Fateful Transitions. Daniel M. Kliman

From 1872 to 1886, Great Britain retained a modest lead in military expenditures. On a per annum basis, German allocations averaged 78 percent of Great Britain’s. However, from 1887 to the start of the Boer War, each state’s annual military expenditures were roughly equal. Last, between 1904 and 1913, Germany held its own in an arms race with Great Britain. During this period, German military spending on average stood at 98 percent of yearly British allocations.⁶

      Steel Production

      Great Britain led the first industrial revolution but eventually ceded its status as the world’s workshop to the United States and Germany. Nowhere was this more apparent than in steel production. Great Britain in 1870 forged more than twice as much steel as the United States and Germany combined. The steel production of these two states was respectively 28 and 21 percent of the British total. Yet four decades later Great Britain had surrendered the jewel in its industrial crown. The United States surpassed Great Britain in 1890, and by 1913 produced four times as much steel. Germany, undergoing a similar process of rapid industrialization, overtook Great Britain a decade later than the United States, and by the eve of World War I, produced 226 percent as much steel.⁷

      Warship Tonnage

      Great Britain’s unparalleled maritime primacy waned as the United States and Germany rose. In 1880, the Royal navy was supreme in every corner of the globe and dwarfed the navies of both powers. The U.S. fleet, after becoming a formidable force during the course of the Civil War, was sold off or allowed to rot away. The remainder, an “alphabet of floating wash-tubs” in the words of one American observer, had a tonnage 26 percent that of the Royal navy. Germany, a nation forged by Prussia, a traditional land power, scarcely possessed a navy at all. German warship tonnage in 1880 was only 14 percent of Great Britain’s.⁸

      However, by the eve of World War I, Great Britain’s reign as unchallenged ruler of the seas had ended.⁹ Beginning in the late 1880s, the United States moved to reconstitute its navy. The Spanish-American war of 1898 provided a powerful impetus for additional shipbuilding, as did the later presidency of Theodore Roosevelt.¹⁰ Consequently, the U.S. navy in 1914 reached 36 percent of the Royal navy’s warship tonnage. The expansion of the German navy, beginning in 1898 with the passage of the first naval bill, ultimately posed an even greater challenge to Great Britain’s control of the ocean. From 1900 to 1905, the German navy launched fourteen battleships, sparking a maritime arms race. When Great Britain escalated the arms race by introducing a revolutionary type of capital ship, Germany soon followed suit.¹¹ The construction of naval armaments by both sides continued at a feverish pace, and by 1914 the German navy had 48 percent of the Royal navy’s tonnage. Table 5 summarizes the eclipse of Pax Britannica that occurred as the United States and Germany ascended.

       The Balance of Perceptions

      British fear of relative decline, though evident among a handful of farsighted intellectuals as early as 1882, only became widespread among elites during the mid-1890s.¹² Initially, concerns about Great Britain’s loss of predominance were largely economic in nature. By the century’s turning, British elites also began to foresee an erosion of their country’s maritime supremacy.

Table 5: Anglo-U.S. and Anglo-German Balance of Power (%)

      *German military outlays remained above peacetime levels in the immediate aftermath of the Franco-Prussian War and spiked in the year before World War I. For this reason, the comparison is military expenditures from 1872 to 1912. The long-term increase in U.S. and German military expenditures relative to that of Great Britain masks substantial short-term variation.

      Premonitions of Economic Decline

      Observers at the turn of the twentieth century lacked the tools to calculate gross domestic product. Elites had no means of estimating the size of the British economy or its growth rate relative to others. Indeed, the only regular statistics collected by the British government were the Customs Department’s record of exports and imports.¹³ The use of trade returns as a measure of relative economic performance precluded a consensus on Great Britain’s declining competitiveness. Given the fluctuations of trade returns, and the malleability of the statistics collected, no unassailable conclusions could be drawn.¹⁴

      Early warnings of economic decline thus failed to resonate among British elites. In 1886, a royal commission reported on the “Depression of Trade and Industry.” The commission observed a growing challenge to British exports, and noted that the “increasing severity of this competition both in our home and in neutral markets is especially noticeable in the case of Germany.” Although relatively optimistic about Great Britain’s long-term economic prospects, the commission concluded: “we cannot, perhaps, hope to maintain, to the same extent as heretofore, the lead which we formerly held among the manufacturing nations of the world.”¹⁵ The anxieties voiced by the commission went largely unheeded. A report by the Board of Trade in 1888 painted a far more sanguine picture of Great Britain’s economic performance. The report argued that alarmism was unwarranted, and that British commercial primacy was uncontested.¹⁶ Likewise, the Times (of London), the newspaper of elites in the Victorian age, confidently asserted in 1891 that German hopes of overtaking British trade “must soon be surrendered.”¹⁷

      However, by the mid-1890s, doubts about Great Britain’s economic competitiveness had become commonplace. Parliamentary debates in 1893 and subsequent years featured repeated questions about the influx of German imports into Great Britain. No longer complacent about Great Britain’s longterm economic trajectory, the Times in 1894 and 1895 published numerous articles detailing the advance of German commerce and the intensifying competition British business faced. The “Decay of the Iron Industry,” a prominently located article in the Times, provides a window onto British anxieties: “the iron trade of that country [Germany] has of late years greatly improved its competitive position in reference to the iron and steel industries generally, and that it now menaces the prosperity of the English iron trade to a larger extent than has ever happened in the past.”¹⁸

      The alarm sounded by the Times paralleled the thinking of many, though not all Conservatives, who in 1895 assumed control of government.¹⁹ Joseph Chamberlain, the new colonial secretary, was already convinced that Great Britain would be surpassed by its commercial rivals in the absence of strenuous efforts to shore up competitiveness.²⁰ The president of the Board of Trade, Charles Ritchie, also harbored doubts about Great Britain’s economic situation. In 1896, the Board of Trade conducted a study comparing Great Britain to France, Germany, and the United States. Summarizing the results, Ritchie, largely referring to the United States and Germany, predicted: “their competition with us in neutral markets, and even in our home markets, will probably, unless we ourselves are active, become increasingly serious.” Without improving industry, Great Britain “could scarcely expect to maintain our past undoubted pre-eminence.”²¹

      On the economic side, the balance of perceptions decisively shifted in the mid-1890s. From then on, a critical segment of British elites projected decline relative to the United States and Germany.

      Maritime Fears

      Throughout much of the nineteenth century, elites in Great Britain took the Royal navy’s worldwide supremacy for granted.²² This was particularly true vis-à-vis the United States and Germany. Continuous neglect of the American navy in the decades following the Civil War led the British government to dismiss the United States as a maritime power. A paper prepared in 1882 for the Royal Commission on Imperial Defence exemplifies this perception. It described the American navy as “contemptible,” and cited budgetary pressures and tensions between Congress and the executive branch as ruling out substantial increase in U.S. maritime strength.²³

      By the late 1880s, the British government had begun to reassess the future trajectory of the American navy. The War Office and the Admiralty in an 1889 joint report noted that British maritime supremacy in the Western Hemisphere was secure, but added: “the