN COOPERATION IN CHINA It was in East Asia, indeed, where the Anglo-American failure to agree on joint monetary policy had its greatest impact. Following the Washington conference, the high hopes that a Consortium loan to the Peking government to extend its control over all of China were not fulfilled. When Peking refused to accept the Consortium requirements - namely funding of their debt and international control over their railways - no loan was issued. Nor were the Washington conference agreements to increase the tariff or reconsider extra-territoriality carried out.82 Meanwhile, the southern nationalist government at Canton, under the leadership of Sun Yat-sen, began accepting aid and guidance from Russian agents, a situation that created great apprehension in London, Washington, and Tokyo. As a result of these developments, British and American diplomats showed more concern in 1925 about Russian influence over the Canton government than Japanese influence over Peking. American and British Consortium bankers could not agree on what use was to be made of the tariff increase which had been promised to Peking. Lament, still the manager of the American group, insisted that these new revenues be used to

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fund the American and Japanese loans on which the Chinese government had defaulted. On the other hand, Addis insisted that any new revenues be used to fund new projects, namely railway development. In other words, the two bankers' positions on China loans were exactly opposite their views regarding German loans. As one of the foreign directors who had been appointed to the Council of the Reichsbank under the Dawes settlement, Addis unsuccessfully attempted in late 1924 to prevent the Dawes Plan loan (new revenues) from taking precedence over the reparation payments (old debts).83 It does not seem unreasonable to suspect that the American victory on the Dawes Loan made Addis all the more determined to prevent Morgans from using new Chinese revenues to pay off old American loans to China.84 Simply put, this shows that the bankers' determination in both Europe and Asia to protect the interests of British and American investors was the real barrier to political agreement. With the Consortium bankers badly divided, Anglo-American cooperation faltered. No new loans were issued, and the warlord struggles continued. When the Tariff Conference, which had been promised at the Washington conference, finally convened in October 1925, it simply made public the disarray of the Consortium powers. The British delegation withdrew in the spring of 1926 and Sir Austen Chamberlain, the Foreign Secretary in Baldwin's second government, which had taken power in November 1924, announced in December 1926 a new, independent policy in China; this aimed at reaching accommodation with the southern nationalists.85 During 1927-29, the struggle among the leaders of the Kuomintang Party prevented recognition of a new government. Sun Yat-sen had died in 1925 without leaving any successor firmly in control of the Kuomintang. After much sparring and controversy regarding the Bolshevik advisers, Generalissimo Chiang Kai-shek crushed and eliminated the Communist Chinese leadership in Shanghai in 1927.86 The next year his forces marched north and captured Peking. The Americans hurried to recognise Chiang's government and sent out a financial advisory mission headed by Kemmerer.87 But the newly-established regime, based in Nanking, discovered that Addis, as manager of the Consortium, still controlled the foreign loan machinery. Furthermore, the Japanese quickly

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demonstrated that they would not permit the Kuomintang to establish Chinese control over Manchuria, this by ordering the assassination of Chiang's ally, the Manchurian warlord, Chang Tso-lin. As the decade came to an end, Chiang Kai-shek's tenure seemed tentative at best. So also were the prospects for future Anglo-American cooperation in East Asia. Many Americans were convinced that the British had used the Consortium as a device to keep American capital out of China,88 and later comments from the Bank of England substantiated American suspicions. When, in 1935, a senior member of the British Treasury, Sir Frederick Leith-Ross, sought to dissolve the Consortium, the Bank of England informed him: over a long period London cannot unaided, finance the capital development of China, and that the USA is the greatest potential reservoir of credit. It follows that, if we terminate now the agreement by which the Americans undertake to share the market with us, we may be without the means of securing for ourselves a reasonable share of the business there in competition with them, if and when they resume foreign lending.89 While the British followed the American lead in China, recognising the Kuomintang government and promising tariff autonomy, none of the Consortium powers believed Chiang was more than another warlord, one whom each power intended to dominate. Whether Nanking would succeed in dividing the powers and destroying the Consortium was not clear in 1929. Much depended on the successful implementation of the recently-concluded reparations settlement. FROM THE REPARATIONS CONFERENCE OF 1929 TO THE BANK CRISIS OF 1931 The difficulty in Anglo-American relations in East Asia about monetary policy reflected the general tension over this issue that was occurring in Europe after the high-water mark of the Dawes Plan and the British return to gold. By 1928 European and American financial leaders recognised the urgency of finding a final settlement to the reparations-war debt imbroglio.

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The French refused to ratify their debt-funding agreement with the United States without a firm commitment from the Germans on reparations and would not withdraw their troops from the Rhineland until an agreement was reached. In the autumn of 1928, the League of Nations agreed to call a new Reparations Conference for January 1929. Although each delegation of experts officially were independent of their governments, they all worked closely with their respective treasuries and foreign offices. The American delegation, headed by Owen Young, the president of General Electric Corporation, included Lamont, and J. P. Morgan, Jr.; the British experts were led by Lord Revelstoke, the head of Barings Bank, and Sir Josiah Stamp, an economist who had helped to write the Dawes Plan. Addis and Sir Basil Blackett, the Treasury official most experienced in Anglo-American finance, served as alternates.90 Private information encouraged the British to believe that Congress would accept a plan for a loan to Germany sufficiently large to pay off inter-Allied debts to America. Dulles had sent a secret proposal to Frank Tiarks, a director of Schroeders and the Bank of England, which suggested that it might be 'politically possible to discount the annuities on some favourable basis and discharge them entirely by a present cash payment'. 91 When Revelstoke explored the situation with Morgan, he found him to be optimistic about a loan. Therefore, Revelstoke concluded that Morgan 'very possibly has some authorisation from Coolidge and Hoover to make some kind of concession to Europe. Otherwise it is difficult to explain J. P. M.'s extreme and continued optimism.'92 Revelstoke convinced British Treasury officials that the best strategy was to humour Morgan, whom he described as 'easily subdued and led'. Revelstoke did not disguise his own bitterness at past policies, describing the Americans as 'the greatest profiteers that the World has ever seen'.93 After months of difficult and acrimonious negotiations in Paris an agreement finally emerged, known as the Young Plan, which set a final figure for German reparations and provided for their division among the Allies. In addition, the Young Plan included a proposal for the creation of a Bank for International Settlements - the BIS - which was to take over the functions of the Dawes Plan transfer committee, float a reparations loan,

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and serve as a bankers' bank for consultation among central bankers.94 Even while the negotiations were taking place in Paris, the Hoover Administration criticised the American delegates and the Chicago Tribune denounced the BIS as 'a sinister plot of the international bankers for cancelling the war debts, or restoring London's financial supremacy, or both'.95 During this same period, the great stock-market expansion in New York steadily drew capital from Europe for speculation, while the Federal Reserve Board, fearing domestic consequences, hesitated to break the market. In addition, Strong had died in 1928 and his successor, George Harrison, could not exert his predecessor's firm influence over monetary policy.96 When the bubble finally burst in October 1929, the likelihood of the successful implementation of the Young Plan greatly diminished as monetary contraction took hold. In 1930, the Hoover Administration did not permit the FRBNY to become a member of the BIS, thus leaving to Morgans the task of issuing Young bonds.97 S. Parker Gilbert, the former Treasury official who became Agent-General for reparations and later joined Morgans, warned Washington that the British were pursuing the same policy of'all around cancellation of war debts and reparations', and that they were hoping for an economic crisis in Germany so that the whole question could be reopened.98 In such an atmosphere, the Young Plan bonds found few buyers in 1930 and, faced with economic disaster at home, Americans were in no mood to hear of their responsibility to provide credits for Europe. In London a Labour government, pledged to find solutions to Britain's economic crisis, had been elected in May 1929.99 The subsequent investigations of the Macmillan Committee and May Commission in 1929-31 provided evidence of the seriousness of Britain's plight.100 During the same period, two separate studies by the League and Chatham House concluded that American and French hoarding of gold was causing restriction and price decline, unemployment, and hardship.101 No one doubted the seriousness of the situation; the question was what to do about it. Many leaders felt a tariff should be adopted; some believed devaluation was not only inevitable but desirable.102 Most recognised that the time had come for a showdown with Washington on reparations and war debts,

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that without American cooperation, the pound could not be held at the established exchange rate.103 In 1929 Addis undertook a campaign to win support for the Young Plan and the BIS. Speaking at Cambridge, he explained that the Young Plan finally recognised the relationship between war debts and reparations, and he predicted that the Americans might finally see the wisdom of cancelling both.104 He also suggested that the BIS might create an international currency which would solve the credit shortage and put the moneychangers out of business.105 But Addis's views were not shared by his American friends.106 Further cause for concern were political developments in Germany, where the Nazi Party gained strength in the 1930 elections; the Nazis were committed to cancelling reparations. Clearly, if the reparations payments ceased, the war debt payments would follow. If that happened, the possibility of future American loans to Britain was dim indeed. Without such loans, there was serious doubt as to the Bank of England's ability to protect the pound. Late in 1930, Addis made a final attempt to enlist American cooperation in international finance, travelling to New York, Washington, and Chicago, and speaking to businessmen, bankers, and government officials to warn that only such cooperation could ensure peace.107 Such warnings went unheeded. In May 1931, the Credit Anstalt, Austria's largest commercial bank, failed. Despite Norman's urgent warnings, Hoover refused to agree to anything more than a one-year moratorium on war debts.108 Hoover also ignored the advice of his own countrymen - such as Dulles - that the entire system might collapse.109 When the crisis spread from Austria to Germany, the Bank of England Committee of the Treasury decided not to loan any more money to Germany for reparations payments.110 This critical decision signalled the determination of British financial leaders to force a showdown with the United States on reparations and war debts. British leaders were convinced that complete cancellation was the only remedy.111 But they could not convince Hoover, so confidence in the pound continued to decline while speculation increased. In August, despite the formation of a National Government, a cut in unemployment benefits, and the furnishing of American and French loans, nothing proved sufficient to stem withdrawals from the Bank of England. The next month the govern-

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ment finally faced the inevitable by suspending gold payments and proceeding to develop a sterling strategy.112 Sir Edwin Peacock, presiding over the Bank of England while Norman recovered from a breakdown, comforted the Prime Minister, MacDonald, with assurances that 'no-one could accuse this country of not having made every effort before letting the pound go, and it was pointed out that by having balanced the Budget whatever happened, this country had at least demonstrated her will to play the games at all costs'.113 Britain's devaluation exposed the bankruptcy of Anglo-American financial cooperation. One can at least wonder if the Japanese invasion of Manchuria in September 1931 was purely coincidental. Certainly it came at precisely a time when the possibility of a strong AngloAmerican response was least likely. While the League condemned the aggression, without Anglo-American cooperation there was no chance of deterring Japan.114 These two widelyseparated events - Britain going off the gold standard and Japan invading Manchuria - both revealed the collapse of the British, American, and Japanese financiers' dreams of creating a stable, peaceful, and prosperous world. In the 1930s, the three powers proceeded unilaterally to pursue their own narrow national interests, adopting tariffs, engaging in currency competition, and increasing tensions which finally exploded into war, first in China, then in Europe. Churchillian rhetoric has long camouflaged and distracted attention from the reality that the Anglo-American alliance, like the wartime partnership with the Soviet Union between 1941 and 1945, was one of convenience, a temporary union of competitors forced to join together against a common enemy. But it is essential that the historian recognise both the causes and the significance of the failure of the two Anglo-Saxon powers to resolve their differences in the 1920s. For despite the professions of partnership and cooperation, Britain and America's ongoing struggle for supremacy in Europe and Asia produced and encouraged instability in Germany and China, and created the economic and political crises which made military solutions attractive, perhaps inevitable.

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NOTES 1.

2. 3. 4.

5. 6. 7. 8. 9. 10.

11. 12.

13.

14.

K. M. Burk, Britain, America and the Sinews of War, 1914-18 (London, 1985), 19-20; and R. A. Dayer, 'Strange Bedfellows: J. P. Morgan & Co., Whitehall and the Wilson Administration during World War I', Business History, 18(1976), 127-51. Also see C. Quigley, The AngloAmerican Establishment: From Rhodes to Clivedon (New York, 1981). Addis to Kemmerer, 22 Mar. 1919, Kemmerer Papers (Princeton University). Also see R. A. Dayer, Finance and Empire. Sir Charles Addis, 1861-1945 (New York, 1988). B. Eichengreen (ed.), The Gold Standard in Theory and History (New York, 1985). D. McLean, 'British Banking and Government in China: The Foreign Office and the Hongkong and Shanghai Bank, 1895-1913' (unpublished Ph.D. dissertation, Cambridge University, 1972) includes an entire chapter on Addis. Also see C. B. Davis, 'Financing Imperialism: British and American Bankers as Vectors of Imperial Expansion in China, 1908-1920', Business History Review, 16(1982), 236-64. For Addis and the Bank of England, see R. Sayers, The Bank of England, 1891-1944, 3 vols (Cambridge, 1976); and Dayer, Finance and Empire, passim. H. Clay, Lord Norman (London, 1957). For Brown Shipley, see E. J. Perkins, Financing Anglo-American Trade; the House of Brown, 1800-1880 (Cambridge, MA, 1975). M. Moss, 'Montagu Collet Norman, Lord Norman of St Clare (1871-1950)', Dictionary of Business Biography (hereafter DBS), Vol. 4 (London, 1985), 447-58. L. Chandler, Benjamin Strong, Central Banker (Washington, DC, 1958), 258 indicates that the Strong-Norman friendship began in 1916. The Strong-Norman correspondence is at the FRBNY. Copies are at the Herbert Hoover Presidential Library, West Branch, Iowa. T. Lamont, Henry P. Davison: The Record of a Useful Life (New York, 1933); and idem, Across World Frontiers (New York, 1951). E. Hoyt, House of Morgan (New York, 1966) indicates that Davison became a partner in Morgans in 1909; Lamont followed in 1911. P. Roberts, 'The American "Eastern Establishment" and Foreign Affairs: A Challenge for Historians', The Society for Historians of American Foreign Relations Newsletter, Pts 1 and 2 (Dec. 1983 and Mar. 1984). J. M. Atkin, 'Official British Regulation of British Overseas Investment, 1914-1931', Economic History Review, 2nd Ser., 23(1970); and D. Dilks, 'The British Foreign Office Between the Wars', in B. J. C. McKercher and D. J. Moss (eds), Shadow and Substance in British Foreign Policy. Memorial Essays Honouring C.J. Lowe (Edmonton, 1984), 181-202. O. T. Falk, Tuesday Club Memoir', 23 May 1950, Marshall Library, Cambridge University. This was kindly furnished to me by Professor Moggridge. Also see the Addis diaries for the 1920s, Addis Papers (Library, School of Oriental and African Studies, London). The literature on Hoover is extensive. See B. D. Rhodes, 'Herbert

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15.

16. 17. 18. 19. 20. 21. 22.

23.

24. 25. 26.

27.

28.

181

Hoover and the War Debts, 1919-1933', Prologue (Summer 1974), 13CM-5; C. P. Parrini, 'Hoover and International Economies', in L. E. Gelfand (ed.), Herbert Hoover: The Great War and Its Aftermath, 1914-23 (Iowa City, 1979). The 'mental annex' quote is in S. Schuker, The End of French Predominance in Europe: The Financial Crisis of 1924 and the Adoption of the Dawes Plan (Chapel Hill, NC, 1976), 163. Niemeyer to Brand, 19 May 1927, T (Treasury Archives, Public Record Office, London) 188/13. 'Playing the game' is a phrase and concept which repeatedly reoccurs in British diplomatic documents, no doubt reflecting the culture of the ruling class, the unwritten ethic of gentlemen. For a discussion of the monetary 'rules of the game', see the introduction in Eichengreen, Gold Standard. Addis to his wife, 24 Aug. 1921, Addis Papers. H. G. Moulton and L. Pasvolsky, War Debts and World Prosperity (Washington, DC, 1932). The phrase was actually used by Sir Eric Geddes, First Lord of the Admiralty, in the British general election in December 1918. R. Skidelsky, John Maynard Keynes, Vol.1 (London, 1984), 354-7. M. J. Hogan, 'Thomas W. Lament and European Recovery', in K. P. Jones (ed.), U.S. Diplomats in Europe, 1919-1941 (Santa Barbara, CA, 1981), 8-9. M. Leffler, 'The Origins of Republican War Debt Policy, 1921-1923', Journal of American History, 59 (1972), 585-601. C. P. Parrini, Heir To Empire: United States Economic Diplomacy, 1916-1923 (Pittsburgh, 1969); and P. Abrahams, 'The Foreign Expansion of American Finance and its Relationship to the Foreign Economic Policies of the United States, 1907-1921' (unpublished Ph.D. dissertation, University of Wisconsin, 1967). Addis Diary, June, July, Sept. 1919, Addis Papers; Strong Journal, July, Sept. 1919, Hoover Presidential Library, container 4; Strong to Leffingwell, 31 July 1919, Strong Papers, FRBNY; Norman Personal Diary, July, Sept., 1919, Norman Papers (Bank of England Archives, London); and Grey to Curzon, 29 Sept. 1919, Lloyd George Papers (House of Lords Record Office, London) F/60/3/6. Strong Journal, 8 and 9 Sept. 1919, and Strong memorandum, 30 Aug. 1919, all Hoover Presidential Library, container 4. L. E. Boothe, 'A Fettered Envoy: Lord Grey's Mission to the United States, 1919-1920', Review of Politics, 33(1971), 78-94. For background on this 'Memorial', see E. Johnson and D. Moggridge, (eds), The Collected Writings of John Maynard Keynes (hereafter JMK) (London, 1971-82), Vol.17, 128-39; and D. P. Silverman, Reconstructing Europe After the Great War (Cambridge, MA and London, 1982), 272-4. Addis Diary, 26 Jan. and 3 Feb. 1920, Addis Papers suggests that Lazards was a major backer of the International Memorial. The competition between Lazards and Morgans for government favour is a recurring theme in the 1920s and 1930s. See Dayer, Finance and Empire, passim. Norman Diary, 17, 18, and 21 May 1920, Norman Papers.

182 29. 30.

31. 32. 33.

34. 35. 36. 37. 38. 39. 40. 41.

42. 43. 44.

45. 46.

