Winston Churchill and the Decline of British Power during the 1920s

• In Event: Churchill at 150: 1874-2024

Abstract

Winston Churchill served as Great Britain’s Chancellor of the Exchequer during the late 1920s. In keeping with the theme of APSA’s annual conference, my essay examines Churchill’s efforts at retrenchment, renovation, and reimagination of British power during his time in office as chancellor of the exchequer. The role of chancellor of the exchequer is one of the most important government positions in the British government, considered second only to the prime minister in importance. Domestic political considerations loomed large in the making of Churchill’s policy agenda. British democracy was changing during this period with the rise of the Labour Party as a formidable political force. My essay will explore the interaction of domestic politics, economic policy, foreign policy, and defense strategy. I will examine the question of how Churchill’s policies to address Britain’s economic and social problems affected its standing as a world power on the international stage. How did Churchill reimagine Britain’s role in the world in the aftermath of the First World War? Did Churchill’s retrenchment in defense spending during the 1920s contribute to British weakness during the next decade when great-power competition would return with a vengeance?

That Churchill was selected to serve as chancellor stunned the governing Conservative party which he had only recently rejoined. Churchill himself was surprised to be offered the position because he was considered a maverick politician, outside the mainstream of the Conservative party. In Parliament and the country, he championed the Conservative party’s policy agenda during the entire span of its hold on government between 1924 and 1929. As chancellor, Churchill controlled the government’s purse strings, reviewing the spending requests of government departments, finding revenue to pay for government expenditures, putting together a budget that reconciled income with outlays, helping to manage the country’s economic life, and publicly defending the government’s stewardship of the economy. The single biggest problem facing the government was restoring the country’s economic prospects. When the Conservatives came to power, Britain’s economy was impaired by slow growth. Britain’s traditional industries—cotton, shipbuilding, steel, and coal—were hard hit. Unemployment, stubbornly hovering around 1,250,000, or more than eight percent of the work force, underscored the bleak economic problem confronting the incoming Conservative government. Churchill wanted to spur and preside over an economic recovery. He subscribed to the economic orthodoxies of the time, which proffered the nostrums of the government running a balanced budget, a reduction in the tax burden, and stable prices as the way to revive the economy. These economic nostrums lay behind Churchill’s attempt to hold down spending on the armed forces. He believed that the international security environment did not call for increased spending on defense. He advocated a policy to govern defense spending known as the ten-year rule. This rule to govern defense spending stated that Britain would not be engaged in a great-power war for the next ten years. To the chagrin of Churchill and the Conservatives, the British economy continued to suffer throughout its tenure of office. Their policy prescriptions failed to usher in a dramatic upturn in the British economy. High unemployment led to social unrest, including a general strike of the British workforce. While the Conservatives weathered the strike, it suffered a major defeat in the general election of 1929. Churchill would lose office and, for the next ten years, not hold an executive position in government.

Author

• John Maurer, Naval War College