by Andrew Marr
Britain had arrived blinking into a new world still cloaked in the archaic nineteenth-century grandeur of imperialism. The Americans were busy creating their own commercial empire, moving into markets vacated by defeated or exhausted rivals. The Soviet Union was equally busy extending its political empire, funding local dictators and occasionally lurching towards more dramatic confrontation. These two new empires were very different. America’s empire came informally dressed talking about freedom and equality. Outside its Asian wars and its support for vicious South American regimes these words did not ring hollow – but those are large geographical exceptions. Moscow, meanwhile, was busy repressing and imprisoning in the name of History and the working class, one eye always on the even more bloodthirsty tyranny of Mao’s China challenging it for Third World leadership. Against these new empires, the moth-eaten pretensions of a mild-mannered king-emperor, a few battleships and a modest number of colonial governors in baggy shorts barely seemed relevant.
Britain’s dilemma from 1945 until today has been easy to state, impossible to resolve. How do you maintain independence and dignity when you are a junior partner, locked into defence systems, intelligence gathering and treaties with the world’s great military giant? At times Britain has had real influence in Washington, above all in the talks with the Labour government which produced the North Atlantic Treaty Organization, NATO, and in the first Gulf war when Margaret Thatcher urged George Bush senior not to wobble. At other times her dependence has been embarrassing, in big ways such as the Suez fiasco; and small ways, such as the American refusal to share intelligence assessments in Iraq, even when the raw intelligence was gathered originally by British agents and passed on. Yet when one country, the United States, is both leader of a large alliance of other countries, and has strong national interests which may conflict with those of her allies, there is bound to be friction. Periodic bouts of anti-Americanism inside the Foreign Office and in Whitehall generally have been the result. Anti-American feeling has been the Establishment’s secret vice. In public, successive foreign secretaries and mandarins spoke reassuringly of the British ‘punching above our weight’ and the vital importance of the Churchill-hallowed ‘special relationship’. In practice this meant sharing intelligence with the Pentagon and CIA, the intertwining of nuclear strategy, large US bases on British soil, the leasing of British bases to America, and a posture towards American presidents that is nearer that of salaried adviser than independent ally.
For there was another reason for Britain’s new dependency politics. The country was broke. Attlee’s government had little time to contemplate all this. The military and economic weaknesses of the country were tested with devilish symmetry just a fortnight after the new government was formed. On 14 August 1945, eight days after the atomic bombing of Hiroshima and five after the attack on Nagasaki, Japan surrendered. A week after that President Truman reached across and briskly placed his signature on a paper ending the wartime Lend-Lease agreement with Britain and other countries. Lend-Lease, which dated from 1941, had allowed the US government to lend, sell, lease and give countries fighting Germany and Japan whatever they thought was needed. Britain was by far the largest recipient, getting more than $30 bn of the $50 bn spent. She had become dependent on the huge pipeline of aid, and not only for fighting. About a fifth of people’s food needs came from America. When the pipeline was suddenly cut off, and a bill presented for whatever was still being used, it was brutal cold turkey indeed. Truman, acting in strict accordance with American law, stopped Lend-Lease without warning his allies and without, it seems, realizing the implications of what he was doing.
The effect on Attlee’s new government was instant. Britain did not have enough dollars left to feed the country. Nor was there any way to earn the money quickly. The shattered economy was exporting only around a fifth of what it had before the war, yet non-military imports were five times higher than in 1938. In the words of one historian Britain had by now declined into ‘a warrior satellite of the United States, dependent for life on American subsidies’ and had, by waging total war, destroyed the basis of her economy on which she had flourished for the previous hundred years. Through the war years America had been open-handed but Britain, fighting also to prevent a German victory which would have threatened the global influence of the United States, spent proportionately far more of her energy on the common struggle. The official historians of the wartime economy, writing in the dark post-war years, allowed their feelings to show: ‘In a war allegedly governed by the concept of the pooling of resources among Allies, the British had taken upon themselves a sacrifice so disproportionate as to jeopardise their economic survival as a nation.’
In his memoirs Truman said he had learned the lesson from his signature of the ending of Lend-Lease ‘that I must always know what is in the documents I sign’. But the economic crisis which the action caused in Britain in many ways served American interests. At the time, with the victory celebrations a recent memory and patriotic films pouring from the British cinema industry, pessimism about the future would have seemed outlandish to most people, a kind of moral treason. This after all was the Britain of – to quote Labour’s 1945 election manifesto – ‘scientists and technicians who have produced radiolocation [radar], jet propulsion, penicillin and the Mulberry Harbours’, the Britain whose Empire had mostly survived, the Britain occupying swathes of Germany and Italy, the Britain whose leaders sat with those of the new superpowers, apparently shaping the world.
The historian Correlli Barnett summarized the situation with brutal clarity: the post-war British people had ‘the psychology of the victor although their material circumstances approximated more to those of a loser’. That was a perception gaining ground in Whitehall at the time, where they had the figures. In August 1945, the economist John Maynard Keynes told Attlee that the country ‘is virtually bankrupt and the economic basis for the hopes of the people non-existent’.