Anglo-American Monetary Policy See Addis memorandum, 21 May 1920, Addis Papers (Bank of England Archives, London) ADM 16/2. Norman's diary indicates that he discussed the Anglo-French loan with Basil Blackett and Avenol on the following dates: 4, 5, 9, and 19 Feb. 1920; 1, 5, 8, and 29 Mar. 1920; and 21 May 1920. For the Anglo-French loan, see Burk, Sinews of War, 63-75. Norman Diary, 29 Mar., and 17, 18, and 21 May 1920, Norman Papers. R. A. Dayer, Bankers and Diplomats in China, 1917-1925; The AngloAmerican Relationship (London, 1981). See Lament's preliminary report on his trip to Asia, 14 May 1920, Lamont Papers (Baker Library, Harvard University) 185/22; and Strong to Pierre Jay, 11 May, and 4 and 21 July 1920, Strong Papers FRBNY. R. Butler and J. P. T. Bury (eds), Documents on British Foreign Policy, 1919-1939 (hereafter DBFP], 1st Ser., Vol. 14 (London, 1966). See R. A. Dayer, 'The British War Debts to the United States and the Anglo-Japanese Alliance, 1920-1923', Pacific Historical Review, 45(1976), 569-95. Dayer, Finance and Empire, Chapters 1-3. Addis Speech, 1912 Hongkong and Shanghai Banking Corporation Annual Dinner, Addis Papers. The 'Reorganization Loan' is in J. Van Antwerp MacMurray (ed.), Treaties and Agreements With and Concerning China, 1894-1919, 2 vols (New York, 1921), Vol.11, 1007-20. For Yuan Shih-k'ai, see J. Ch'en, Yuan Shih-k'ai, 1859-1916: Brutus Assumes the Purple (Stanford, 1961). For American objectives, see N. Pugach, Paul S. Reinsch: Open Door Diplomat in Action (Millwood, NY, 1979). For Japanese actions, see M. Chi, China Diplomacy, 1914-1918 (Cambridge, MA, 1970). P. Lowe, Great Britain and Japan, 1911-1915: A Study of British Far Eastern Policy (London, 1969); C. Davis, 'The Defensive Diplomacy of British Imperialism in the Far East, 1915-1922: Japan and the United States as Partners and Rivals' (unpublished Ph.D. dissertation, University of Wisconsin, 1972); and R. A. Dayer, 'Struggle for China: The AngloAmerican Relationship, 1917-25' (unpublished Ph.D. dissertation, State University of New York, Buffalo, 1972). The following material is dealt with fully in Dayer, Bankers and Diplomats, Chapter 3. Ibid., 79-82. Wellesley, the head of the Foreign Office Far Eastern Department, thanked Addis for playing the 'principal part in bringing these negotiations to the conclusion recorded': in Wellesley to Addis, 18 Nov. 1920, FO (Foreign Office Archives, Public Record Office, London) 371/2786/2/10. The plans for the CER are in the Charles Evans Hughes Papers (Library of Congress, Washington, DC) Boxes 171 and 175. Addis Diary, 15-25 Aug. 1921, and 1-9 Sept. 1921, Addis Papers; and

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47. 48. 49. 50. 51.

52.

53. 54. 55.

56. 57. 58. 59. 60. 61. 62.

63. 64. 65.

66.

183

Norman Personal Diary, 6-30 Aug. 1921, and 1-10 Sept. 1921, Norman Papers. Lamont to Hughes, 18 Aug. 1921, Lament Papers 186/6; Strong to Jay, 29 Aug. 1921, Strong Papers FRBNY; and Addis to his wife, 24 Aug. 1921, Addis Papers. Addis speech in Peking, 1922, Addis Papers 14/624. The Washington treaties are in the Papers Relating to the Foreign Relations of the United States (hereafter FRUS), 1922, Vol.1 (Washington, DC, 1937). Also see Dayer, 'British War Debts to the United States'. Addis Diary, 22 Mar. 1922, Addis Papers. C. Fink, The Genoa Conference: European Diplomacy, 1921-1922 (Chapel Hill, NC, 1984); and 'Resolutions proposed for adoption by the Central & Reserve Banks represented at meetings to be held at the Bank of England', Addis Papers Bank of England ADM 16/2. Addis Diary, 18 Apr. 1922; and Norman to Addis, 18 Apr. 1922, both Addis Papers Bank of England ADM 16/2; and Norman Personal Diary, 4 May 1922, and Norman Diary, 22 Apr. 1922, both Norman Papers. Moulton and Pasvolsky, War Debts, 80-81. Balfour to Saint-Aulaire, 1 Aug. 1922, FRUS, 1922, Vol.1, 406-9. Also see K. O. Morgan, Consensus and Disunity: The Lloyd George Coalition Government, 1918-22 (Oxford, 1979). For the American response to the Balfour Note, see F. C. Costigliola, 'The Politics of Financial Stabilization: American Reconstruction Policy in Europe, 1924-30' (unpublished Ph.D. dissertation, Cornell University, 1973), 258. Norman Diary, 8 Aug. 1922, Norman Papers. Raymond Poincare was the French premier. Strong to Parker Gilbert, 20 Oct. 1922, Strong Papers FRBNY. JMK, Vol. 19, Pt 1, 6-106. Keynes to Cravath, 23 Nov. 1922, ibid., 44-5. See Sir John Bradbury's 'Scheme for a Comprehensive Settlement of European Inter-Allied Debts', 15 Dec. 1922, which was sent to Baldwin, T 194/263. K. Middlemas and J. Barnes Baldwin. A Biography (London, 1969), 139^2; and JMK, Vol. 18, 103. Cabinet Minutes, 15 Jan. 1923, CAB (Cabinet Archives, Public Record Office, London) 23. Also see R. Rhodes James, Memoirs of a Conservative: J. C. C. Davidson's Memoirs and Papers (London, 1969), 142-3; and Addis Diary, 29 Jan. 1923, Addis Papers. Strong to Parker Gilbert, 6 Mar. 1923, Strong Papers FRBNY. Minute on Geddes to Foreign Office, 2 Feb. 1923, FO 371/665/136/45. Also see Cabinet Minutes, 31 Jan. 1923, CAB 23. K. P. Jones, 'Alanson B. Houghton and the Ruhr Crisis: The Diplomacy of Power and Morality', in Jones, U.S. Diplomats, 25-42; and J. M. Carroll, 'The Paris Bankers' Conference of 1922 and America's Design for a Peaceful Europe', International Review of History and Political Science, 10(1973), 39-47. Quoted in Schuker, End of French Predominance, 379-80.

184 67. 68. 69.

70.

71.

72.

73. 74. 75. 76. 77. 78.

79.

80.

81. 82.

Anglo-American Monetary Policy Bradbury to Chancellor of the Exchequer, 27 Feb. 1924; and OEN memorandum, 29 Feb. 1929, both T 194/261. Lamont to Hughes, 23 Oct. 1924, Hughes Papers Box 62. Also see Costigliola, 'Financial Stabilization', 134. F. C. Costigliola, 'U.S. & Reconstruction of Germany in the 1920s', Business History Review, 11(1976), 487n41; and K. P.Jones, 'Discord and Collaboration: Choosing an Agent-General for Reparations', Diplomatic History, 1(1977), 137-8. See S. V. O. Clarke, Central Bank Cooperation, 1924-31 (New York, 1967); M. J. Hogan, Informal Entente: The Private Structure of Cooperation in Anglo-American Economic Diplomacy, 1918-1928 (Columbia, MO, 1977); and M. P. Leffler, The Elusive Quest: America's Pursuit of European Stability and French Security, 1919-1933 (Chapel Hill, NC, 1979). L. S. Presnell, '1925: The Burden of Sterling', Economic History Review, 2nd Ser., Vol. 31(1978), 77-8. For American aims, also see C. P. Parrini, 'Anglo-American Corporatism and the Economic Diplomacy of Stabilization', Reviews in American History, 6(1978), 379—87. Quoted in F. C. Costigliola, Awkward Dominion: American Political, Economic, and Cultural Relations with Europe, 1919-1933 (Ithaca, NY, 1984), 101. See also R. Pruessen, John Foster Dulles: The Road to Power (New York, 1982). Quoted in D. Moggridge, British Monetary Policy, 1924-1931: The Norman Conquest of $4.86 (Cambridge, 1972), 56. Dayer, Finance and Empire, Chapter 6. P. Williamson, 'Financiers, the Gold Standard and British Politics, 1925-1931', in J. Turner (ed.), Businessmen and Politics: Studies of Business Activity in British Politics, 1900-1945 (London, 1984). Moggridge, British Monetary Policy; and S. Howson, Domestic Monetary Management in Britain, 1919-38 (Cambridge, 1975). Dayer, Finance and Empire, Chapter 6; and R. Skidelsky, 'The Gold Standard and Churchill: the Truth', The Times, 17 Mar. 1969, 25. 'Minutes of Evidence taken in London before the Royal Commission on Indian Currency & Finance', Vol. 5, 1926, copy in the Addis Papers 660. The first evidence of the Addis-Norman concern about prices and the shortage of gold came in their joint evidence; see Sayers, Bank of England, 347, and Addis Diary, 5 and 29 Mar. 1926. B. J. C. McKercher examines other areas of friction; see his The Second Baldwin Government and the United States, 1924-1929: attitudes andd diplomacy (Cambridge, 1984). Also see Clay, Norman, 260-65, and Chandler, Strong, 403-15. See Garrard Winston (Under-Secretary of the US Treasury) to Strong, 18 July 1926 and 30 Aug. 1927, both Strong Papers FRBNY. Ninetenths of Britain's external debt was owed to the United States. Also see Churchill to Niemeyer, 26 Jan. 1927, T 176/39. Strong to Norman, 27 Mar. 1928, Strong-Norman Correspondence, Hoover Presidential Library, Box 6. Dayer, Bankers and Diplomats is the source of the following account. Also see C. M. Wilbur, 'The Nationalist Revolution: From Canton to Nanking, 1923-28', Cambridge History of China, Vol. 12, Pt 1.

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83. 'Minutes of Reichsbank Council', T 188/5. 84. Dayer, Bankers and Diplomats, Chapter 7. 85. The best sources of Britain's China policy in the mid-1920s are W. J. Megginson, 'Britain's Response to Chinese Nationalism, 1925-1927: The Foreign Office Search for a New Policy', (unpublished .Ph.D. dissertation, George Washington University, 1973), and D. C. Wilson, 'Britain and the Kuomintang, 1924-1928. A Study of the Interaction of Official Policies and Perceptions in Britain and China' (unpublished Ph.D. dissertation, University of London, 1973). 86. For Chiang's purge of the Chinese Communists, see H. Isaacs, The Tragedy of the Chinese Revolution, 2nd rev. ed. (New York, 1968). For Chiang's background, see S. Seagrave, The Soong Dynasty (New York, 1985); and P. Coble, The Shanghai Capitalists and the Nationalist Government, 1927-1937 (Cambridge, MA, 1980). 87. Good materials on the Kemmerer mission are in the Kemmerer Papers, and in those of John Van Antwerp MacMurray, who was American Minister at Peking. These are at Princeton University. 88. Dayer, Bankers and Diplomats, 94-5. 89. Clay to Leith-Ross, 1 Aug. 1935, T 188/151. 90. J. Jacobson, Locarno Diplomacy: Germany and the West, 1925-1929 (Princeton, 1972); and J. Y. Case and E. N. Case, Owen D. Young and American Enterprise (Boston, 1982), Chapter 24. 91. Tiarks to Revelstoke, 4 Jan. 1929, enclosing Dulles letter, Revelstoke Papers (Barings Bank, London). 92. Revelstoke Diary, 14 Feb. 1929, Revelstoke Papers. 93. Ibid. 94. E. Dulles, The Bank for International Settlements at Work (New York, 1932). 95. Quoted in Case and Case, Young, 438. 96. Dayer, Finance and Empire, Chapter 7. 97. Clarke, Central Bank Cooperation, 147. 98. Parker Gilbert to State Department, 13 Dec. 1929, Hoover Papers (Hoover Presidential Library, West Branch, Iowa) Presidential Foreign Affairs, Box 1015. 99. Philip Snowden, a senior Labour Party leader who became Chancellor of the Exchequer in Ramsay MacDonald's second Labour government, had called for cancellation of war debts early in 1929. See P. Snowden, Autobiography (London, 1934), 748-9. 100. For the Macmillan and May commissions, see S. Howson and D. J. Winch, Economic Advisory Council, 1930-1939 (Cambridge, 1977). 101. For the League of Nations gold committee, see Sayers, Bank of England, 346-51, and Dayer, Finance and Empire, Chapter 7. For the Chatham House study, see Royal Institute of International Affairs, The International Gold Problem: A Record of the discussions of a study group of members of the RIIA, 1929-1931 (Oxford, 1931). 102. For Keynes' evidence to the Macmillan Committee, seeJMK, Vol. 20, 308-9; and for that of Bank of England officials, see Sayers, Bank of England, III, Appendix 21. 103. Dayer, Finance and Empire, Chapter 7.

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104. Addis speech at Cambridge, 28 Nov. 1929, Addis Papers 569. 105. Addis outlined these ideas in his speech to the Institute of Bankers. See 'The Bank for International Settlements', 3 Apr. 1930, the Institute of Bankers Journal, reprinted in The Bankers' Magazine (May 1930). 106. For an example of American criticism, see Burgess to Osborne, 23 Apr. 1930, FRBNY, C797.3. 107. 'Addis for Control of World Prices', New York Times, 25 Nov. 1930; and Addis speech to the Academy of Political Science, Proceedings, Vol. 14 (1931). 108. Clarke, Central Bank Cooperation, 186-8. 109. For Dulles' warning, see Pruessen, Dulles, 138. For the American political situation, see E. A. Rosen, Hoover, Roosevelt, and the Brains Trust (New York, 1977), Chapter 11. 110. Committee of Treasury Minutes, 9 July 1931, Bank of England. 111. Dayer, Finance and Empire, Chapter 7. 112. Ibid., Chapters 7 and 8. 113. Quoted in Howson, Domestic Monetary Management, 78. 114. C. Thome, The Limits of Foreign Policy: The West, the League, and the Far Eastern Crisis of 1931-1933 (New York, 1973).

6 The Image of Britain in the United States, 1919-1929: A Contentious Relative and Rival Benjamin D. Rhodes It should not have been too surprising that Britain's image in America during the twenties underwent some decline from the exalted heights achieved during the First World War. From April 1917 until the Armistice, the two nations shared a common enemy and a common ideology as they fought shoulder to shoulder to end war and safeguard democracy. Over a million 'doughboys' served on the Western Front. And the United States Treasury, through the proceeds of Liberty bonds sold to the American public, made advances to the Allies totalling $10.3 billion, of which $4.1 billion was loaned to Britain. Never had Britain's prestige in America been greater. In reality, however, the emotional outpouring of AngloAmerican friendship was somewhat out of character inasmuch as the Anglo-American rapprochement was only about twenty years old when the First World War ended. Once the 'Hun' was vanquished, America's wartime mood of comradeship with Britain soon faded and was replaced by a growing disillusionment about moral crusades and foreign entanglements. Persistent Anglo-American disputes now arose over such war-related problems as the League of Nations, reparations, war debts, and naval limitation. Throughout the next decade the quarrelling continued practically unabated, vividly illustrating that the Anglo-American rapprochement was not yet complete. Not until the fascist challenge of the thirties did London and Washington finally cease their mutual contentiousness and again concentrate upon their common political interests.1 In the United States the Anglo-American controversies of the twenties were viewed from several perspectives. On the one 187

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The Image of Britain in the United States, 1919-1929

hand, irreconcilable isolationists and anglophobes still regarded Britain as a treacherous power bent upon luring America into the League of Nations and the World Court. But internationalists and anglophiles saw Britain as the benevolent bulwark of western civilisation. In between were the undifferentiated masses who were fundamentally proud of America's AngloSaxon heritage, but highly suspicious of the motives of the British government. As facetiously expressed by Sir Esme Howard, Britain's Ambassador to the United States from 1924 to 1929, the average American harboured 'a constant fear that in all dealings with the duplicity-loving British diplomat the manly straightforward American is sure to receive a gold brick.'2 For the most part, however, the bickering between American and British officials during the twenties was usually businesslike and without public recriminations. On a personal level the respective British ambassadors and American secretaries of state managed to maintain relative civility. All the while trade and cooperation between private and central bankers were little affected by the diplomatic squabbling. Despite it all the British image in America slightly improved by the end of the twenties. By 1929 Britain was no longer seen in America as a tyrannical ogre - the view of nineteenth-century anglophobes - but as a contentious relative and rival. The men who made American foreign policy in the twenties were, for the most part, mildly favourable to the Anglo-American rapprochement. However, improving relations with Britain was not one of the major priorities of either Warren G. Harding or Calvin Coolidge, despite the fact that both presidents regarded themselves as friends of Britain in principle. Notwithstanding their reputations to the contrary, neither of the two presidents was an unthinking provincial. Harding for example, had twice visited Europe prior to his election in 1920. Still, in contrast to the idealistic and erudite Wilson, Harding (a native of Blooming Grove, Ohio, and the editor of a rural newspaper) seemed hopelessly unsophisticated. A new order based upon universal justice and world government had no appeal to him. But Harding's vision of a return to 'normalcy', in which the nation sought to advance its national interest through traditional balance-of-power tactics, was essentially a more practical conception of international politics than Wilson's. Coolidge, who succeeded to the presidency following

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Harding's death at San Francisco in August 1923, was also no expert on foreign policy. Unlike Harding he had never left the western hemisphere, but he was not an isolationist, despite his reputation for making narrowminded, if quick-witted, comments. On the possible cancellation of war debts, in a remark which must have offended the British, he supposedly quipped: 'They hired the money didn't they?' He once shocked the wife of the British Ambassador by remarking, probably facetiously, that he would never visit Europe because America possessed all he wished to learn. Nevertheless, Sir Esme Howard, whose opinion was not always shared by the Foreign Office, came to admire Coolidge as a man of dependability, courtesy, and common sense whose word could be trusted.3 In surveying the cabinets of the twenties the British could count on many friends. During his four years as Secretary of State Charles Evans Hughes usually pleased the British by trying to steer a middle path in foreign affairs. His successor, Frank B. Kellogg, had to resign as Ambassador to Britain to accept the position of Secretary of State. Charles G. Dawes, Vice-President under Coolidge, later became Ambassador to Britain. Secretary of Commerce Herbert Hoover had spent much of his life as a mining engineer and financier in the British Empire; some of his critics contended that 'Sir Herbert' was too anglicised to be trusted. Andrew W. Mellon, the immensely wealthy Secretary of the Treasury, was destined to become Ambassador to Britain. Even John W. Davis, Coolidge's Democratic opponent in 1924, had once been American Ambassador in London. Their British connections did not, of course, guarantee that these men would be favourable to Britain on any specific foreign policy issue. American leaders in Congress were somewhat less sympathetic to the British. Henry Cabot Lodge of Massachusetts, the Chairman of the Senate Foreign Relations Committee until his death in 1924, had a reputation as an anglophobe because, during the early stages of his political career, he had sought to appeal to the large Irish population of his state. He was also known as an outspoken nationalist for having masterminded the Senate's rejection of Wilson's League of Nations. But culturally he was an anglophile and he had been strongly pro-British during the First World War. Even less predictable was his successor, Senator William E. Borah of Idaho, who

