The Formation of the Foreign Office Economic Relations Section, 1930–1937

Abstract

In December 1930 Sir Victor Wellesley, the deputy under secretary at the Foreign Office, and its expert on Far Eastern finance, circulated a 29-page ‘Proposal for the establishment of a Politico-Economic Intelligence Department in the Foreign Office.’ This memorandum was prompted by the growing importance of tariffs, and various forms of investment, as instruments of foreign policy, and concern at his colleagues' failure to understand the political consequences. With economic nationalism in the ascendant, Wellesley recognized that Britain soon would have to consider whether she would ‘take part in the scramble for economic hegemony’. He hoped Cabinet would decide against tariffs and imperial preference, but was worried that the Foreign Office would be ill-equipped to defend this viewpoint. It was not that the Office lacked adequate sources of economic information, but rather that the division of duties between the Department of Overseas Trade and the Foreign Office precluded their assimilation with political appreciations. Although seventy five per cent of the work of the average mission was economic or commercial, this was generally left to the commercial counsellor, who reported directly to the Department of Overseas Trade. Political dispatches were forwarded to the appropriate Foreign Office department and there examined in virtual isolation. Moreover, the dominant attitude of mind among senior diplomats was, if not actually predisposed against economic work, at least so lacking in understanding that their efforts were often misdirected.