Attlee’s cabinet duly sent Keynes, the world’s most famous economist, to Washington to get help. What followed was as important in the history of modern Britain as any minor war to be fought in the decades to come. As beggar, Keynes may not have been a good choice. He was over-optimistic about his powers of persuasion, indeed startlingly arrogant, a trait not unknown among Bloomsbury intellectuals. He sailed off assuring Attlee that he believed he could get a free gift of some $6 bn from the Americans, a large proportion of what was left in the Federal Reserve. Once in Washington, he ran into a stodgy defensive line of conservative bankers, bolstered by public opinion which was 60 per cent against giving the British a loan, never mind a gift. Keynes responded by dazzling but also irritating the American negotiators with wit, high-minded arguments and occasional mockery. One US banker retorted, ‘He is too brilliant to be persuasive with us Americans…how many trust him? How many will accept his sales talk? No one.’ Up against Keynes, who arrived ill via a troopship to Canada, was William Clayton, a gangling cotton manufacturer from Texas, and Fred Vinson, a former professional basketball player and lawyer. For four solid months, based in his Washington hotel and supported by the British ambassador Lord Halifax, Keynes haggled and chiselled. Keynes’s biographer said this of their marathon argument: ‘The Kentucky lawyer and the Bloomsbury intellectual were like chalk and cheese…Vinson and Clayton were no match for Keynes in argument. But they always held the whip-hand. It was a case of brains pitted against power.’
London had a completely unrealistic notion of what might be won. Attlee’s cabinet refused the early US offers and held out, vainly, for better ones. Keynes, ill with a heart complaint and surviving on icepacks and sodium amytal capsules through a sweltering autumn, was trapped by the exuberance of his earlier self-confidence. He described the mood as ‘absolute hell’. The core of the trouble was that the Americans did not quite believe how broke the British Empire really was. Nor did they much care. Powerful players in Washington may have been sentimental about the common struggle that had just ended but were unsentim
ental about empires and the new world that must now be built. This was not a game of equal players. Every time the British turned down an American offer, the next offer was worse. An angry Keynes wrote back to his mother: ‘They mean us no harm but their minds are so small, their prospects so restricted, their knowledge so inadequate, their obstinacy so boundless and their legal pedantries so infuriating. May it never fall to me to persuade anyone to do what I want, with so few cards in my hand…I am beginning to use up my physical reserves.’
Eventually, though the effort would contribute to his death early the following year, Keynes’s hoped-for gift or interest-free loan of around $6 bn had shrunk to a 50-year loan of $3.75 bn, at 2 per cent interest. In addition, the Americans required that within a year of the loan starting, pounds should be freely exchangeable for dollars, so removing a traditional protective wall from London. Alongside British agreement for the new Washington-dominated international financial system, this placed the country firmly under the economic control of the United States, which through the later forties and early fifties would also be steadily advancing into former British markets round the world. It was a moment of truth for the country as stark as the fall of Singapore, or Dunkirk. The loan was not finally paid off until 2006, well into Tony Blair’s time at Number Ten. So part of the story of post-war Britain was set. The new financial system made future financial crises inevitable and they duly followed under Attlee, Eden, Macmillan, Wilson and Callaghan. Each time, Britain’s weak economy meant another ‘run on the pound’ as the world, and particularly the United States, sold Sterling, causing inflation and a slump in investment. Neither the starkness of the crisis nor the inevitable long-term repercussions were ever fully grasped by the country. This was the moment when the British government could have honestly explained to the people how grave the country’s situation really was.
Instead, Attlee and his ministers hid their dismay about the underlying weakness of Britain’s hand – the brutal treatment of Lord Keynes in Washington and, later, the equally brutal repudiation of Britain’s claim to nuclear cooperation. War-trained, and proud, they put on a good face. The new Chancellor, Hugh Dalton, claimed that he valued the settlement ‘very highly’ and instructed MPs to ‘welcome’ it. The Economist, generally the most pro-American British publication, retorted: ‘We are not compelled to say we like it. Our present needs are the direct consequence of the fact that we fought earlier, that we fought longest, and that we fought hardest.’ But in Parliament, after the devastating events of the past few years, it seemed there was little energy left for outrage or debate.