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was an irreconcilable on the League, but a leader of the movement for an international disarmament conference. Like their leaders, the average American congressmen of the twenties looked at Anglo-American relations from a nationalistic perspective. From their point of view, America's timely intervention in the World War had rescued Britain from imminent disaster. Moreover, whereas America had asked for nothing at the Peace Conference, Britain had enlarged its Empire and stood to receive enormous reparations from Germany. Disillusioned by the results of the war, America's presidential and legislative leaders were inclined to hold Britain at arm's length. Given the lack of a common enemy and the less-than-shining image of Britain in America, there seemed no urgent necessity for closer ties.4 The pattern of Anglo-American bickering, so characteristic of the twenties, was frequently evident at the sessions of the Paris Peace Conference of 1919. More often than not President Woodrow Wilson, the advocate of a new world order based upon the idealistic Fourteen Points, found himself opposed by Prime Minister David Lloyd George, a pragmatic and opportunistic politician who sought to advance the interests of himself and the British Empire. A glimpse into the personality conflicts between the two leaders is contained in the memoirs of such British participants as John Maynard Keynes and Harold Nicolson. Both viewed Wilson as unprepared, mentally slow, and incapable of adapting his moralistic principles to the real state of affairs. According to the unflattering and unfair view of Keynes, Wilson was a 'blind and deaf Don Quixote', who was completely overmatched by the agile Lloyd George. 'Never', wrote Keynes, 'could a man have stepped into the parlour a more perfect and predestined victim to the finished accomplishment of the Prime Minister.' The irreconcilable opponents of Wilson in America loved Keynes's cynical portrait, but other observers found his views to be oversimplified and inaccurate. Charles Seymour of Yale University recorded that Britain was the only power at the conference which was 'not playing chauvinistic polities', and he discovered 'that it was not only possible but very pleasant to work with the British.'5 Economic policy was the main subject of Anglo-American discord at Paris. On the issue of German reparations Wilson

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favoured a fixed and final agreement, whereas British policy wavered back and forth between moderation and demands for enormous unspecified payments. A related subject, one which continued to rankle throughout the twenties, was the possible cancellation of the war debts owed to America by the Allies. 'The question in one form or another constantly arose', recalled Thomas.,, W. Lament, one of Wilson's economic advisers. 'It was always "stepped on" by the American delegates. There was no commitment, expressed or inferred, near or remote, moral or otherwise, as to the handling of the Allied indebtedness to the United States Government.'6 Anglo-American interests at Paris also diverged on the question of how to divide the German empire. At least theoretically Wilson emerged the victor on this subject as the British Empire agreed to accept his idea of awarding former enemy territory to the victors as mandates. Finally, the two powers disagreed on what policy should be followed toward Soviet Russia. In the summer of 1918, against his better judgement, Wilson had agreed to British demands for Allied intervention in Russia with the objective of reforming the Eastern Front against Germany. The President thought he had restricted American participants to the role of non-combatants and he was highly displeased when the British commanders in North Russia deployed the 5700 troops of the United States 339th Infantry for offensive purposes. At the conference, Wilson made it clear that the American forces were being permanently withdrawn and he rejected British schemes (advanced by Winston Churchill) for further intervention.7 But, at the same time the two powers were bickering at Paris, they also found substantial room for agreement on such major issues as the territorial settlements within Europe and the desirability of establishing the League of Nations. The Anglo-American differences at the Peace Conference, for the most part, were discussed by diplomats outside the glare of publicity. But once the Versailles Treaty was submitted to the Senate in the summer of 1919, the disputes were out in the open. Anglophobes and demagogues had a field day as they blamed the British for the Treaty's defects. Especially vocal were Irish-Americans who condemned the Treaty because it did not grant Ireland its independence. The sensational publisher William Randolph Hearst, a notorious

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anglophobe, assailed the inclusion in the treaty of the 'British spawned' League of Nations. Missouri Senator James A. Reed, a spokesman for '100% Americans', also warned of the danger to America from a British-dominated superstate. And the last of Senator Henry Cabot Lodge's fourteen reservations to the Treaty was aimed at Britain and its Empire. It stated that America would not be bound by any League action in which any state exercised more than one vote.8 The Senate's eventual rejection of the Treaty was not only a blow to the image of Woodrow Wilson but to the image of Great Britain as well. Anglo-American relations marked time during the last yearand-a-half of the Wilson administration largely as a result of the President's illness and the paralysing effects of the fight in America over the Versailles Treaty. The diplomatic correspondence between Washington and London dealt with a tedious series of commercial and territorial grievances which were basically of secondary importance. With Wilson's approval, Secretary of State Bainbridge Colby complained that Britain was discriminating against American oil interests in its mandates in Mesopotamia and Palestine. Also, the State Department protested against a lack of consultation in the settlement of reparations. And Wilson fretted that Britain was abandoning self-determination by failing to oppose vigorously enough Italy's desire to annex the Adriatic port of Fiume. The opposing British point of view was that it was inconsistent for America to protest when it chose voluntarily not to participate in the decision-making process. Besides, complained Lord Curzon, the Foreign Secretary, American oil companies wanted to monopolise the world petroleum industry.9 Under the new Republican administration of Warren G. Harding the pattern of bickering over minor issues continued. Nevertheless, concessions by Britain on two of the major areas of dispute, disarmament and war debts, contributed to a modest improvement in relations. Many of the details were worked out by two men who were new to diplomacy: Secretary of State Charles Evans Hughes and Sir Auckland Campbell Geddes, the British Ambassador to the United States. The bearded Hughes, a former Governor of New York and Associate Justice of the Supreme Court, had run a close race against Wilson in the presidential election of 1916. He combined a moderate internationalist outlook and a forceful personality

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with the negotiating skills of a technical lawyer. Geddes, just forty years old, came from a somewhat unusual background for a diplomat. He was trained as a medical doctor at the University of Edinburgh. But during the First World War Geddes served with distinction in several Cabinet positions under Lloyd George. It was his intention to become Principal of McGill University in Montreal when he was 'offered the position at Washington. Hughes and Geddes first cooperated in arranging the Washington Conference on the Limitation of Armaments which convened in November 1921. Self-interest motivated both nations to participate. Britain hoped to avoid a costly and unwinnable naval race and to protect its Asian and Pacific interests. The Harding administration, committed to reducing federal spending, came to see naval disarmament as good economic policy and as good political strategy. Peace through reduction of armaments could be a logical alternative to Wilson's policy of seeking peace through world government. Geddes served as the second-ranking British delegate behind Arthur Balfour and he made at least a minor contribution to harmony when he diplomatically gave up his seat at the conference table to permit the disgruntled French Premier, Aristide Briand, to occupy a more prestigious chair. Hughes cleverly gained a psychological advantage through his celebrated opening address in which, after a dull opening, he dramatically proposed massive and specific naval reductions. Overall the results of the Washington conference considerably refurbished the British image in America. In the first of three major treaties to come out of the meeting, Britain accepted parity in battleships with the United States. Also Britain agreed to scrap the Anglo-Japanese Alliance of 1902 and convert it into a fourpower arrangement. Finally, all the participating governments pledged to respect the territorial and administrative integrity of China. But, if the British expected that their cooperation at Washington would lead to American concessions on the war debt - the other major disagreement of the period - they were in for a severe disappointment.10 The British war debt was another Anglo-American problem left over from the First World War. A product of good intentions and inexperience on both sides, the debt issue originated in America's nastily improvised loan policy in the spring of

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1917. According to a story attributed to Basil Blackett of the British Treasury, American and British officials innocently blundered into a trap of their own making in arranging the initial loan of $100 million. When Secretary of the Treasury William G. McAdoo was asked what form should be used to evidence the loan he replied that he hadn't had time to think about it. Then: The British delegation said, 'Well, how about a demand note?' They said, 'All right.' And then somebody said, 'Well, notes always bear interest. What kind of interest shall we have?' Then somebody said - Blackett said, 'I don't remember which side it was, we were all negligent.' - 'Well, the way interest is going now, New York is five per cent, the AngloFrench loan was five per cent, make it five per cent.' So the British said, 'All right.' And Blackett said, 'We sat down and signed a demand note for a hundred million dollars at five per cent and then from thereafter, every time we got any advances in they were always due on that same basis.' Possibly such a method could have worked had the amount of the loans been of modest size, but in practice the principal of the advances amounted to $4 135 818 358.44 - far more than anyone would have anticipated in 1917. By 1922, including unpaid interest of $611 044 201.85, Britain owed the United States the immense sum of $4 746 862 560.29. From the time of the Peace Conference, Britain hoped for the reduction or cancellation of this debt on the ground that it was a political, not a commercial, debt and that the funds were expended in the United States on behalf of a common cause. Many American financiers and internationalist politicians sympathised but found cancellation to be politically suicidal. The stumbling block was that the loans, as evidenced by the demand notes bearing interest at five per cent, had been advanced from dollars raised through the sale of Liberty Bonds to the American public. The political trap was that if Britain did not pay, the American taxpayer was left with the bill. Blackett admitted that no pressure at all had been applied to induce the British to sign the demand notes and he con-

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eluded that both governments had been 'stupid' for having fallen into such a tangle.11 For several years the debt issue remained decidedly in the background as American opinion concentrated on the fight over the Versailles Treaty and the presidential election of 1920. Under an informal moratorium begun under Wilson no payments were expected on either principal or interest. For the short run British officialdom was content to let the question slumber since, as Blackett concisely summarised the view of the British Treasury: 'The policy of His Majesty's Government may be said to watch events and avoid bringing on any premature discussion of the problem, in the expectation that as time passes conditions may be counted upon to become more favourable to its solution.' However, private British citizens felt no obligation to refrain from offering America free advice on finance. On the eve of the Washington conference, for example, former Chancellor of the Exchequer Reginald McKenna enraged Sir Auckland Geddes by touring the country and advocating cancellation. McKenna's visit, said Geddes, had destroyed any chance of getting the debt cancelled, had 'reawakened interest in an issue which was dormant and has stirred up anti-British propaganda in the districts that were slowly becoming friendly'.12 In February 1922 the debt question awakened from its dormant state when Congress created a collection agency with the formidable name of the World War Foreign Debt Commission. But the Commission was given little discretion in adjusting repayment terms; the loans were to be collected in twenty-five years at an interest rate no lower than 4V4 per cent. At its first meeting the Commission, headed by Treasury Secretary Andrew W. Mellon, requested the State Department to inform each debtor nation that the commission was ready to consider proposals for funding the wartime loans. From Secretary of State Hughes, Geddes learned that the commissioners hoped Britain would be the first to negotiate. Yet, the British Treasury, still hoping for a change in American opinion, insisted on delaying negotiations.13 Until the summer of 1922 the debate over the debt had usually been conducted on a subdued governmental level. Official relations remained, in the view of Geddes, 'correct and friendly' despite the feeling of many Englishmen, the ambassa-

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dor included, that America was being less than generous and that the initials U.S. stood for 'Uncle Shylock'. The publication of the Balfour Note on 1 August 1922 abruptly introduced an element of contentiousness into Anglo-American relations. The note was signed by the Acting Secretary of State for Foreign Affairs, Arthur J. Balfour, who had previously headed the prestigious British financial mission to the United States in the spring of 1917. Ostensibly the note was addressed to Britain's First World War debtors, but in reality it was directed at the United States. Essentially it proposed a 'general settlement' of war debts and reparations. American officialdom was especially incensed by the statement: 'In no circumstances do we propose to ask more from our debtors than is necessary to pay our creditors. And, while we do not ask for more, all will admit that we can hardly be content with less. For it should not be forgotten, though it sometimes is, that our liabilities were incurred for others, not for ourselves.'14 Beyond a doubt the Balfour Note achieved one of its objectives: that of stimulating a discussion of America's collection policy. Yet, contrary to the expectations of its author, virtually all American commentary was negative. The Treasury Department was especially irate. According to his nephew, Andrew Mellon was 'really mad' and characterised the Balfour Note as 'a lie'. In the opinion of Under-Secretary of the Treasury S. Parker Gilbert, Balfour's statement 'that our loans to them were made in order to help their allies is about as irritating a piece of nonsense as has been pulled in the whole discussion about inter-governmental debts'. The national press also condemned the note, stressing the theme that cancellation would be a gift to Britain while the American taxpayer remained saddled under a crushing burden. Also criticised was the Balfour Note's tone of moral superiority. According to the Philadelphia Inquirer. 'In the Balfour Note John Bull is depicted as the liberal, magnanimous and sympathetic creditor whose heart bleeds for his debtor's sufferings, and who is willing and anxious to relieve them of a burden which he perceives is beyond their ability to bear; Uncle Sam is portrayed as a ruthless, relentless, hard-hearted Shylock, who is making it impossible for John Bull to follow his altruistic and benevolent instincts by stubbornly insisting upon the letter of his bond.' Even the

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liberal magazine The Nation concluded that 'Lord Balfour has injured the cause of cancellation'.15 Over the next few months the tarnished image of Britain was somewhat refurbished. First, in the fall of 1922 the United States Treasury was greatly pleased when the British made a goodwill payment of $100 000 000 to cover interest due on the debt. Then in January 1923 a seasick British delegation headed by Chancellor of the Exchequer Stanley Baldwin arrived in Washington for two weeks of talks before returning to London. The stumbling block was the rate of interest to be charged. The Americans offered to fund the $4.6 billion debt over sixtytwo years at 3.3 per cent interest. Prime Minister Bonar Law had been erroneously led by the American Ambassador to Britain to expect an interest rate of only 11/2—2 per cent. Baldwin and Geddes urged Law to accept the American terms so as to avoid 'serious damage to our prestige'. For the time being the Prime Minister resisted and termed the American proposals 'utterly unjust'. 16 A potentially serious hitch in the preceedings occurred when Baldwin, upon his arrival in England, gave an exceptionally candid background interview to the press. He spoke of being 'bound in regard to that debt in the most stringent hands you can possible imagine'. He criticised American provincialism ('The people in the West merely sell wheat and hogs and other products and take no further interest in the international debt or international trade'), and characterised the terms offered by the United States as 'perfectly impossible'. To Baldwin's shock his remarks were widely publicised and widely criticised. Senator Kenneth McKellar of Tennessee called Baldwin's comments 'coarse and uncouth'. In Britain's hour of need Americans greeted the Balfour Mission with respect and esteem, said the senator, but 'when pay day comes around they send another commission over here that deals in the dark'. 17 The controversy over the interview quickly passed, as on 1 February, to the great relief of the Debt Commission, Geddes announced that the Cabinet had accepted the American terms. The debt settlement, which was greeted with a chorus of approval in America, raised British prestige to its highest level since the war. President Harding said the settlement demonstrated 'the sincere commitment of one great nation to validate its obligations in the highest sense of honor'. American press

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opinion was overwhelmingly favourable. The New York World hailed the settlement as proof of 'Why Great Britain is Great', and the New York Times said the agreement 'bespeaks a union of hope and purpose, cherished for the benefit of the world'. Only the Chicago Tribune expressed disappointment because Andrew Mellon had failed to acquire the British West Indies. Congress quickly endorsed the settlement despite the opposition of a few Democrats who claimed the Debt Commission had been too generous with the British. No concessions on interest should have been made, contended Senator McKellar. And Senator James A. Reed of Missouri charged that the settlement would 'tie the United States to the chariot wheels of British diplomacy and British finance for 62 years'. But to the majority of congressmen the financial advantages of the agreement were obvious. In the House the settlement (introduced as an amendment to the act which created the World War Foreign Debt Commission) passed 291 to 44, and the Senate approved by a margin of 70 to 13.18 When Geddes, in June 1923, formally signed the agreement, Britain's prestige in America was higher than at any time since the Washington conference. Yet, the Ambassador's personal popularity soon dropped sharply in America as a result of another minor Anglo-American dispute which had been simmering beneath the surface for two years. This time the two governments quarrelled over conditions at the immigration station on Ellis Island in New York harbour - a subject of immense concern to British subjects unfortunate enough to be detained there, but one deemed by the two governments to be of mere secondary importance. The trouble began soon after the First World War as large-scale immigration badly strained the dilapidated Ellis Island facilities. The overcrowding was exacerbated by the 1921 Immigration Act, which established a quota system based upon national origin; only 20 per cent of a country's quota could be admitted per month. It was not uncommon for arriving immigrants, including students, to discover that their national quota had been exhausted for the month in which they arrived; to be admitted they would have to wait until the start of the next quota. As a result immigrants from the British Empire frequently found themselves confined in close proximity with poor Eastern European immigrants who had crossed the ocean in steerage.

