Pax Britannica – The Zenith of the British Empire

Pax Britannica – The Zenith of the British Empire

This British financial supremacy was at a peak just before the 1914-18 war. But international crises and internal weaknesses buffeted Britain and she did not succeed in trying to recover and maintain her position during the next twenty years after the 1914-18 war. As a result she was replaced by the United States as chief creditor of Canada and much of Latin America (especially the Argentine and Chile), but she maintained her position in “Australia, India, Africa, her Eastern Empire and China. Also she was investing considerably in the Middle East for oil and other areas such as Venezuela. Overall Britain was declining faster in trade than in investment, and while in the 1930s no-one could doubt the power of the American dollar, London remained as a leading financial centre.”27 At the same time, however, this situation was somewhat misleading. The economy of Britain had serious flaws. The pound was over-valued and Britain’s relative trading decline placed strains on the financial ability of the British capitalist. By 1939 the economic advance of Germany and Japan together with the untested economic might of the United States were posing crucial threats to the maintenance of Britain’s position as a great power in the world.

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