One action was taken immediately. Within months of the end of the war the characteristic sounds of the Royal Navy changed. The thunder of guns and the pounding of turbines gave way to a great clanging, from Portsmouth to the Clyde, a smashing of hammers and hissing of flame, the thud and the sparks of destruction as, one by one, the great ships were destroyed. By 1946, when the Russians were beginning to build an even bigger surface and submarine fleet than they had had during their ‘Great Patriotic War’, 840 British warships had already been struck off the Navy List, and a further 727 in various stages of construction had been abruptly cancelled. By the time the new Admiral of the Fleet, Lord Fraser, took over in 1948 a total of 10 battleships, 20 cruisers, 37 aircraft carriers, 60 destroyers and 80 corvettes had been sent to the scrapheap. This was an extraordinary rate of destruction. Fraser, who had worked with the US Navy in the Pacific and survived a kamikaze attack and who therefore understood the need for modernization, now had to deal with a demoralized and stunned Royal Navy. Battleships whose names read like a history lesson – Nelson, Rodney, Valiant – were broken up. New battleships and aircraft carriers whose names read like an optimistic prospectus for a revived empire, which had been ordered to project British power around the world into the sixties, ships such as Lion, Malta, New Zealand, Eagle, Gibraltar and Africa, were abruptly cancelled. Britain’s very last battleship, HMS Vanguard, was completed on the Clyde. Too late for the war, she survived to take the King and future Queen Elizabeth to South Africa for an unsuccessful Commonwealth-boosting trip, and then functioned as a training ship before she too was towed away and broken up. Ninety British warships were towed out to sea and used for target practice until they broke up and sank. Hundreds more were taken to the breakers’ yards and painstakingly disassembled back into piles of torn, rust-softened steel.
Some were sold to small countries which had hardly had navies before. The US Navy had proved that aircraft carriers were an indispensable part of modern global war, but Britain could afford only a few, relatively small ones. So one British carrier was given to the French as a free loan until they could pay for her. Another was loaned to the Dutch and two were offloaded at half price to the Australians. The inaptly named Terrible ended as an uncompleted hulk sitting in the Gare Loch, near Glasgow. Some smaller ships were ‘mothballed’ – shrouded with nets, which were then sprayed with plastic and treated with electrolysis to stop their bottoms rotting. Initially, seagulls proved worryingly keen to eat the plastic. Meanwhile, inside their cocoons, the ships’ poor-quality wartime steel rotted anyway. Vessels which had protected the convoys which helped keep Stalin’s Russia fighting, or shepherded food and fuel convoys across the Atlantic, or had rescued the British army from Dunkirk, or which had been in at the kill in the Pacific, ships whose names went back to Nelson’s navy and whose captains came from West Country families which could trace their service just as far – almost all of them went, and very quickly. This is little remembered. It is as if the nation engaged in a giant act of smashing, the quiet murder of its nautical self, out of sight, out of mind. Of the 880,000 men and women serving in the Royal Navy towards the end of the war, nearly 700,000 had left two years later.
The admirals fought back. ‘If we are to hold our world position, we must maintain our sea power,’ said the Admiralty. Using an argument already hopelessly out of date, the deputy director of naval planning, Captain Godfrey French, protested that a force of two major fleets, with battleships and carriers, was vital to sustain the British Empire’s status as ‘a first class power’. Battleships, he said, were needed to counter the Soviet fleet and, in the future, rather more bizarrely, the French. The Labour government was not impressed. Attlee argued forcefully that Britain was no longer America’s rival on the high seas and could not maintain large fleets. Hugh Dalton, his Chancellor, ordered the dockyards to give up the electricians and woodworkers he needed for the post-war home-building programme. By 1948 the defence statement said that it was necessary for manpower to be brought down as quickly as possible, even though this meant ‘a degree of disorganisation and immobility’. Naval campaigners in the Commons were horrified to discover that the Home Fleet was down to a single cruiser and a few lesser ships.
Reports came into the Admiralty of ‘strangely apathetic crews’ and occasions of ‘outright disobedience’. In time, of course, the navy readjusted to a far smaller role, particularly once the nuclear deterrent was based in its submarines, not on the RAF’s airfields. But finally, the 336-year history of the Admiralty itself ended, when it was swallowed up by the Ministry of Defence. On 31 March 1964 the Queen saved a salary by becoming her own Lord Admiral. The Admiralty’s historian expresses institutional hurt as eloquently as it can be told:
No department of state survived so long, through so many metamorphoses and vicissitudes, as the Admiralty. When most of the great departments of state were born, it was already ancient…Monarchs and dynasties, statesmen and ministers, came and went, the tides of war and revolution washed over and around, constantly altering but never submerging the Admiralty, and it survived them all, counter, original, spare and strange to the last.
It was the last act in the ruthless liquidation of the organization that had been central to British identity for as long as Britain had been a single nation.
Falling behind in military technology and without the strength to keep hold of her empire, the Royal Navy’s time
had gone. What might have happened without the extremity of the financial crisis after the American cancellation of Lend-Lease is unknowable. The government’s failure to involve the country in the full grimness of the situation was made more palatable two years later with the generous American Marshall Plan aid, as Washington finally realized how far Soviet Communism might advance over bankrupt and demoralized Western European nations. Britain got the largest share of that, and the immediate crisis eased. The Marshall Plan helped put all Europe back on its feet. It is still remembered as Washington’s ‘most unsordid act’.
Optimism about the British economy’s ability to export its way back to health returned. There was a great national drive for more exports at the expense of consumption at home. The post-war world, in which so many industrial countries had been devastated, was starved of goods, so it was not hard to find export markets, even for outdated British cars and unsuitable British clothing. But the politicians’ habit of embarrassed deception about how things really stood would continue. Successive British prime ministers treated the country’s weakness as a personal failing which could be hushed up.