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Geddes was repeatedly called upon by the Foreign Office to protest what Lord Curzon termed 'conditions unworthy of a civilised country'. Then, on 28 December 1922, Geddes accepted an invitation from the Labor Department to make a tour of the facility. Based upon his perspective as a physician and diplomat, Geddes painstakingly wrote out his impressions for the benefit of Curzon. The report was not composed with any expectation by Geddes that it would become a public document. Although his general tone was decidedly critical, Geddes found a few bright spots such as the ample, wellprepared meals, and the efficiency with which administrative details were handled. Yet, on the whole, Geddes was plainly offended by the overcrowding, and the odour and filth of the place ('After leaving the island,' he recounted, 'it took me thirty-six hours to get rid of the aroma which flavoured everything I ate or drank'). His recommendation was that the buildings should be thoroughly cleaned and repainted, that the toilet arrangements and ventilation should be improved, and that separate facilities should be provided for Jewish immigrants. Ideally, he suggested, the United States should abandon Ellis Island and construct a brand-new facility. Under the existing circumstances, he said, he would prefer confinement in the penitentiary at Sing Sing to Ellis Island. In August 1922, following several hostile parliamentary questions, Geddes' report was published as a White Paper. In America Geddes was then assailed for having unjustly depicted Ellis Island as a 'modern Black Hole of Calcutta'. But the furore proved short-lived, largely because the American press was less concerned with reforming Ellis Island than with speculating about the policies and personality of President Calvin Coolidge, who had taken office only two weeks before, following the death at San Francisco of Warren G. Harding. Furthermore, Geddes was absent from Washington while undergoing eye surgery for a detached retina in London and was therefore unavailable for any comment upon his controversial report. Unfortunately, the attempt to reattach Geddes' retina through electrical cautery failed when his surgeon slipped and by accident burned a hole in the ambassador's eyeball. Unable to distinguish even facial expression, Geddes realised that he was physically unable to continue as British Ambassador and thus was forced into retirement in 1924 at the age of 44.19

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To replace Geddes, Curzon selected Sir Esme Howard, who at the time of his appointment was British ambassador to Spain. During the Theodore Roosevelt administration Howard had served as counsellor of the British Embassy under James Bryce. That experience had contributed to Howard's conviction that good Anglo-American relations were essential to the basic interests of the British Empire. One of his attributes as a diplomat was his ability to charm audiences and individuals, including President Coolidge, with a self-deprecating brand of humour. For his part, he regarded Coolidge as a shrewd, if curiously introverted politician and as a man 'who would never leap before he looked'. As Ambassador, Howard found that he needed all his charm and talent as a conciliator to cope with the many 'difficult and prickly' issues dividing the two nations.20 Not even a man of Howard's ability could erase Britain's image as a contentious relative and rival. Judged by the volume of diplomatic correspondence on the subject, the most acrimonious Anglo-American dispute of the decade concerned violations of national prohibition by British 'rum runners', who were often assisted by American collaborators. The lucrative liquor-smuggling industry grew up soon after the war and was concentrated in Canada, Bermuda, and the Bahamas. It was not uncommon for smugglers to obtain from cooperative authorities in the Bahamas, for a fee, two sets of clearance papers so as to evade Coast Guard searches. At the same time a 'rum fleet' of as many as fifty-five British vessels hovered a few miles off the port of New York waiting to discharge liquor into small boats. In January 1924, however, the British, as a demonstration of goodwill, signed the Liquor Treaty which permitted the Coast Guard to apprehend fleeing bootleggers at a distance of up to one hour, depending upon the speed of the vessel concerned, from the American coast. As a result, the 'rum fleet' was reduced to only ten to twelve vessels hovering thirty to ninety miles off shore.21 Still, there was endless controversy over how to interpret the Liquor Treaty. Repeatedly Sir Esme Howard was called upon to protest overzealous enforcement by the United States Coast Guard. The British specifically claimed that seizures could not legally be made unless the smuggler first penetrated the twelvemile limit. They objected also to the use of entrapment tactics by the Coast Guard (as in the 1925 cases of United States of

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America v. the Schooner Marjorie E. Bachman, and United States of America v. 600 cases, more or less, of assorted liquor) and were pleased when a federal judge at Boston ruled that the seizure of the Bachman and its cargo of liquor had been illegally conducted. But Howard was unsuccessful in protesting the seizure of the Hazel E. Herman, which claimed to have been inadvertently blown off its course from Nova Scotia to British Honduras, when it was apprehended at the mouth of the Mississippi River. More serious were the cases of the W. H. Eastwood, which in 1926 was struck by machine-gun fire from a Coat Guard cutter engaging in 'target practice', and the 1929 case of the I'm Alone, which was sunk by shellfire after a chase of 200 miles into the Gulf of Mexico.22 While such cases provided employment for international lawyers, jurists, and the authors of diplomatic notes, the disputes were generally regarded by both sides as routine matters of business to be handled with as little publicity as possible. Probably only prohibitionists regarded Britain's image as tarnished by association with 'rum-running'. Those who defied national prohibition by purchasing the smuggled British products presumably viewed Britain in a more favourable light. By far the most serious Anglo-American disputes during Howard's years as Ambassador were over war debts and naval disarmament - two issues which had seemingly been settled under Geddes. In regard to the debts, it did not take long for the British to have serious second thoughts about the wisdom of having agreed to fund their debt at an interest rate of 3.3 per cent. Britain's policy of facing its financial obligations was discredited when the Debt Commission, on the basis of capacity to pay, agreed to fund the debt of France at 1.6 per cent interest and that of Italy at just 0.4 per cent. Howard, who recognised the political obstacles to reopening the debt settlement, displayed unusual tact in his public remarks on the subject. His personal opinion, he disarmingly suggested, was that if America 'in her own interests and those of the world at large were to ask for a reduction of the amount due to her I thought it not impossible that the request might have favourable consideration'. Not so tactful was Chancellor of the Exchequer Winston Churchill who, in the summer of 1926, initiated a transatlantic debate by criticising the 'rigour' the United States had meted out to Britain in 1923.23

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The next stage of the controversy was ignited by American academics. On 20 December 1926, President Nicholas Murray Butler of Columbia University and members of the Faculty of Political Science published a petition calling for an international conference to consider the readjustment of the entire question of war debts and reparations. The Columbia statement was then endorsed by President John Grier Hibben of Princeton University and 116 members of the Princeton faculty. Secretary of the Treasury Mellon responded by issuing a lengthy letter rebutting Butler and Hibben. It was Mellon's contention that the American debt settlements were fairly negotiated on the basis of capacity to pay and were therefore not a drain upon the resources of the debtors. And, he concluded, 'all of our principal debtors are already receiving from Germany more than enough to pay their debts to the United States'. In fact, Mellon's statement contained a glaring error of fact and should have read 'all our principal debtors except Great Britain . . .'. Thereupon, the British Embassy presented the State Department with a formal note of protest. Based upon a memorandum by Churchill, the note charged that Mellon's statements were 'inaccurate both as regards the past and as regards the future'. 24 In the exchange Churchill scored numerous debating points but changed few, if any, American minds. Senator Borah accused Churchill of conducting a 'Gallipoli campaign' on behalf of cancellation. Secretary of State Kellogg called in charge d'affaires Henry G. Chilton and announced that he considered the Mellon-Hibben exchange to be a purely domestic matter and said that he had no desire to exchange diplomatic notes on the subject. 'I informed him', Kellogg recorded, 'that Mr. Winston Churchill could appeal to the press any time he saw fit; that he had not been backward about doing it heretofore and I did not understand why he did not do that now unless he wished to use the note as a means for getting publicity.'25 Beyond raising bureaucratic blood pressure and cementing Britain's reputation for contentiousness, the exchange of recriminations did not alter the status of the debt. Unknown to any of the participants in the debate of 1926-27, an imminent, if mutually unpleasant, solution was near at hand in the defaults of the Great Depression. The nearest approach to a crisis in Anglo-American relations

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came soon after the Mellon-Churchill debate over the debt, but involved an entirely different issue: the limitation of cruisers. Delegations from the United States, Britain, and Japan debated this topic at the Geneva Disarmament Conference which met between June and August 1927 before adjourning in failure. Superficially the positions of the United States and Britain on cruisers were not far apart. Both paid lip service to applying to cruisers the 5:5:3 tonnage limitation ratio agreed to at Washington in 1921 for battleships. The problem was how to apportion the quota between heavy and light cruisers. American naval policy emphasized the construction of heavy 10 000ton cruisers with eight-inch guns and a long cruising range. The British stressed lighter cruisers of 6000 tons. Sir William Bridgeman, the chief British representative, insisted upon Britain's 'absolute need' for seventy cruisers; fifty-five would be of the 6000-ton class and only ten of the 10 000-ton category. In other words, Bridgeman maintained that Britain must have superiority in numbers of cruisers, although he would concede overall tonnage parity. The American position was that the conference must first agree on maximum tonnage limits before considering a limit on numbers. On the other hand, the Admiralty insisted that the number of vessels should be agreed to before limiting tonnage. To the man on the street such a disagreement was unintelligible. In reality, the debate over technical matters disguised the fact that the two nations were potential naval rivals in the event of another world conflict. With the experience of the First World War before them, the British wanted a large fleet of light cruisers to protect commerce and their far-flung empire. Moreover, the light cruisers would be necessary for enforcing maritime belligerent rights, including blockade. As aptly summed-up by General Preston Brown in a conversation with the British military attache in Washington, the British wanted more light cruisers so as to be able to establish a blockade; the United States Navy wanted the large cruisers so as to be able to challenge a blockade.26 Unquestionably the failure to reach an agreement at Geneva hurt Anglo-American relations and reinforced Britain's image as a contentious naval rival. The 1928 election campaign dominated the final year of the Coolidge Administration. In the summer of 1927 the President had announced his retirement by stating, in his typically enig-

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matic way, 'I do not choose to run for President in 1928.' Commerce Secretary Herbert Hoover soon emerged as the choice of the Republicans and he was opposed by Alfred E. Smith, the Democratic Governor of New York. Fortunately for Britain's image in America neither candidate mentioned the cruiser-deadlock at Geneva. In fact, foreign policy played practically no role in the campaign. According to the journalist Walter Lippmann, the only difference between the 'voluble and vague' foreign policy platforms of the two parties was that the vacuous verbiage of the Republicans took twice as long to read as that of the Democrats. Either Smith or Hoover could have run just as well on the other's platform, Lippmann maintained. In the meantime the disarmament dispute marked time. But all was not negative, as the British cooperated with the State Department in launching the widely-praised but ineffective Kellogg-Briand Pact, which renounced war as an instrument of national policy. Actually the British did attach several reservations, one of which exempted from the pact the right to defend the Suez canal, but these were so skilfully phrased that they did not arouse antagonism.27 On Armistice Day 1928, six days after Hoover won the presidency. Britain's image in America descended to its lowest level of the decade. The basic cause was continued American resentment over the failure of the Geneva Conference, a subject which Coolidge reacted to in his bellicose Armistice Day address. Self-righteously the retiring president warned Europe against increasing arms spending. From Howard's point of view the speech was an 'apple of discord thrown at Europe as a present to commemorate the tenth anniversary of the armistice'. Yet, a White House source suggested that the President's outburst had come as a result of frustration over the cruiserdeadlock at Geneva, combined with a desire to get the subject 'off his chest'.28 The President's bark was worse than his bite, however. In his final public and private remarks, Coolidge adopted a moderate tone before he retired with the curious boast that he had been a president 'who minded his own business'. More conciliatory was Coolidge's successor, Herbert Hoover. Contrary to rumours that the new President was an anglophobe, Sir Esme Howard could find no evidence that Hoover was anti-British. Instead, the new administration sought a

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compromise on naval limitation and Hoover strongly advised that the role of professional naval officers should be strictly limited in the next round of negotiations. The October 1929 visit to America of Prime Minister J. Ramsay MacDonald, who had taken office just three months after Hoover's inauguration, was also helpful in resolving the cruiser dispute. Hoover's advice to exclude naval officials was adhered to and the basis for an understanding was reached whereby the United States would receive a greater number of heavy cruisers in return for conceding Britain an advantage in light cruisers. The two leaders were not so successful, however, when they turned to the war debt, a subject they discussed at length while driving to Hoover's camp on the Rapidan River in Virginia's Blue Ridge Mountains. In the abstract Hoover agreed that the 1923 settlement was in need of revision and said he would give sympathetic consideration to any request for a modification. Not so helpful, however, was Hoover's thoughtless suggestion - apparently offered on the spur of the moment - that Britain should transfer to the United States such possessions as Bermuda, British Honduras, and Trinidad in return for debt concessions. Neither Hoover nor MacDonald suspected that within a few weeks the great crash would set in motion a deflationary collapse which would lead to the Hoover Moratorium of 1931 and the eventual default of the British debt three years later.29 By the end of 1929 Britain's image in America had slightly improved from the discordant days of the Paris Peace Conference. The settlement of the war debt (even on less than generous terms) and the resolution of the cruiser deadlock were accomplishments which overshadowed the petty disputes over immigration and liquor-smuggling. Another positive factor was the disappearance of the Irish issue as a result of Britain's granting of Irish independence. Also, for the most part, anglophobia appeared to decline slowly during the decade. An exception was the Chicago mayoral contest of 1927 in which the showman William Hale Thompson won the election on the slogan 'Keep the King's Nose Out of Chicago'. It was his contention that George V sought to force America into the League of Nations, and 'Big Bill' threatened to 'bust King George in the snoot'. Promptly a national chorus of ridicule descended upon the mayor, suggesting that the day had passed

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when politicians could automatically win acclaim by 'twisting the lion's tail'.30 Despite the modest improvement in the British image, the two nations were not about to enter a golden age of friendship. Further contentiousness and rivalry were assured by the trade wars, defaults, and mutual recriminations produced by the Great Depression.

NOTES 1.

2. 3. 4.

5.

6.

7. 8.

There is no detailed study of Anglo-American relations in the twenties. The general background is surveyed in H.C. Allen, Great Britain and the United States: a History of Anglo-American Relations (1783-1952 (New York, 1969), 724-62; Crane Brinton, The United States and Britain (Cambridge, Mass., 1945), 128-32; and H.G. Nicholas, The United States and Britain (Chicago, 1975), 74-83. Robert K Murray, The Harding Era: Warren G. Harding and His Administration (Minneapolis, 1969), 360—64 and L. Ethan Ellis, Republican Foreign Policy, 1921-1933 (New Brunswick, NJ, 1968), 79-228, discuss Anglo-American differences over disarmament and war debts. The Anglo-American financial relationship is surveyed in Michael J. Hogan, Informal Entente: the Private Structure of Cooperation in Anglo-American Economic Diplomacy, 1918-1920 (Columbia, Mo., 1977). The most recent scholarship on the subject is contained in B.J.C. McKercher, The Second Baldwin Government and the United States, 1924-1929 (Cambridge, 1984). Howard to Sir Austen Chamberlain, 7 May 1929, FO371/13551/A3381, Public Record Office, hereafter cited as PRO. Murray, The Harding Era, 328; Selig Adler, The Isolationist Impulse: Its Twentieth Century Reaction (New York, 1957), 151-3; Esme Howard, Theatre of Life (2 vols, Boston, 1935-6), II, 488. William C. Widenor, Henry Cabot Lodge and the Search for an American Foreign Policy (Berkeley, 1980), 38, 186-9; Adler, The Isolationist Impulse, 135-7. Harold Nicolson, Peacemaking, 1919 (New York, 1939), 69-75; John Maynard Keynes, The Economic Consequences of the Peace (New York, 1920), 36-55; Charles Seymour, Letters from the Paris Peace Conference, Harold B. Whiteman, Jr., ed., (New Haven, 1965), 153. Seth P. Tillman, Anglo-American Relations at the Paris Peace Conference of 1919 (Princeton, 1961), 229; Thomas W. Lamont, 'Reparations', in Edward M. House and Charles Seymour (eds), What Really Happened at Paris: The Story of the Peace Conference, 1918-1919 (New York, 1921), 289. John W. Long, 'American Intervention in Russia: The North Russian Expedition, 1918-1919', Diplomatic History 6 (Winter, 1982), 45-67. Thomas A. Bailey, Woodrow Wilson and the Great Betrayal (New York, 1945), 28-9, 164-7.

Benjamin D. Rhodes 9. 10. 11. 12. 13. 14.

15.

16. 17. 18. 19. 20. 21. 22.

23. 24. 25.

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Daniel M. Smith, Aftermath of War: Bainbridge Colby and Wilsonian Diplomacy, 1920-1921 (Philadelphia, 1970), 32-55. Murray, The Harding Era, 140-48; Thomas H. Buckley, The United States and the Washington Conference, 1921-1922 (Knoxville, Tennessee, 1970), 69-70. Memoir of Candler Cobb, Columbia University Oral History Collection, 90-93; World War Foreign Debt Commission, Combined Annual Reports of the World War Foreign Debt Commission (Washington, 1927), 10. Blackett to Curzon, 14 July 1921, FO371/5662/A5144, PRO. Geddes to Curzon, 25 April 1922, FO371/7281/A2766, PRO; Curzon to Geddes, 25 April 1922, FO371/7281/A3041, PRO. Sir Auckland Campbell Geddes, The Forging of a Family (London, 1952), 327; Ambassador George Harvey to Hughes, 4 August 1922, Department of State, Papers Relating to the Foreign Relations of the United States [1922] (2 vols, Washington, 1938), I, 406-9. William Larimer Mellon, Judge Mellon's Sons (Pittsburgh, 1948), 447-8; Gilbert to Mellon, 17 August 1922, Department of the Treasury, Records of the Bureau of Accounts, RG 39, National Archives; Literary Digest, 74:13-15, 19 August 1922; 'An Immoral Moral Plea', The Nation, 115:159, 15 August 1922. Bonar Law to Sir Robert Home, 22 January 1923, FO371/8503/A440, PRO. New York Times, 28 January 1923; Congressional Record, 67 Cong., 4 Sess., 2669 (29 January 1923). World War Foreign Debt Commission, Combined Annual Reports, 96-100; Literary Digest, 76: 10-11, 3 March 1923; Chicago Tribune, 2, 3 February 1923. Benjamin D. Rhodes, 'A Modern "Black Hole of Calcutta"? The AngloAmerican Controversy Over Ellis Island, 1921-1924'^ New York History, July 1985, 229-48. Howard, Theatre of Life, II, 476-7,, 491-3. Hughes to Geddes, 26 June, W22 (enclosed in Henry G. Chilton to the Earl of Balfour, 30 June 1922), FO414/250/6799, PRO; Geddes to Curzon, 23 January 1924, FO414/253/6484, PRO. Howard to Sir Austen Chamberlain, 11 March 1925, FO414/255/6460, PRO; Howard to Lord Byng of Vimy, 4 November 1925, FO414/256/6752, PRO; Howard to Chamberlain, 13 April 1926, FO414/257/6740, PRO; Howard to Chamberlain, 12 April 1929, FO414/263/6688, PRO. Howard, Theatre of Life, II, 497-8; New York Times 20 July 1926. Mellon to Hibben, 15 March 1927, World War Foreign Debt Commission, Combined Annual Reports, 306—11; Chilton to Kellogg, 2 May 1927, ibid., 621-6. Howard to Chamberlain, 30 July 1927, FO414/258/6452, PRO; Kellogg to Howard, 4 May 1927, World War Foreign Debt Commission, Combined Annual Reports, 626-7; Memorandum of a conversation between Kellogg and Chilton, 5 May 1927, General Records of the Department of State, File No. 800.51W89 Great Britain/212, RG 59, National Archives.

208 26. 27. 28.

The Image of Britain in the United States, 1919-1929

McKercher, The Second Baldwin Government, 55-76, 93. Ibid., 104-27; New York Times, 25 July 1928. Howard to Lord Cushendun, 16 November 1928, FO414/262/A8128, PRO. 29. Benjamin D. Rhodes, 'Herbert Hoover and the War Debts, 1919-1922', Prologue: The Journal of the National Archives, Summer, 1974, 136-7. 30. Benjamin D. Rhodes, 'Anglophobia in Chicago; Mayor William Hale Thompson's 1927 Campaign Against King George V, Illinois Quarterly, Vol. 39, summer 1977, 3-14.

