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The legacy of the First World War - its long-term effects on Britain and her Empire - undoubtedly
significantly impacted the trade and commerce of the British Empire in the interwar period. Despite other
impactors upon the economic landscape of the Empire and metropole - namely more short-term ones such as
the immediate after-effects of the First World War and the Great Depression of the 1930s, the legacy of the First
World War and the way it impacted Britains relationship with her Empire between 1919 and 1939 can be said to
be the most significant influence on trade and commerce.

Economically, the First World War left Britain near devastated in its immediate aftermath. The war had
cost around thirty-five million pounds, and British gold reserves had run so low in its duration that the pound
sterling was removed from the gold standard. Britains capital investment overseas was also almost entirely
wiped out, and many of the overseas markets typically dominated by British exports were lost and not won back
in the years immediately after the war, with new international competitors, such as Japan in the textile industry.
For many parts of the Empire - namely India, Australia and New Zealand, Britains own economic problems
directly affected their own. Australia and New Zealand relied heavily on the British market and were therefore
also economically damaged by a loss of trade; India contributed so much to the war effort that she faced inflation
and shortages during and in the years following the war. Looking at the instantaneous effects of the First World
War upon trade and commerce within the Empire, it is easy to conclude that these were its main ones, and
therefore its legacy. But the reality is, though in some cases dragged out further by the Great Depression of the
1930s, these economic problems caused by the First World War were not long-lasting or permanent. Following
the war, the pound was placed back onto the gold standard once more (until 1931, at least), and though British
manufacturers did lose ground in parts of the Empire such as India and Canada, those places themselves
benefitted - in the long-term - from the impact of the war. Canada emerged as an industrial power and began
trade outside the Empire (with the USA in particular) over the interwar period, and Indias own manufacturers
were able to capture back parts of the domestic market after British manufacturers lost their footing in it, with
Indian trade also benefitting as a whole from the protection afforded it by subsequent high taxation placed on
Indian imports. Whilst many aspects of the First World War initially left the Empire heavily damaged,
economically, the effects of its legacy were perhaps more positive.

The Great Depression of the 1930s undoubtedly shaped much of Britains imperial trade policies upon
its arrival. It triggered a collapse of international trade and markets for industrial exports, as well as forcing Britain
off the gold standard once more in 1931. But what this meant, however, was a newfound emphasis on the
importance of the Empire to British commerce. Many countries of the Empire kept their currencies fixed to sterling
(as well as, in some cases, their national reserves in sterling too), and this created the Sterling Area that
effectively reduced the potential damage that could have been caused to Britain by the depression. This was a
practical enactment of the theoretical move away from free trade and no special preference granted to Empire
that was clearly triggered by the Great Depression. It was because of the Great Depression that imperialists
argued for this re-instigation of a variation of imperial preference and it was, in some ways, carried out. The Great
Depression can be used to argue, therefore, that the shifts in trade and commerce between Britain and her
Empire in the interwar period were not entirely due to the effects of the First World War. Whilst this may be true,
the fact remains that much of this initial imperial preference policy first came about as a result of the First World
War and the need for greater cohesion between Britain and her Empire. In addition, the Great Depression did
not affect trade and commerce for the entirety of the interwar period; only in its aftermath, from 1930 onwards. By
contrast, both the First World War and its legacy had an economic impact from 1919 until 1939.

This long-term effect - the legacy of the First World War - comes in various forms, the first being the
constitutional shift of the British Empire that re-established its relationships with her colonies, but particularly with
her Dominions. The emergency of the British Commonwealth following the First World War is certainly a legacy
of it, coming as a result of Dominions aspirations for control over their own affairs after their large contribution to
the war effort, and certainly being long-term (the Commonwealth still being an association that exists today). This
Commonwealth placed emphasis on economic co-operation between the Dominions and the metropole that
arguably affected trade and commerce significantly from 1926 (with the introduction of the idea in the Balfour
Declaration) onwards. In addition to a changing relationship with the Dominions, the First World War also
cultivated the development of a new kind of relationship between Britain and many of her colonies, with, in Africa,
the establishment of indirect colonial rule, as well as of mandates. Indirect British rule in Africa stressed
promotion of colonial economic development (along with social development), and involved initiatives such as the
funding of the Gezira Cotton Scheme in Sudan in 1920 to boost cotton production, and the allocation of money
towards improvement of rail and dock facilities in East Africa. The expectation of African colonies to be self-
financing also changed the nature of trade and commerce between them and Britain in a more negative way,
particularly in the 1930s when they were impacted heavily by the Great Depression and felt the limits of the
development policy that took place. The First World War, therefore, was a clear catalyst of a changing
relationship between Britain and her Dominions and colonies that impacted on their commerce and trade.

In conclusion, despite the large influence of the Great Depression in the latter part of the interwar period,
the impact of the legacy of First World War on trade and commerce in the British Empire is undeniably the
largest. Not only did its short-term effects significantly impact trade from 1919, particularly in leaving Britain more
susceptible to tough competition from other international trade such as that of Japan, the colonies and Dominions
felt more long-term effects that can be attributed to the legacy of the First World War that were both positive - for
example, the development of India and Canadas economy, as well as that of the British Commonwealth and
British initiatives in East and West Africa - and negative, with the policy of self-finance that came with indirect
British rule and eventually left Africa vulnerable to the Great Depression.