7 'The Deep and Latent Distrust 5 : The British Official Mind and the United States, 1919-1929 B. J. C. McKercher i In the 1920s, the group of men responsible for the conduct of Britain's external relations, the British foreign-policymaking elite, was divided in its collective opinion about the United States. This derived from the fact that the years between the end of the Great War in 1918 and the London Naval Conference of 1930 saw decided strain in Anglo-American relations. Britain and the United States struggled with one another throughout this period: Britain to retain its position as the only truly global power against the American challenge; and the United States to achieve its own global status over the opposition of the British. The general course of Anglo-American relations in the 1920s is well-known.1 It was dominated by two central issues, economic competition and naval rivalry, which in turn were permeated by Washington's political isolation from international politics and concurrent aggressive economic diplomacy. This is not to suggest that there were continual flashpoints in the transatlantic relationship at this juncture. There were not. Indeed, a cooperative competition existed in several economic areas. But it remains that Anglo-American rivalry existed as a constant in international politics in the ten years or so after the Allied victory in 1918. What is not wellunderstood, however, is the way in which the British foreignpolicymaking elite, the 'official mind' as far as external relations went, perceived the United States and, as a result, shaped Britain's American policies.2 This dimension of the Anglo-American relationship in the 1920s needs to be examined 209

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in order to understand better how and why Anglo-American relations progressed as they did during that difficult time. In the 1920s, the British foreign-policymaking elite comprised a relatively small group of men: the prime ministers and those of their private secretaries interested in diplomatic matters; the foreign secretaries and their advisers within the Foreign Office and amongst the Diplomatic Service; and, depending upon the particular question, a few interested Cabinet ministers and their senior advisers.3 What held true for British foreign policy generally during that decade was notably so when considering policy towards the United States. The various prime ministers and their foreign secretaries usually found only the chancellors of the exchequer, the first lords of the Admiralty, and the secretaries for the colonies and the dominions seeking to influence the governments' American policies. But the ability and desire of even this select few to shape diplomatic strategies varied with each ministry. When David Lloyd George served as Prime Minister (December 1916 to October 1922), he dominated foreign policy. The same was the case when James Ramsay MacDonald presided over his first government (January to November 1924) - he even served as his own Foreign Secretary. In his second government (June 1929 to August 1931), MacDonald relinquished control of the Foreign Office, but he retained complete control over policy towards the United States. The other premiers during this decade, Andrew Bonar Law (October 1922 to May 1923) and Stanley Baldwin (May 1923 to January 1924, and November 1924 to June 1929), had little interest in foreign policy; thus, their foreign secretaries received a relatively free hand in directing Britain's external relations. As these foreign secretaries, Lord Curzon (October 1922 to January 1924)4 and Austen Chamberlain (November 1924 to June 1929), also possessed political strength within their party, they not only had freedom when pursuing policy. They were usually able to succeed in inter-departmental struggles to ensure their goals were not deflected to any great extent. The elite in the 1920s contained three broad divisions.5 At one end of the spectrum were the 'Atlanticists', firm believers in pan-Anglo-Saxonism, who saw the United States as Britain's natural ally because of supposed shared history and common political and cultural ties. For them, joint Anglo-American

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economic, diplomatic, and naval efforts were enough to preserve international peace and security within the confines of the new international order devised at the Paris Peace Conference. The Labour Prime Minister MacDonald certainly stands at the fore in this respect. He had travelled widely in the United States before 1920; he continued to do so whilst Leader of the Opposition between 1924 and 1929; and, when he became Prime Minister for a second time following the general election of May 1929, he undertook an informal mission to Washington to meet with the new President, Herbert Hoover. MacDonald's mission was designed to resolve the naval deadlock, which had bedevilled Anglo-American relations for two years, by face-to-face discussions at the highest level. But MacDonald did not restrict himself to inter-governmental talks to show his 'Atlanticism'. He also gushed publicly over the importance of firm Anglo-American relations, this in the Hearst press for £2000 a time, and he counted amongst his friends a range of prominent Americans.6 These friends included Senator William Borah, the xenophobic chairman of the Senate Foreign Relations Committee from 1924 to 1933. As MacDonald explained to Borah in August 1929, when the Prime Minister was searching for a method of resolving the naval question: You know how I regret that there should be any difficulties between us - so many of them purely psychological - arid how glad I should be if those of us who are striving for peace in the world could secure it. I do not believe that real peace will come until you and we stand together and proclaim from the house tops together that in that respect we have the same mission and inspiration.7 The Labour Party, of course, had no monopoly on 'Atlanticism'; the concept found expression in every important political party in Britain during this period. The Conservative Viscount Cecil of Chelwood, a co-founder with Woodrow Wilson of the League of Nations in 1919 and, from early 1925 until the middle of 1927, the minister responsible for disarmament in Baldwin's second government, resigned from that government because of its hard line towards the United States at the Coolidge naval conference. He subsequently put his concerns before the public in a speech in the House of Lords which, ironically, only added to the strain in Anglo-American relations. 'Atlanti-

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cists' in Britain and Americans generally saw his critique of his own government as a justification for the equally hard line taken by the United States delegation at Geneva.8 In the Liberal Party, Philip Kerr, Lloyd George's private secretary from 1916 to 1922, played a prominent part in trying to cement close Anglo-American ties at the Paris Peace Conference.9 After Lloyd George's fall, Kerr wrote widely on Anglo-American relations, travelled extensively in the United States, and, because of his esteemed position, had some influence on the various governments after 1922 when they considered the American question, especially in the troubled two years after the failure of the Coolidge conference in August 192710 indeed, in August 1939, Kerr began service as the British Ambassador at Washington. 'Atlanticism' after 1918 contained just one weakness, but it was significant. Its advocates, like MacDonald, Cecil, and Kerr, assumed that the United States would willingly join with Britain in preserving the new international order, the legacy of the Paris Peace Conference, should a major threat to it erupt in Europe or elsewhere. Such an assumption constituted wishful thinking of a high order. In 1919, Woodrow Wilson had stated unequivocally that: You must not speak of us who come over here as cousins, still less as brothers; we are neither. Neither must you think of us as Anglo-Saxons, for that term can no longer be rightly applied to the people of the United States . . . No, there are only two things which can establish and maintain closer relations between your country and mine: they are a community of ideals and of interests.11 These were wise words, which British 'Atlanticists' ignored. With the demographic make-up of the United States less 'British' than ever by the end of the Great War, a result of heavy immigration from Central and Southern Europe beginning in the late nineteenth century, that country was more heterogeneous than ever. It contained large groups of hyphenated Americans, like Irish-Americans and German-Americans, who had little love for Britain. But it remained difficult to convince pan-Anglo-Saxons like MacDonald that the United States could not be relied upon to help Britain preserve the international status quo. The colonialism epitomised by the exist-

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ence of the British Empire was anathema to most Americans - a hypocrisy given the burgeoning American holdings in the western Pacific and United States economic domination of Latin America - so that they were never going to fight to prop up the British Empire. Rather than base their lobbying for close Anglo-American ties on a dispassionate assessment of what interests the two great powers had in common, the only way to pursue successful diplomacy, 'Atlanticists' believed in a diplomatic condominium based on sentiment. In the hard world of international politics, especially in the 1920s, sentiment counted for almost nothing. At the other extreme within the British foreign-policymaking elite stood the 'Imperial isolationists'. These men saw the Empire as the raison d'etre of Britain's position as the preeminent world power. Therefore, they wished to preserve the Imperial edifice at all costs and, not only that, to add to its political and economic strength. This could only be achieved, wrote Leopold Amery, the Colonial and Dominions Secretary in Baldwin's second government, by 'quickening the consciousness of Empire and the sense of its possibilities'.12 'Imperial isolationists' reckoned that in order to maintain a strong and cohesive Empire able to resist the encroachments of other powers, Britain should keep all extra-Imperial commitments to a minimum. It followed that men like Amery found little merit in British membership of the League of Nations, and they chafed at the efforts of more pragmatic British leaders to involve Britain heavily in European affairs through diplomatic and military commitments like the Treaty of Locarno of 1925.13 Such endeavours, the 'Imperial isolationist' argument ran, only deflected limited British resources and energies away from more crucial Imperial development and defence. However, when threats to the Empire arose, this group within the elite could be relied on to strain every effort to remove them. For 'Imperial isolationists' in the 1920s, the United States stood as the principal threat to the Empire because of, first, the advocacy by the Harding, Coolidge, and Hoover administrations for 'a navy second to none' and, second, the American economic penetration of crucial portions of the Empire like Canada. 'Imperial isolationism' found its adherents primarily within the ministries responsible for the welfare and defence of the Empire: the Colonial Office, the Dominions Office, and,

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because of the naval question, the Admiralty. These men became the most vociferous anti-Americans within Britain in the 1920s and, interestingly, they had one leader throughout. Sir Maurice Hankey, the secretary to both the Cabinet and its chief foreign and defence policy advisory body, the Committee of Imperial Defence (the CID), provided a focus for resistance to United States naval demands from the armistice of 1918 through to the London naval treaty of 1930, the recognised end of Anglo-American naval rivalry in the interwar period. Whilst ministers and other permanent officials from amongst the 'Imperial isolationists' came and went, Hankey remained - he was Secretary to the CID from 1912 to 1937 and to the Cabinet from 1916 to 1937. Hankey's reaction to renewed American efforts to settle Anglo-American naval differences by conference, made in the aftermath of the failure to formalise complete naval equality between Britain and the United States at the Coolidge conference in 1927, typifies 'Imperial isolationist' attitudes at the time: I see no reason why we should allow ourselves to be dragooned by the American Senate into a Conference which has no other object than the curtailment of our sea-power. We have nothing to gain from such a Conference, and much to lose. We are the greatest Naval Power, and a Conference cannot take place without us.14 American endeavours to emasculate the Royal Navy had to be resisted at all costs. Although the efforts of Hankey and the other British navalists served only to delay a settlement of Anglo-American naval differences, not to prevent one, they show how this train of thought within the British 'official mind' perceived the Americans as rivals.15 However, whilst the naval question aroused passions in Britain, the more so because the country had nearly starved to death between 1914 and 1918 thanks to German naval operations, the matter of American economic penetration of the Empire was different. American economic success within the Empire was a slower, more insidious process. Rather than portending a sudden shift in the Anglo-American balance in the wider world that would assuredly come with formalised naval parity, the expansion of United States international trade and investment at Britain's expense did not seem to pose an

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immediate threat to British interests. By the middle of the 1920s, however, 'Imperial isolationists' perceived danger to Imperial unity with Canada falling heavily under American financial domination. For Amery's advisers, like Lord Willingdon, the Governor-General of Canada, this presaged a slow but steady erosion of British political influence in the senior dominion, and its replacement by that of the United States.16 When for the first time Canada and the United States exchanged permanent diplomatic missions, this in 1927, Amery helped lobby successfully for the appointment of a permanent British high commissioner to Canada the next year. 17 It was important to ensure that London not only knew precisely what was occurring at Ottawa - the governors-general moved only in high political and social circles - but that British policy could be more effectively implemented in Canada in order to preserve Imperial unity and counter the American threat. Like 'Atlanticism', 'Imperial isolationism' was predicated on a series of beliefs, all of which contained a single, but telling flaw. In this case, it was a failure to recognise that not all parts of the Empire wanted to continue either being under British domination or having close ties with London. In colonies like India, native nationalists wanted to establish their own independent states. Just as anti-British were Irish nationalists, unhappy that an all-Ireland independence had not been achieved by the bloodshed that led to the Anglo-Irish treaty of 1921 and the creation of the Irish Free State. Adding to antiAmerican sentiments amongst British 'Imperial isolationists' in the 1920s was the fact that nationalist agitators from India and Ireland were able to travel to the United States, spread the most malicious lies about British policy, and raise money for their causes.18 But just as crucial, anglophilic dominions like Canada also wanted to loosen the bonds of Empire. At the 1926 Imperial Conference, the Canadians led the successful fight to achieve the right for each dominion to pursue an independent foreign policy - the Canadian and American exchange of permanent diplomatic missions followed right after this. The Canadian Prime Minister, William Lyon Mackenzie King, had long wanted to push Canada away from the tight control of officialdom at London. In 1927, Amery refused to follow Mackenzie King's advice to honour a group of prominent Canadians by recommending them for privy councillor-

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ships. About this, the Canadian Prime Minister fulminated: 'The refusal to grant these has been an egregious error, for which Amery is to blame. We will yet get the Dominions Office out of the Br. Cabinet circle - It is a fifth wheel to the coach and save as a post office is wholly unnecessary.'19 British 'Imperial isolationists' in the 1920s were men of a different age, the age before the Great War when British global power was less shaky than it was after 1918 and when Pax Britannica gave the appearance of omnipotence to English civilisation. They wanted to push the clock back but could not do so. As the decade progressed, the 'Imperial isolationists' became increasingly inflexible in their attitudes towards what they perceived as necessary for the preservation of the Empire. Occupying the middle ground within the elite were the 'world leaders'. These men believed that the best way for Britain to survive as a power of the first rank was to ensure that another crisis of 1914-18 proportions did not engulf Britain. A second great War would most probably undermine Britain from within - economically, socially, and politically; blunt the effectiveness of its foreign policy and armed strength; and, with the centre of the Empire weakened, see its Imperial holdings melt away. Therefore, these men worked to acquire a leadership role for Britain in great-power politics outside of the Empire; to do so would be the best protection for Britain and the Empire - like the 'Imperial isolationists', British 'world leaders' realised that the possession of the Empire gave Britain its position as a world power. In the 1920s, British 'world leadership' encompassed active participation in the League of Nations, as well as efforts to ensure that the balance of power in Europe, primarily, and in the Mediterranean and East Asia were not upset to Britain's disadvantage. Austen Chamberlain's words to the Royal Institute of International Affairs in February 1930 are apposite: The experience of 1914 is there to teach us how great a matter a little fire kindleth, and how desperately the affairs of another country may affect our own existence . . . . Nothing, therefore, has occurred to release us from the necessity of maintaining a watchful interest in continental affairs. On the contrary, positive engagements now reinforce and extend our old interests, and in those positive engagements arising from

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the Covenant the share of the Dominions is the same as our own.20 For British 'world leaders', the United States became an increasingly important factor in British diplomatic calculations because of the acuteness of the naval question. And, importantly, it was the perception of the United States held by these men that was telling: the United States was not necessarily a friend or a foe; it was simply one of a group of great powers with the potential to damage British interests.21 This constituted a rational approach to the American question in the conduct of British external policy, at least more rational than that of either of the other two lines of thought within the elite; it is not surprising to find British 'world leaders' dominating the premiership, the Foreign Office, and the Diplomatic Service, the offices charged with the responsibility for foreign policy. In the context of 'world leadership' ideas, Lloyd George saw Britain as the arbiter of European affairs once the Great War ended. Not always successfully, he sought to take such a stance at the Paris Peace Conference and, afterwards, in a series of smaller conferences at San Remo, Cannes, and other warm places in southern Europe.22 For Lloyd George, Europe remained the most important concern of British foreign policy. He did not ignore other areas of the world, especially East Asia, where he looked to a sort of Anglo-American condominium after the Washington conference of 1921-22 to prop up their respective interests.23 But no sentiment permeated this attitude. Just as Lloyd George was guided in personal affairs and British domestic policy by ideas of pure self-interest, the same notion dominated his foreign policy. Such is the same for Curzon and Chamberlain, the men who ran British foreign policy whilst Bonar Law and Baldwin occupied 10 Downing Street. The issue was always to ascertain what British interests were and, when the United States had to be considered, what were American ones. If the two powers' interests did not coincide, as in the quest for European military security in the first half of the decade, the British could safely ignore the United States. This is precisely what Chamberlain did when he seized upon the idea of Britain guaranteeing the FrancoGerman border in 1925, which led to the Locarno treaty in

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October of that year.24 However, when British and American interests clashed, as happened over the naval issue from the Coolidge to the London naval conferences, then the differences had to be weighed and a compromise found.25 If the United States, like any other major power, still proved intransigent, then Britain had to remain firm whilst new avenues of compromise were found. British 'world leaders' realised that if another continental war broke out in Europe, Britain could not stand by whilst a decision was reached without reference to British interests. Throughout the 1920s, maintaining the European balance of power meant supporting Germany as much as possible against the French, paranoid that Germany might revive and crush France for the third time in less than a century. The United States was not unimportant in this British equation. Thus, British 'world leaders' on the whole welcomed American participation in the German reparations settlement that followed the French occupation of the Ruhr in 1923. The British and the Americans worked together without undue friction in the Dawes Committee, the senior British representative, Sir Josiah Stamp, playing a major part in the drafting of the Committee's Plan.26 British 'world leaders' also dominated in the settlement of the British war debt to the United States. In early 1923 Baldwin, then Bonar Law's Chancellor of the Exchequer, Sir Montagu Norman, the Governor of the Bank of England, and Sir Auckland Geddes, the British Ambassador at Washington, conducted the final negotiations in the United States.27 This settlement was not well-received in Britain by the general public nor by Bonar Law; 28 the British expenditure of men and money during the war were ignored by American legislators and public opinion, both of whom demanded that Britain pay. But the debt settlement was accepted by the Cabinet. This action removed one of the main impediments to improved Anglo-American relations in the postwar period and, more important, showed international financial circles that Britain could be relied upon to honour its debts - this remained crucial for maintaining confidence in London as an international financial centre within those circles. Not surprisingly, the resolution of German reparations via the Dawes Plan fell successfully on the heels of the Anglo-American debt settlement. Of the three groups within the British foreign-policymaking

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elite, the 'world leaders' were the most pragmatic and flexible in pursuing diplomatic objectives. This explains much about why they generally succeeded in the pursuit of policies concerning the United States, policies devised by looking dispassionately at the American question and proceeding from there. This is not to suggest that British 'world leaders' remained neutral in their feelings about the United States. They did not. Sir Robert Vansittart, the senior Foreign Office expert on the United States for most of the 1920s, is a good example. He served as Curzon's private secretary from 1920 to 1924, head of the Foreign Office American Department from 1924 to 1928, and, from 1928 to 1930, worked as the senior foreign policy adviser in the Prime Minister's office. He liked the United States, having travelled there often to visit his American wife's family. But he was always the cool professional, never letting his personal feelings interfere with the creation of policies designed to protect British interests. In 1925 and 1926, for instance, whilst Chamberlain and the senior Foreign Office officials wrestled with the problem of ensuring the inviolability of the Franco-German border and then getting Germany into the League of Nations, Vansittart almost singlehandedly defused an effort by the State Department to collect 'blockade claims' dating from the Great War.29 Britain could never agree to the payment of such claims; to do so would call into question the legal basis of British belligerent rights imposed between 1914 and 1918 - if Britain agreed to make restitution, British blockade policies in a future war would be seriously compromised. Vansittart, therefore, pursued a hard line policy that led to a blockade claims settlement that did not dilute in any way the doctrine of British belligerent rights. If another war occurred, it was believed by the Foreign Office and the Admiralty in the 1920s, British maritime blockade of the Empire's enemies would be essential for victory. Vansittart saw this and moved accordingly. This pragmatism is what distinguished 'world leaders' from both the 'Atlanticists' and the 'Imperial isolationists'. When considering the British foreign-policymaking elite, it is necessary to be aware of two points. The first is that not all of its members can be identified exclusively with one trait. A large number of men held two or even all three views concurrently. Depending upon the situation, one trait would dominate

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whilst the others receded into the background. When the situation changed, opinion might change. The most striking example of this can be seen with Winston Churchill, variously Lloyd George's Minister of Munitions, Air, War, and Colonies and, between 1924 and 1929, Baldwin's Chancellor of the Exchequer. No doubt exists that this man believed strongly in panAnglo-Saxonism. One of the underlying themes of his personal history of the Great War, The World Crisis, written between 1921 and 1929, is that Anglo-American cooperation in large part proved decisive to the Allied victory over the Central Powers.30 But ideas about blood links between Britain and the United States - and Churchill, after all, was the product of a transatlantic marriage - did not restrain him from becoming one of the most vociferous anti-Americans in the Cabinet during the naval deadlock of the late 1920s. For instance, he led the British hardliners who sabotaged the chance for a cruiser compromise at the Coolidge conference in 1927 and, in so doing, took on the guise of an 'Imperial isolationist': No doubt it is quite right in the interests of peace to go on talking about war with the United States being 'unthinkable'. Everyone knows that this is not true. However foolish and disastrous such a war would be, it is in fact, the only basis upon which the Naval discussions at Geneva are proceeding. We do not wish to put ourselves in the power of the United States. We cannot tell what they might do if at some future date they were in a position to give us orders about our policy, say, in India or Egypt, or Canada, or on any other great matter behind which their electioneering forces were marshalled.31 However, earlier, in 1925, when Churchill presided over the return of Britain to the gold standard, he did so advocating 'world leadership' ideas. In reporting to King George V on this momentuous decision, he pointed out that the United States was on the gold standard, and that a number of other countries in Europe and the Empire were either on it or about to join. Britain also had to join if it was to preserve its place at the centre of world finance: The importance of a uniform standard of value to which all

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transactions can be referred throughout the British Empire and through a very large part of the world cannot be overestimated. It benefits all countries, but it benefits no country more than our crowded island with its vast world trade and finance by which it lives.32 Churchill was not alone in possessing shifting opinions about the direction British foreign policy should take or the British response to the American question. Changing views are a normal human condition and, importantly, they indicate that portions of the British 'official mind' could change depending on the situation. The second point to consider in assessing the foreign-policymaking elite and the American question is that the perceptions of the United States held by individuals did not always square with reality. 'Atlanticists' are the best example. Assumptions about shared interests almost always dominated their pursuit of policy. This created a belief that Anglo-American unity would be certain to emerge when the international chips were down, a belief that flew in the face of the fierce American isolationism of the time. In mid-1928, MacDonald wrote to an American friend: Tf America is to help us secure peace[,] it must take some responsibility and I believe, when we get down to actual problems, it will do so.'33 It took several years, especially with the frustrations marking British policies in the early phase of the Great Depression that culminated in Franklin Roosevelt torpedoing the World Economic Conference in 1933, before MacDonald realised the essential flaw in 'Atlanticist' reasoning. 'It is very difficult for me here to understand exactly what is going on,' MacDonald wrote to a prominent American banker after Roosevelt's move, 'but at the moment it looks as though the action of America at the International Conference has about finished me and has certainly been a very serious setback to the work I have been doing for a good many years in building up friendly relations between the two countries.'34 In the same way, both the 'Imperial isolationists' and the 'world leaders' entertained misperceptions about the United States. Geddes, the ambassador at Washington and a 'world leader', surmised that the Washington conference marked 'the beginning of a new and better epoch in AngloAmerican relations'.35 The recrudescence of the naval question

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five years later showed how misperceptions could emanate even from the chief British diplomatic agent at the American capital. Nonetheless, the point to appreciate is that it matters not whether the image of the United States held by those who made foreign policy in Britain was accurate or not. These men constructed policy on those beliefs, and it is this which counts. For the British 'official mind', the perception of reality was reality when making and implementing policy. II

Several questions now arise about the British 'official mind' and the United States in the 1920s: did one division of the foreign-policymaking elite dominate in the creation and implementation of Britain's American policy, or did some sort of consensus emerge from amongst the three groups through debate at the Cabinet and ministerial levels? How did this 'official mind' perceive the United States during the decade? and, finally, in what way did the general perception affect policy? The answers to these questions lie in an appreciation of how the four men who actually controlled British foreign policy in the 1920s - Lloyd George, Curzon, Chamberlain, and MacDonald - handled the problem of the United States. When Lloyd George became Prime Minister in the midst of the Great War, he saw part of his task to be the rejuvenation of political leadership and decision-making. This led to the creation of the War Cabinet and the Cabinet Secretariat, plus the concentration of political power in the prime minister's office in order to make the speedy decisions called for in wartime. As the Foreign Secretary was not judged important enough to merit a permanent place in the War Cabinet regular diplomacy had gone into limbo because of the war Lloyd George and a few of his private secretaries, chiefly Kerr, conducted foreign policy from Downing Street. This continued until Lloyd George's fall from power in October 1922.36 At the Paris Peace Conference, the Prime Minister tried to work with Wilson to forge a new international order with the AngloAmerican powers at its centre: 'I was delighted to have an opportunity of meeting him and of entering into a heart-toheart discussion with this remarkable man on problems affect-

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ing the settlement of the world.'37 But British and American interests differed, especially over Germany, and Lloyd George's hopes for Anglo-American cooperation in the postwar world proved illusory.38 With the American rejection of the Treaty of Versailles and the return of the United States to political isolationism that came with the Republican Party's electoral success in 1920, Lloyd George tended to ignore the United States in his diplomatic calculations. The important foreign policy concerns of Britain lay in Europe and the Middle East, areas where the Americans expressed little political interest. Nonetheless, when President Warren Harding called the Washington Conference to bring about both general naval arms limitation and stability in East Asia and the western Pacific, Lloyd George's government sent a delegation. Doing so conformed to the Prime Minister's desire to effect economies in naval spending. In addition, he saw the abrogation of the Anglo-Japanese alliance, called for by the Americans, as a trade-off for getting the Americans to support formally the maintenance of the East Asian and Pacific status quo that had emerged during the Great War. This would provide Britain with another ally, no matter how tenuous, to help keep the balance of power in the Far East.39 But when at Washington it came to the American demand for complete naval equality with Britain, Lloyd George and his ministers baulked.40 Whilst accepting parity in capital ships and aircraft carriers - the expensive vessels - they refused to extend equality to warships displacing less than 10 000 tons. This meant essentially that the Lloyd George government had no intention of formalising cruiser parity with the United States. At once the principal weapon for attacking and defending seaborne lines of communication, cruisers were fundamental to any success that Britain might hope to enjoy should it in future impose a blockade. With an Empire to protect, trade routes to guard, and international commitments to consider, Britain needed a cruiser fleet unimpeded by numerical equality with another power. The Royal Navy's preeminence could not be abandoned to appease the Americans. Unwilling to wreck the conference, and happy to achieve at least a limited naval agreement with Britain, the Harding Administration accepted the Lloyd George government's reluctance to arrange cruiser parity.

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In the interim between the Lloyd George and Austen Chamberlain eras of dominance in British foreign policy, the American question receded from the first rank of problems. The Washington naval treaty in late 1921 and the negotiation of the British war debt to the United States a year later did much to ameliorate strained Anglo-American relations. But crucially, more pressing problems now confronted British diplomatists. These concerned creating a stable balance in Europe: reducing Franco-German animosities, giving France security, and bringing Germany back into the comity of nations. Curzon, MacDonald, and, for his first year at the Foreign Office, Chamberlain concentrated on this problem. In January 1923 the French, with their Belgian allies, occupied the Ruhr Valley to siphon off German wealth - in late 1922, Germany had defaulted on its reparations payments because its economy was in a shambles. Both the British and the Americans, though their reasons differed, were at one in criticising this French heavyhandedness. For the British, the possibility of France dominating the continent could not be countenanced.41 Beginning with Curzon,42 the three Foreign Secretaries tried to reduce Franco-German tensions. This had two dimensions: first, get the German economy functioning again and, from this, devise a sensible reparations regime to meet the German ability to pay; and, second, create a system of security so neither France nor Germany would feel the need to revise the status quo in their favour, a situation that could lead either to war or to an imbalance in Europe detrimental to British interests. To the former, the United States was essential. It possessed the economic resources to underwrite the major portion of monies needed to foster German economic recovery. Therefore, Curzon gave his 'enthusiastic support' in November 1923 to the creation of an international body of experts charged with getting Germany back on its economic feet and fulfilling its reparations obligations.43 This body became the Dawes Committee, named after its chairman, the American banker, Charles Dawes, and, as noted earlier, the British and American experts worked together in relative harmony. The Dawes Committee continued functioning whilst MacDonald controlled foreign policy in 1924, and he, too, looked to the success of the experts' proposals in settling the problem.44 When Dawes and his colleagues reported that Germany could pay reduced

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reparations, but that this would entail loans and a reorganisation of the German central bank, MacDonald supported it.45 Although MacDonald fell from power before the Dawes Plan could be implemented, Chamberlain provided continuity in British policy by maintaining support for the Dawes proposals from the centre of the foreign-policymaking elite. In addition, when a modification of the Dawes Plan was needed later in the decade, this via the Young Plan, Chamberlain supported that as well.46 The matter of devising a system of European security constituted a different proposition. At the Paris Peace Conference, Wilson and Lloyd George had agreed to provide France with an Anglo-American guarantee against German irredentism.47 They did so to water down some extreme demands of the French Army against Germany which were sure to prevent any sort of German revival. But the American Senate's rejection of Versailles killed the guarantee, and France responded by forcing Germany to honour every jot and tittle of the peace and settlement. The Ruhr occupation became the reductio ad absurdum of this French policy. Curzon subsequently gave guarded support to a proposal called the Draft Treaty of Mutual Assistance, designed to pry the French out of the Ruhr by giving them a guarantee of their security. The Draft Treaty was to be tied to the League of Nations, but it had not been ratified when MacDonald came to office early in 1924.48 He immediately jettisoned this 'Conservative'-endorsed idea, promoting instead the 'Geneva Protocol', an initiative also tied to the League but containing additional arbitration and disarmament provisions.49 As the Protocol was still in the discussion stage when MacDonald's first government fell in October 1924, the new Baldwin ministry abandoned it after taking office - the Protocol's universal application did not conform to the CID's view of how to protect British interests. Chamberlain then came to support the strategy of a British guarantee of the Franco-German border. He worked assiduously with his French and German opposites, so that by December 1925 the Treaty of Locarno was ratified and in operation.50 Locarno significantly reduced Franco-German animosities, and it guaranteed the Franco-German border. In addition, following a commitment made to the Germans at Locarno, Chamberlain also succeeded in getting Germany a permanent seat on the

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League Council by September 1926; permanent seats were given only to recognised great powers. Chamberlain had ignored the Americans when pursuing what became the Locarno system. As isolationists, the Americans wanted nothing to do with Europe, thus it was best to ignore them. Britain had to pursue a system of European security as the best protection of British interests. 'With America withdrawn, or taking part only where her interests are directly concerned in the collection of money', Chamberlain wrote Esme Howard, the British ambassador at Washington, 'Great Britain is the one possible influence for peace and stablisation. Without our help things will go from bad to worse.'51 In this way, a peace and stability unknown since before 1914 came to Europe thanks in major part to British diplomacy. The real crisis in Anglo-American relations in the 1920s occurred between the middle of 1927 and late 1929, the result of the recrudescence of the naval question. In 1925, the League of Nations established a Preparatory Commission to lay the groundwork for a world disarmament conference. Because of this Commission's importance, non-League powers like Bolshevik Russia and the United States also sent delegations to its meetings which began at Geneva in early 1926. After a year's deliberating, a draft treaty seemed an impossibility, and Calvin Coolidge, anxious to improve his and the Republican Party's political fortunes for the 1928 elections, decided to circumvent the seemingly lethargic Preparatory Commission by having the world's chief maritime powers meet separately to conclude their own naval agreement.52 Once such an agreement was reached, the major naval powers could have it incorporated into the draft treaty being forged slowly at Geneva. The Coolidge Administration sent invitations for a separate naval conference to Britain, Japan, France, and Italy. The latter two powers refused to attend because of mutual suspicions concerning their relative naval strength in the Mediterranean. But Britain and Japan accepted, and the Coolidge naval conference began at Geneva in June 1927. This effort at arranging naval arms limitation failed miserably because of British resistance to the idea of formalising complete naval parity with the United States - the Coolidge Administration's intention was to extend the Washington treaty limitations for capital ships and aircraft carriers to lesser craft.53

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The sticking-point centred on cruiser-limitation: the British wanted a large fleet, seventy vessels, of predominantly small cruisers - 6000 tons with six-inch guns; the Americans, on the other hand, sought a smaller fleet, about thirty-five vessels, but one composed mainly of large cruisers, 10 000 tons with eightinch guns. A British concession to formal cruiser parity with the United States would have put the Royal Navy in a disadvantageous position strategically should naval power be necessary in future to protect British interests. The failure at Geneva damaged the smooth course of Anglo-American relations, thanks to extensive press coverage in Britain and the United States that tended to paint the other country and its naval policies in the darkest hues.54 It led to Coolidge renouncing his bid for a second full term as president; it saw Herbert Hoover, Coolidge's probable Republican successor, discuss the possibility of Anglo-American war with Howard; and it precipitated the outburst of anglophobia in the United States following Cecil's resignation, coupled with a British counterblast of anti-Americanism in the British press and in Parliament. Chamberlain and his advisers concluded that at the base of the cruiser deadlock resided a dichotomy between the British doctrine of maritime belligerent rights and the American theory of the freedom of the seas.55 Over the opposition of the 'Imperial isolationists' led by Hankey, and supported by the Admiralty, Chamberlain won Baldwin's support to have a special CID sub-committee examine the feasibility of concluding a belligerent rights agreement with the United States.56 This sub-committee began deliberating in January 1928, and a year later produced two reports on the subject. Whilst the CID sub-committee deliberated, Chamberlain worked with mixed success to keep Anglo-American relations from further deterioration. In the first six months of 1928, his deft diplomacy saw Britain support an American-sponsored treaty to renounce the use of war as an instrument of national policy. In doing so, Chamberlain won American acceptance of Britain's right to defend the Suez Canal by force of arms, a right that would not call Britain into violation of the renunciatory pact. This was the so-called 'British Monroe Doctrine', and Chamberlain succeeded in this as the Americans had no intention of abandoning their own Monroe Doctrine; it was a necessary tradeoff by Washington, and Chamberlain's determination to have

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'The Deep and Latent Distrust3

Britain treated equally in its 'national defence' amounted to sound foreign policy to protect British and Imperial interests.57 Chamberlain also worked to get the Preparatory Commission moving by burying British and French differences over disarmament through a compromise - those differences were at the bottom of the Commission's snail-pace in achieving a draft treaty in 1926. Although the compromise was reached, it died principally because of American dislike for its cruiser provisions.58 Indeed, American reaction to the Anglo-French compromise, fanned into flames of intense anglophobia by American politicians anxious to score easy points with voters in the 1928 elections, pushed Anglo-American relations to one of their twentieth-century nadirs. In November 1928, the normally parsimonious Coolidge publicly advocated American naval supremacy over Britain in a fit of anger - constructing such a fleet would cost large sums of the taxpayers' money and, early in 1929, Congress passed a bill authorising the construction of fifteen new cruisers. This came at the same time as the renewal of the Anglo-American arbitration treaty - the new text advocated by the Americans wanted belligerent rights to be an arbitrable subject, so Chamberlain, his Foreign Office advisers, and the CID sub-committee worked to settle the American question once and for all. The Foreign Office held the view that arbitration, belligerent rights, and the naval question all constituted parts of 'a vicious circle' of issues. However, so the argument of Chamberlain and his advisers ran, if the belligerent rights question could be settled, the other problems would perforce disappear: American warships would not be needed to break a British blockade; and the arbitration of future blockade claims would be pointless, since there would be prior Anglo-American agreement on the subject.59 'Imperial isolationists' in the CID sub-committee, principally Amery, Hankey, and William Bridgeman, the First Lord of the Admiralty, moved to oppose any agreement with the United States that would tie Britain's hands needlessly in another war or, even, if Britain had to act as a leading member of the League of Nations to bring pressures to bear on some transgressor of peace. But thanks to Chamberlain and the Foreign Office winning to their side the overwhelming majority of the members of the sub-committee, the Foreign Secretary's conception of how to settle the American question was put

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before the Cabinet in those two reports.60 Whilst Amery, Bridgeman, and Hankey wanted belligerent rights to be exempted via a reservation from the purview of the treaty, the Cabinet was told that in relation to arbitration, there had only to be specific exemption of any British actions taken to enforce their 'Monroe Doctrine.' Nothing need be said about not arbitrating belligerent rights, since such an omission, Chamberlain and the Foreign Office argued, would make a future American demand to arbitrate a British blockade almost impossible. About belligerent rights themselves, only one member dissented from the need to keep those rights as 'high' as possible this was Lord Cushendun, Cecil's replacement as the minister responsible for disarmanent affairs. However, if the possibility of a conference to codify maritime law seemed imminent, one which might seek to lower those rights - and Borah was making efforts in this direction - then there had to be secret preliminary discussions with the United States government to get prior Anglo-American agreement on future blockades before that conference met. With the two greatest naval powers in accord on this issue, such a conference would certainly adopt their viewpoint. The final CID sub-committee delibertions came just as Hoover, the new American President, began efforts of his own to improve Anglo-American relations. He wanted to avoid an expensive naval race, so, at the April 1929 meeting of the Preparatory Commission, the American delegation unexpectedly proposed that a 'yardstick' be found to equate British small cruisers with American large ones.61 Along with softening British attitudes in the wake of the CID sub-committee's findings - and both Baldwin and Chamberlain were then contemplating visits to the United States to meet with Hoover to settle Anglo-American differences62 - this brought about a thaw in Anglo-American relations, chilled since the poor American reception of the Anglo-French disarmament compromise. Before any visits could occur, however, Baldwin's government had to face the British people in a general election. There had been no election since October 1924 and, by British constitutional tradition, one had to occur at least every five years. Baldwin set the polling date for 29 May 1929 but, unfortunately for the Conservative Party, Ramsay MacDonald and Labour formed a minority government in June.

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For personal and political reasons, the new Prime Minister also wanted to settle Britain's outstanding differences with the United States; like Baldwin and Chamberlain, he, too, Was willing to travel to Washington to do so. Another naval conference, a successor to that at Washington in 1921-22, was supposed to occur after a decade to consider extending the life of the earlier agreements. Here lay the peg on which MacDonald could hang his efforts to settle Anglo-American differences. Throughout the summer of 1929, MacDonald, Howard, Vansittart, and the Foreign Office American experts cleared the diplomatic path for the Prime Minister's talks with Hoover. In doing this, MacDonald relied on the men who had been Chamberlain's principal advisers on the United States for the preceding five years, men who were 'world leaders'. Hankey seems to have had little influence on the new occupant of Downing Street.63 In fact, when MacDonald travelled to Washington in the autumn of 1929, Hankey remained in London whilst Vansittart and Robert Craigie, the head of the Foreign Office American Department, accompanied the premier. In the United States, these two officials, along with Howard, served as MacDonald's advisers. MacDonald and Hoover agreed that belligerent rights was not an issue for discussion between the two governments.64 This paved the way for what became the London naval conference of January to April 1930, at which the Americans conceded that the British should have about 50 000 more cruiser tons than the United States - a moderate strategic advantage for Britain, as the notion of a 'yardstick' proved to be unworkable. As for arbitration, the MacDonald government decided to let the Anglo-American and all other arbitration treaties to which Britain was a signatory lapse. Instead, showing their faith in the League of Nations despite American distrust of that organisation, the Labour government signed an international instrument in September 1929 called the 'Optional Clause'.65 Its signatories accepted the Permanent Court of International Justice, a League appendage, as having the ultimate jurisdiction in all disputes involving the interpretation of treaties, all questions of international law, 'any breach of international obligations', and the level of award in the event such a breach occurred. The Hoover Administration demurred over this British decision - it could do little else - thus, with the arbitration

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issue resolved, and with the resolution of both the naval question and its corollary of belligerent rights by April 1930, the period of intense Anglo-American discord that had marked most of the decade of the 1920s had ended. Ill

The answers to the three question posed earlier about the British 'official mind' and the United States are clear. One division of the foreign-policymaking elite, the 'world leaders', dominated the creation and implementation of Britain's American policy throughout the 1920s. This was a function of the importance of personality in the governmental process. Lloyd George followed the dictates of what he saw as Britain's selfinterest at the Paris Peace Conference and after, working with Wilson to fashion a settlement amenable to those interests and, when that proved hollow, striking out on his own. This did not mean that he rejected working with the United States when he had to do so: the Washington conference shows this; but it means that Britain under his foreign policy did not see the United States as a perpetual foe or a perpetual friend. The United States existed as a power that had to be considered in British diplomatic calculations in order to ensure the continuation of Britain's position as the only truly global power. He would work with the Americans if it was in Britain's interests to do so - the guarantee to France - but he would oppose American ambitions if it was not - resistance to cruiser parity at the Washington conference. The same remained so for Curzon and Austen Chamberlain. Curzon could show enthusiasm for American participation in arriving at a new reparations regime, but, when settling European security, he ignored the United States. Chamberlain could do all possible to help the Coolidge Administration secure its pact to renounce war, as long as Britain could defend Suez, but he would never contemplate abandoning belligerent rights on the altar of good AngloAmerican relations. As for the other two divisions of the elite, they could periodically deflect policy. Cecil's resignation in August 1927 created a stir in the aftermath of the Coolidge conference, in part adding to anglophobia in the United States that contributed

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to the creation of the CID belligerent rights sub-committee. That that sub-committee opted to avoid appeasing the United States after more than a year's deliberation showed the barrenness of'Atlanticism' in the 1920s. Indeed, the greatest 'Atlanticist' of them all, MacDonald, ultimately presided over the amelioration of Anglo-American relations; but he did so relying heavily on the advice of those who had aided Chamberlain for almost five years, and the settlement did not involve a climbdown over either naval construction or belligerent rights. As far as the 'Imperial isolationists' were concerned, their antiAmericanism was pronounced; it created divisions within the government and the civil service; but it did no more than delay the settlement of 1930. Because 'Imperial isolationism' coalesced around Hankey, a civil servant, it lacked the political muscle that 'world leaders' had with Lloyd George, Curzon, and Chamberlain, and 'Atlanticists' with MacDonald. The ultimate defeat of the 'Imperial isolationists' in 1930 shows this clearly. On the whole in the 1920s, the 'world leaders' had the edge, essentially because they were both pragmatic and flexible, and this led away from reaching a consensus with the others who were rigidly narrow in their outlook. Robert Vansittart once noted that an American had spoken of Anglo-American 'agreement on important political subjects being impossible owing to the deep and latent distrust with which each side regards the other'.66 Although Vansittart felt inclined to downplay such a characteristic on the British side, no doubt exists that, except for the 'Atlanticists', the British 'official mind' tended to look on American foreign policy with distrust. 'Imperial isolationists' like Hankey deprecated in the strongest terms the efforts of the Americans to achieve naval equality with Britain. Amery and Willingdon could glance worriedly at the United States economic penetration of Canada. But in their view, the Americans, government and business, were trying to supplant Britain as the greatest of the great powers. This had to be resisted at all costs. For 'world leaders', it was obvious that the United States had world-power pretensions - the call for 'a navy second to none' showed this clearly - but this did not necessarily mean that Britain had to collapse in order for the United States to rise. For men like Lloyd George and Austen Chamberlain, the United States could aspire to world-power status if it wished but, at the same time,

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Britain was not about to abandon its preeminent position to the Americans. American pretensions that struck at the ability of Britain to protect itself and its Empire, and to project its will, had to be rejected. But if the interests of the United States and Britain coincided, or could coincide by means of a diplomatic compromise that did not give the game away, that could be arranged as well. Overall, again except for the 'Atlanticists', the general perception of the United States as potentially dangerous to Britain guided British foreign policy throughout the 1920s. To 'Imperial isolationists', this danger was perceived in the most anti-American way. The United States had to be resisted at all costs, even if this meant allowing relations to rupture over naval construction and belligerent rights. As befitted inflexible men, there could be no compromise because any compromise was a sell-out. The 'world leaders', conversely, took the stance that compromise was always possible, that a way could be found, say through the fourteen months of deliberations by the belligerent rights sub-committee, to strike upon a means of bringing British and American interests closer into line. It would not profit Britain or the Empire to fall out needlessly with the United States; it would profit to maintain the postParis Peace Conference internatioinal status quo, one in which Britain's dominance was a key element. At the same time, 'world leaders' had no intention of appeasing the United States in order to secure a firm Anglo-American axis. The Senate rejection of Versailles and the American determination to collect their war debts showed that the domestic configuration of the United States was such that it could wreak havoc with Administration foreign policy. Danger existed in relying heavily on this untrustworthy power. It seems, therefore, that Palmerston's adage about Britain having no permanent friends or permanent enemies, just permanent interests, guided the 'world leaders', who fashioned British foreign policy in the 1920s. To understand how and why the Anglo-American relationship progressed as it did in the 1920s from the British side, it is important to appreciate the dominance of 'world leadership' in the British 'official mind'. It means that British policy did not emanate from men dominated by strong anti-American feelings; rather, it derived from men who, though entertaining distrust of American foreign policy, treated the United States

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as just another great power with which they had to deal to preserve their state's preeminent position.

NOTES 1. See D. Dimbleby and D. Reynolds, An Ocean Apart (London, 1988), 57-115; C. Hall, Britain, America and Arms Control 1921-37 (London, 1987), 1-115; M. J. Hogan, Informal Entente. The Private Structure of Cooperation in Anglo-American Economic Diplomacy, 1918-1928 (Columbia, Mo., London, 1977); B. J. C. McKercher, The Second Baldwin Government and the United States, 1924-1929: attitudes and diplomacy (Cambridge, 1984); C. Parinni, Heir to Empire: United States Economic Diplomacy, 1916-1923 (Pittsburgh, 1969); S. W. Roskill, Naval Policy Between the Wars, Vol. I: The Period of Anglo-American Antagonism 1919-1929 (London, 1968); and D. Cameron Watt, Succeeding John Bull. America in Britain's Place 1900-1975 (Cambridge, 1984), 40-68. 2. The works by Dimbleby and Reynolds, Hall, Hogan, Parinni, and Roskill cited in note 1 give little analysis to attitudes. McKercher examines only the period from November 1924 to June 1929. Watt's seminal piece looks at attitudes on both sides of the Atlantic, but because of the breadth of his analysis has not been able to provide indepth examination of attitudes on the British side. Other major studies of the 1920s which tangentially consider those who were responsible for British policy towards the United States also give little consideration to the British 'official mind'. For example, J. Jacobson, Locarno Diplomacy: Germany and the West, 1925-1929 (Princeton, 1972); W. A. McDougall, France's Rhineland Diplomacy, 1914-1924; The Last Bid for a Balance of Power in Europe (Princeton, 1978); S. A. Schuker, The End of French Predominance in Europe: The Financial Crisis of 1924 and the Adoption of the Dawes Plan (Chapel Hill, 1976); D. P. Silverman, Reconstructing Europe after the Great War (Cambridge, Mass., London, 1982); and M. Trachtenberg, Reparation in World Politics: France and European Economic Diplomacy, 1916-1923 (New York, 1980). 3. This chapter limits those who make and implement British foreign policy to the narrow definition outlined in D. Cameron Watt, 'The Nature of the Foreign-Policy-Making Elite in Britain', in Watt, Personalities and Policies. Studies in the formulation of British foreign policy in the twentieth century (London, 1965), 1-15. Cf. D. Dilks, 'The British Foreign Office Between the Wars', in B. J. C. McKercher and D. J. Moss (eds), Shadow and Substance in British Foreign Policy. Memorial Essays Honouring C.J. Lowe (Edmonton, 1984), 181-202; and Z. S. Steiner, 'Elitism and Foreign Policy: The Foreign Office Before the Great War', in ibid., 19-56. 4. Curzon was Foreign Secretary from October 1919 to January 1924, but

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5.

6.

7. 8.

9.

10.

11. 12. 13. 14.

15.

16.

17.

235

for the first two years of his tenure at the Foreign Office, Lloyd George controlled foreign policy; in doing so, Lloyd George by-passed the Foreign Office. See A. J. Sharp, The Foreign Office in Eclipse 1919-22', History, 61 (1976), 198-218. The terms used subsequently - 'Atlanticism', 'Imperial isolation', and 'world leadership' - are from the groundbreaking D. Cameron Watt, 'United States Documentary Resources for the Study of British Foreign Policy, 1919-39,' in Watt, Personalities and Policies, 211-22. On MacDonald accepting £2000 for a Hearst interview, see Ritchie [London correspondent, Hearst Newspapers] to MacDonald, 17 Apr. 1929, and Rosenberg [MacDonald's private secretary] to Gumming [Ritchie's secretary], 22 Apr. 1929, both MacDonald MSS PRO [Public Record Office, Kew] 30/69/1439/1. MacDonald to Borah, 26 Aug. 1929, MacDonald MSS PRO 30/69/673/1. For Cecil's speech, see House of Lords Debates, Vol. 69, Cols. 84-94. For initial American reaction, see Howard [British ambassador, Washington] telegram (488) to Foreign Office, 21 Nov. 1927, F[oreign] O[ffice Archives, Public Record Office, Kew] 371/12035/6776/93. Kerr to Lloyd George, 18 Feb. 1919, F89/2/23, Lloyd George MSS [House of Lords Record Office London]; Kerr to Lloyd George, 21 Feb. 1919, F23/4/19, ibid; and Kerr 'Notes of a discussion with M. Tardieu and Dr Mazes, 11-12 Mar 1919', FO 608/142. For example, see Anonymous [but P. Kerr] 'America and the International Problem', Round Table, 48 (Sept. 1922); 'Anglo-American Relations', Round Table, 65 (Dec. 1926); and 'Naval Disarmament', Round Table, 75(June 1929). On a Kerr proposal to resolve Anglo-American differences, see memorandum on 'Public and Private Wars', 31 Dec. 1928 (BR 57), and the minutes of the 8th Meeting of the Belligerent Rights Sub-Committee of the Committee of Imperial Defence, 21 Jan 1929, both CAB[inet Archives, Public Record Office, Kew] 16/79. Quoted in Dimbleby and Reynolds, Ocean Apart, 64. Amery diary, 3 Feb. 1928, in J. Barnes and D. Nicholson (eds), The Leopold Amery Diaries, Vol. I: 1896-1929 (London, 1980), 529. See Crowe [Permanent Under-Secretary, Foreign Office]to Chamberlain, 12 Mar. 1925, Chamberlain MSS FO 800/257. Hankey to Salisbury [Lord Privy Seal], 10 Mar. 1928, CAB 21/307. Cf. Hankey diary, 11 and 13 Jan 1928, Hankey MSS [Churchill College, Cambridge] HNKY 1/8. Beatty [former First Sea Lord] to Keyes [Commander-in-Chief, Mediterranean Fleet], 6 Aug. 1927, Keyes MSS [Churchill College, Cambridge] KEYES 15/1. Willingdon to Baldwin, 9 Aug. 1927, PREM [Prime Ministers' Private Office Files, Public Record Office, Kew] 1/65; and Willingdon to Baldwin, 6 Nov 1927, Baldwin MSS [University Library, Cambridge] Vol. 96. N. Hillmer, 'A British High Commissioner for Canada', Journal of Imperial and Commonwealth History, 1(1979), 339-56.

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18. For the records of the activities of Indian seditionists in 1925, see FO 371/10643/878/878 to FO 371/10643/5924/878. 19. Mackenzie King diary, 7 July 1927, Mackenzie King MSS [National Archives of Canada, Ottawa] MG 26 J13 1927. 20. A. Chamberlain, 'Great Britain as a European Power', Journal of the Royal Institute of International Affairs, 9(1930), 180-88. 21. See Curzon's remarks to the gathering of Imperial leaders in London, 21 June 1921 (Meeting E3,) CAB 32/2. 22. See the minutes of the meeting of Lloyd George, Wilson, Clemenceau [French Premier], and Orlando [Italian Premier], 27 Mar. 1919, in P. Mantoux, Paris Peace Conference 1919: Proceedings of the Council of Four (Geneva, 1964), 24-9. Cf. C. Fink, The Genoa Conference (Chapel Hill, 1984); and S. E. Fritz, 'La Politique de la Ruhr and Lloyd Georgian Conference Diplomacy: The Tragedy of Anglo-French Relations, 1919-1923', Proceedings of the Annual Meeting of the Western Society for French History, 3(1975), 566-82. 23. This is the general conclusion of M. G. Fry, Illusions of Security. North Atlantic Diplomacy 1918-22 (Toronto, 1972), especially 187-200, which examines Anglo-American-Canadian relations during the Lloyd George government from an 'Atlanticist' perspective. 24. Chamberlain to Howard, 22 Dec. 1924, Chamberlain MSS FO 800/256; Howard to Chamberlain, 9 Jan. and 15 Feb. 1925, both ibid., FO 800/257; and Chamberlain memorandum, 27 Jan. 1925, CP 48(25), CAB 24A171. 25. Chamberlain memorandum, with appendices, 26 Oct. 1927, CP 258 (27), CAB 24/189. Cf. Hankey to Chamberlain, 31 Oct. 1927, CAB 21/307; Chamberlain to Balfour [Conservative peer], 10 Nov. 1927 (2 letters), and Chamberlain to Hankey, 10 Nov. 1927, all Chamberlain MSS FO 800/261. 26. Schuker, End of Fench Predominance, 180. 27. Cmd. 1912: Arrangements for the Funding of the British War Debt to the United States. Cf. A. Boyle, Montagu Norman. A Biography (London, 1967), 150-61; and K. Middlemas and J. Barnes, Baldwin. A Biography (London, 1969), 136-48. 28. Jones [private secretary, Prime Minister's Office] diary, 5 Feb. 1923, in K. Middlemas (ed.), Thomas Jones. Whitehall Diary, Vol. I: 1916-1925 (London, New York, Toronto, 1969), 227-8. 29. The rest of this paragraph is based on B. J. C. McKercher, 'A British View of American Foreign Policy: The Settlement of Blockade Claims, 1924-1927', International History Review, 3(1981), 358-84. 30. W. S. Churchill, The World Crisis, 4 vols (London, 1923-29). 31. Churchill memorandum to the Cabinet, 20 July 1927, in M. Gilbert, Winston S. Churchill, Vol. V, Companion Vol. I: 1922-1929 (London, 1979), 32. Churchill to King George V, 23 Apr. 1925, in ibid., 463-8. 33. MacDonald to Shotwell [American peace activist], 22 Apr. 1928, MacDonald MSS PRO 30/69/6/31. 34. MacDonald to Lamont, 11 Aug. 1933, ibid. PRO 30/69/1443. 35. Geddes to Curzon, 13 Jan. 1922, Documents on British Foreign Policy,

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36. 37. 38. 39.

40. 41. 42.

43. 44. 45. 46.

47. 48.

49.

50. 51.

237

Series 1, Vol. 14, 601-6; and Geddes to Curzon, 13 Feb. 1922, FO 414/249. See J. Turner, Lloyd George's Secretariat (Cambridge, 1980). D. Lloyd George, Memoirs of the Peace Conference, Vol. I (New York, 1972 [first published in 1939]), 148-9. For instance, see M. L. Dockrill, 'Britain, the United States, and France and the German Settlement, 1918-1920', in McKercher and Moss, Shadow and Substance, 203-20. Fry, Illusions of Security, 189. Prior to the Washington conference, Lloyd George had been leary of abandoning the Anglo-Japanese alliance; for his intellectual odyssey which saw him accept the necessity of abandoning the alliance, see W. R. Louis, British Strategy in the Far East 1919-1939 (Oxford, 1971), 79-108. Curzon telegram (66) to Balfour [chief British delegate, Washington], 1 Dec. 1921, Documents on British Foreign Policy, Series 1, Vol. 14, 526-8. Curzon memorandum on the 'Question of an Anglo-French Alliance', 28 Dec. 1922, ibid., Vol. 16, 860-70. Curzon also dealt with the ticklish problem of a new Turkish peace treaty, which deepened his anti-French feelings; but Curzon played a major role in getting the Treaty of Lausanne signed in July 1923. See B. C. Busch, Mudros to Lausanne: Britain's Frontier in West Asia, 1918-1923 (Albany, NY, 1976). Earl of Ronaldshay, The Life of Lord Curzon, Vol. Ill (London, 1928), 359. MacDonald to Crewe [British Ambassador, Paris], 17 Apr. 1924, MacDonald MSS FO 800/218; and MacDonald diary, 10 Apr. 1924, MacDonald MSS PRO 30/69/1753. D. Marquand, Ramsay MacDonald (London, 1977), 338-51. On Chamberlain's general support of the Dawes' proposals, which had more to do with arriving at European security than anything else, see Chamberlain to Crewe, 20 Jan. and 2 Apr. 1925, and Chamberlain to D'Abernon [British Ambassador, Berlin], 19 Mar. 1925, all Chamberlain MSS FO 800/257. For Chamberlain and the Young Plan, see Jacobson, Locarno Diplomacy, 245-6. M. L. Dockrill and J. D. Goold, Peace without Promise. Britain and the Peace Conferences, 1919-1923 (London, 1981), 34-8. See Lord Cecil, L. S. Amery et al., 'The Draft Treaty of Mutual Assistance. A Record of Proceedings', Journal of the British Institute of International Affairs, 3(1924), 45-82; and M. Siebert, 'La Securite internationale et les moyens proposes pour 1'assurer de 1919 a 1925', Revue Generate de Droit Internationale Publique, 2nd serie, 7(1925), 194-237. M. O. Hudson, 'The Geneva Protocol', Foreign Affairs, 3(1924), 226-35; and J. Williams, 'The Geneva Protocol of 1924 for the Pacific Settlement of International Disputes', Journal of the British Institute of International Affairs, 3(1924), 288-304. Jacobson, Locarno Diplomacy, 3-67; and D. Johnson, 'Austen Chamberlain and the Locarno Agreements', University of Birmingham Historical Journal,, 8(1961), 62-81. Chamberlain to Howard, 18 Mar. 1925, Chamberlain MSS FO 800/257.

238 52. 53.

54. 55. 56. 57. 58.

59.

60. 61. 62.

63.

64. 65. 66.

"The Deep and Latent Distrust' McKercher, Second Baldwin Government, 55-65; and Roskill, Naval Policy, Vol. I, 498-503. On the course of the Coolidge conference, see D. Carlton, 'Great Britain and the Coolidge Naval Conference of 1927', Political Science Quarterly, 83(1968), 573-98; L. E. Ellis, Frank B. Kellogg and American Foreign Relations, 1925-1929 (New Brunswick, NJ, 1961), 164-84; McKercher, Second Baldwin Government, 65-76; and Roskill, Naval Policy, Vol. I, 503-516. See British Library of Information memorandum on 'Anti-British Propaganda in the United States', 7 Oct. 1927, FO 395/420/1054/75. See Chamberlain's memorandum cited in note 25, above. B. J. C. McKercher, 'Belligerent Rights in 1927-1929: Foreign Policy Versus Naval Policy in the Second Baldwin Government', Historical Journal, 29(1986), 963-74. McKercher, Second Baldwin Government, 104-27. On the compromise, see D. Carlton, 'The Anglo-French Compromise on Arms Limitations, 192&, Journal of British Studies, 8 (1969), 141-62; McKercher, Second Baldwin Government, 140-58; and Roskill, Naval Policy, Vol. I, 545-9. Craigie [head, Foreign Office American Department] memorandum, 12 Nov. 1928, CP 344(28), CAB 24/198; and the Foreign Office exposition in the minutes of the 7th meeting of the Belligerent Rights Sub-Committee of the CID, 20 Dec. 1928, CAB 16/79. ~ See note 56, above; and the 'First Report', 13 Feb. 1929, and the 'Second Report', 6 Mar 1929, both CAB 16/79. Cushendun to Chamberlain, 20 Apr. 1929, Chamberlain MSS FO 800/263. On Baldwin indicating an interest in going to the United States, see Jones diary, 6 Dec. 1928, Middlemas, Whitehall Diary, Vol. II, 161; and on Chamberlain, see Chamberlain minute, 13 Feb. 1929, FO 371/13541/1040/279. Marquand, MacDonald, 500-17, which discusses MacDonald's efforts at settling Anglo-American naval differences over the summer and autumn of 1929, makes this clear. Cf. S.W. Roskill, Hankey, Man of Secrets, Vol. II: 1919-1931 (London, 1972), 475-501. Hall, Arms Control, 77. Cmd. 3452: Memorandum on the Signature by His Majesty's Government in the United Kingdom of the Optional Clause of the Statute of the Permanent Court of International Justice. Vansittart minute, 14 Dec. 1927, FO 371/12036/7141/93.

Index Addis, Sir Charles Stewart, 158-63, 165-72, 174, 176, 178 Admiralty, see Royal Navy American Treasury, see United States Treasury Amery, Leopold, 96, 99, 101, 212, 214, 227-8, 231 Anderson, A. M., 156, n.80 Anglo-Austrian Bank, 142, 143 Anglo-Japanese Alliance (1902) 6, 10, 61, 63, 72, 161, 165, 168 Australia, 96, 134, 136, 152 n.28 Austria, 142-4, 178 Avenol, Joseph, 164 Baldwin, Sir Stanley, 94, 96, 107-8, 110, 114-15, 169-70, 197, 209, 212, 216, 217, 224, 228 Balfour, Sir Arthur (after 1922, Lord Balfour) 23, 30, 33, 36, 56, 193, 195-6 Balfour Note (1922), 169, 195 Banca d'ltalia, 141 Bank for International Settlements (BIS), 9, 146, 148-9, 156 n.87, 176-8 Bank Crisis of 1931, 175 Bank of England, 125, 127, 129, 130-32, 135, 137, 139, 140, 142, 143, 146, 149, 159-60, 172, 175-6, 178 Banque de France, 138-9, 140 Baring Brothers, 127, 135, 141 Barstow, George, 68, 71 Bartow, F. D., 154 n.50 Baruch, Bernard, 44 Beatty, Admiral Lord, 65-6, 70 Beaverbook, Lord, 170 Belgium, 132, 135, 138, 139-40, 145 Belligerent Rights, 106, 218, 222, 226, 227-8, 232 Blackett, Sir Basil, 176, 193-5 Blockade, see Belligerent Rights Borah, William, 167, 189, 202, 210, 228 Briand, Aristide, 193, 204 Bridgeman, Sir William, 101, 103, 104-5, 203, 227-8 British Empire, 3, 81, 87, 89, 91, 96, 102, 111, 132, 134, 211-12, 213-14, 218, 226-7 Imperial Conference of 1926, 6, 82, 83, 92, 93, 102, 214, 231-2

British Monroe Doctrine, 226 British Treasury, 127, 129, 131, 136-8, 143, 148-9, 160, 164, 170, 173 Brown, General Preston, 203 Brown, Shipley & Co., 159 Buffalo Peace Bridge Ceremony, 107—8 Bulgaria, 142 Butler, Nicholas Murray, 201-2 Canada, 6-7, 63, 74, 81-116, 134, 214, 231 Cecil, Lord Robert (after 1923), Viscount Cecil of Chelwood), 23-52, 56, 101, 210-11, 228, 230-31 central bank cooperation, 168, 172 Chamberlain, Sir Austen, 12, 174, 209, 215-16, 218, 221, 224-5, 226-7, 228, 230, 231-2 Chanak crisis (1922), 82, 84 Chang Tso-lin, 175 Chatham House (Royal Institute of International Affairs), 160, 177 Chiang Kai-shek, 174-5 China Banking Consortium, 159-60, 165-6, 173-5 Chinese Eastern Railway (CER), 164, 167 Chinese Revolution (1911), 165 Churchill, Winston, 12, 59-60, 62, 68, 74, 131-2, 172, 219-20 City of London, 126, 127, 130-5, 143, 144, 146, 149, 151 nn. 21 & 22, 152 nn. 28 & 29, 155 n.72, 156 n.84 Clay, Sir Henry, 142 Clementel, Etienne, 129 Cochran, 156 n.74 Colby, Bainbridge, 192 collective security, 21-4, 28-30, 35-9, 49, 50 Coolidge, Calvin, 6-7, 83, 93, 95, 107, 111-12, 114-15, 171, 176, 188-9, 199-200, 204, 212, 225-7 Coolidge naval conference, see Naval Arms Limitation Craigie, Sir Robert, 229 Craufurd-Stuart, Charles Kennedy, 44-6, 54 Cravath, Paul, 169

239

240

Index

Curzon, Lord, 26, 30, 32, 41, 45, 46, 54, 59, 62, 209, 216, 221, 223, 230, 231 Cushendun, Lord, 228 Davis, John W., 189 Davis, Norman, 162 Davison, Henry P., 159, 164-7 Dawes, Charles G., 107, 170, 189, 223 Dawes Loan, 170-71, 174 Dawes Plan, 128, 136, 137, 144-7, 149, 151 n.26, 155 n.72, 161, 170, 174-5, 217, 223-4 Dillon, Read & Co., 139 Disarmament (League of Nations Preparatory Commission), 86, 93-4, 225-6 See also Naval Arms Limitation Dominions, 61, 72, 74, 96 Draft Treaty of Mutual Assistance (1923), 224 Dulles, John Foster, 171, 176, 178 Edward, Prince of Wales, 107, 108 Einzig, Paul, 133-4, 135 Ellis Island, 198-9 European security, 2, 215-16, 223-5 Federal Reserve Bank of New York (FRBNY), 125, 135, 136-7, 140, 142, 153 n.37, 159, 177 First National Bank, 134-5 foreign loans, 126, 130, 131-5, 142-8, 151 n.26, 152 n.28 France, 5, 56, 58, 66, 74-7, 82, 93, 94, 126, 128, 135, 136, 138-9, 140, 144-6, 147-8, 153 n.41, 155 n.73, 216-17, 218, 223, 224-5, 228 Geddes, Sir Auckland, 192-3, 195, 197-9, 217, 220 Geneva Protocol (1924), 224 Genoa Conference (1922), 168 Genoa Resolutions (1922), 172-3 George V, 113, 219 George, Duke of York, 107 German, 2, 3, 10, 58, 76, 126, 131, 132, 135, 136, 141, 142, 144-6, 147, 152 n.30, 153 n.41, 155 n.72, 162-3, 176, 178, 213, 216-17, 218, 223, 224-5 German Navy, 55, 61, 65-8 Gibson, Hugh, 103, 104-5 Gilbert, S. Parker, 147, 169, 177, 196 Gold Exchange Standard, 168, 172-3, 179

Gold Standard, 9, 10, 158, 161, 171-2, 175, 219-20 Greece, 142 Grenfell, E. C. 127, 129, 141, 144, 145, 146, 148, 156 n.81, 159 Grey, Lord, 17, 18, 23, 24, 33, 42-6, 48, 50-54 Hague Conference, first, 147, 156 n.84 Hague Conference, second, 147-8 C. J. Hambro & Son, 127, 135, 141 Hankey, Sir Maurice, 25, 26, 31, 41, 52 nn. 15 and 27, 53, 68, 213, 226, 227-8, 229, 231 Harding, Warren G., 167-70, 188, 197, 199, 212, 222 Harrison, George, 177 Hearst, William Randolph, 11, 191, 210 Hibben, John Grier, 202 Hitler, Adolph, 13 Holland, 136 Hongkong and Shanghai Banking Corporation (HSBC), 159-60, 166 Hoover, Herbert, 11, 161, 176, 178, 189, 203-5, 210, 212, 226, 228-30 Hoover Moratorium, 178 Hose, Commodore Walter, 84, 90-1, 92, 95, 97-100, 101, 102, 103-4, 106, 108, 109, 115 House, Colonel Edward, 1,2, 19, 22, 27, 33, 40-44, 50, 52, 53, 56, 64, 67-9, 163 Howard, Sir Esme, 107, 111, 113-14, 188-9, 199-201, 225, 226, 229 Hughes, Charles Evans, 167, 170, 189, 192 Hungary, 136, 142 Imperial War Cabinet, 25, 26, 30, 31, 36, 52, 54 Institute of Bankers, 158, 169 International Memorial (1920), 163 Irish Free State, 96, 214 Italy, 13, 76, 94, 132, 138, 140-41, 143, 145, 225 Japan, 2, 6, 9, 10, 13, 59-61, 66, 68, 70-72, 74-7, 82, 94, 100, 102, 104, 106, 132, 151 n.23, 153 n.37, 165-6, 179, 225 Jay, Pierre, 171 Jellicoe, Admiral Lord, 66, 97-8 Kellogg, Frank B., 108, 111, 112, 115, 202

Index Kellogg-Briand Pact (to renounce war as an instrument of national policy) 204, 226 Kemmerer, Professor Edwin W., 172, 174 Kerr, Philip, 25, 26, 31, 35, 41, 52, 54, 211, 221 Keynes, John Maynard, 158, 160, 162-3, 169-70, 172, 190 Kuomintang Party (KMT), 166, 174-5 Lament, Thomas W., 128-9, 138, 143, 144, 145, 146, 147-8, 156 nn.81 & 84, 159-60, 162, 164-7, 171, 173, 176, 191 Lapointe, Ernest, 83, 85-7, 92, 95, 97, 99, 100, 101, 102, 103-4, 106, 114, 115 Law, Andrew Bonar, 60, 71, 169-70, 197, 209, 216, 217 Lazard Brothers & Co., 127, 135, 139 League of Nations, 3, 4-5, 10, 17-45 passim, 67, 82, 86, 89, 93-4, 96, 131, 142-3, 147, 163, 176-7, 179, 210, 212, 215-16, 224-5, 229-30 League of Nations Covenant, 17, 18, 21, 22, 24, 35, 36, 52, 54 League of Nations Union, 23, 24, 28, 33, 41, 48, 51 Lee, Arthur, 60 Leffingwell, Russell, C., 128-9, 136, 139, 140, 150 n.7, 152 n.33 Leith-Ross, Sir Frederick, 175 Lippmann, Walter, 204 Liquor Treaty (1925), 200 Lloyd George, David, 4, 5, 18, 19, 24-8, 31-54 passim, 57, 60, 62, 64-70, 75, 81, 162, 165, 169, 190, 192, 209, 211, 216, 221-2, 224, 230, 231-2 Locarno Treaty (1925), 84, 212, 216-17, 218, 224-5 Lodge, Henry Cabot, 17-19, 29, 38, 40, 42-50 passim, 54, 189, 191 London Naval Conference (1930), see Naval Arms Limitation Long, Walter, 61, 65-7, 70 McAdoo, William G., 193 MacDonald, J. Ramsay, 11, 12, 179, 204-5, 209, 210-11, 220, 221, 223, 228-30, 231 McKeller, Kenneth, 197-8 McKenna, Reginald, 170, 195 Mackenzie King, William Lyon, 6—7, 81-2, 83, 84-5, 86, 87, 89, 91, 92, 94, 95, 97, 98, 99, 101, 102, 106-8, 109-10, 111-14, 114-16, 214-15

241

Macmillan Committee, 177 Madden, Admiral Sir Charles, 65-6 Manchurian crisis (1931-33), 9, 10, 167, 175, 179 du Marais, Baron Emile, 128 Marz, Eduard, 143 Massey, Vincent, 111, 113, 115 May Commission, 177 Mellon, Andrew, 112, 137, 189, 195-6 Monroe Doctrine, 226 Morgan, J. P. Jr., 128-9, 136, 137, 141, 143, 145, 147-9, 150 n.8, 152 n.30, 156 n.84, 164, 176 J. P. Morgan & Co., 8-9, 127-50, 153 nn. 37 & 39, 159-61, 164, 168, 170, 172, 174, 177 Morgan, Grenfell & Co., 127, 129, 131, 132, 134, 140-46, 149-50, 152 n.28, 156 n.81 Morgan, Harjes et Cie., 127, 146 Morrow, Dwight, 128-29, 146 National City Bank, 134-5 Naval Arms Limitation Washington Conference (1921-22), 5-6, 10, 55, 72, 75, 83, 93, 105, 167-8, 173-4, 193, 217, 222, 223, 230 Coolidge Naval Conference (1927), 2, 6-7, 83, 93-4, 97, 102-6, 109, 110, 114, 202-4, 213, 217, 219, 225-6, 230 London Naval Conference (1930), 7, 11, 208, 217 New York money market, 126, 130, 132-5, 136-7, 143, 144, 145, 146, 149, 151 nn. 21 & 26, 152 nn. 28 & 29 New Zealand, 96 Nicolson, Harold, 190 Niemeyer, Sir Otto, 137, 138, 143, 151 n.22, 170 Norman, Sir Montagu, 129, 130-32, 134, 136, 137, 138, 140-41, 145, 146, 148-9, 152 n.33, 155 n.74, 156 n.87, 159-61, 163-4, 167, 169-72, 178-9, 217 One Power Standard, see Royal Navy Optical Clause, 229-30 Paris Peace Conference (1919-1920), 1, 2, 4, 13, 19, 23, 27-40 passim, 47, 51, 162, 171, 190-91, 210, 211, 216, 224, 230, 232 Peacock, Sir Edward, 179 Phillips, William, 115 Prohibition, 11, 200

242

Index

Ralston, James, 84, 87-8, 92, 95, 97-9, 104, 108, 109-10, 115 Reed, James A., 191, 198 Richmond, Admiral Sir Herbert, 74 Reichsbank, 171 Reparations, 3, 8, 10, 144-8, 149, 156 n.87, 162-3, 175-6, 178 Revelstoke, Lord, 171, 176 Riddell, Walter, 97, 100, 102, 104, 106 Rockefeller, John D., Jr., 85, 112 Roosevelt, Franklin, D., 220 de Rothschild, Edouard, 138-9 N. M. Rothschild & Sons, 127, 135, 141 Royal Commission on Indian Currency and Finance, 172 Royal Economic Society, 160 Royal Navy, 3, 5-6, 6-7, 13, 59, 64-6, 68-9, 70, 91, 95, 99-101, 104-5, 109-10, 213, 222, 225-7, 228-30, 231-2 One Power Standard, 55, 57-8, 60-61, 66, 68-71, 74-6 Strategic principles, 56-7, 61-3 Ten Year Rule, 69 Russia, 58, 76, 126, 132, 225 Russian gold, 164-7 Russo-Japanese War (1904-5), 167 St Germain, Treaty of (1919), 142 Saito, Admiral Viscount Makato, 103, 105 Salisbury, third Marquess of, 63 Scapa Flow, 2 J. Henry Schroeder & Co., 127 Selborne, Lord, 1, 62 Seymour, Charles, 190 Skelton, Oscar D., 84, 88-90, 91, 92, 94, 97, 99, 100, 101, 106-7, 114, 115 Smith, Alfred, E., 203-4 Smith, Vivian Hugh, 143 Smuts, Jan Christian, 30, 32-7 passim, 46-9 Snowden, Philip, 149, 156 n.84 South Africa, 96, 136 Spa Conference (1920), 164 stabilisation of currencies, 125, 130-31, 135-41, 144-5, 149

sterling strategy, 161 Stamp, Sir Josiah, 176, 217 Stringher, Bonaldb, 141 Strong, Benjamin, 136-7, 141, 159-61, 163-4, 168-9, 171-3, 177 Sun Yat-sen, 173-4 Sweden, 136, 146 Switzerland, 136 Tariff Conference (1925), 163 Thompson, William Hale, 205 Tiarks, Frank, 176 Tuesday Club, 160 United States Navy, 5-6, 13, 55-6, 58, 61, 65-71, 74, 76, 91, 104-5, 222, 225-7, 228-30, 231-2 United States Treasury, 149, 162-3, 172 Vansittart, Sir Robert, 1, 2, 218, 229, 231 Versailles, Treaty of (1919), 1, 2, 4, 17, 18, 21, 34, 38-47 passim, 51, 148, 163, 191-2, 194, 222, 224 Volpi, Count Giuseppi, 140-41 war debts, 2, 3, 8, 11, 125, 190-91, 193-8, 201-2, 205, 217, 223, 232 World War Debt Funding Commission, 168 Washington Conference (1921-22), 5, 6, 10, 167-8, 173-4, 193 See also Naval Arms Limitation Wemyss, Admiral Sir Rosslyn, 66 Westminster Bank, 135 Whigham, C. F., 129, 143 Whitney, George, 141, 151 n. 18 Willingdon, Lord, 113-14, 115, 214, 231 Wilson, Woodrow, 2, 4, 17-53 passim, 56, 58, 67, 163, 165, 167, 188, 190-92, 210, 221-2, 224, 230 World Economic Conference (1933), 220 Young, G. M., 143 Young, Owen D., 147, 176 Young Committee, 9 Young Plan, 128, 146-9, 176-8 Yuan Shi-kai, 166