Sterling Area Research Articles

Reanalysing Ireland’s Exit from the Commonwealth 1948–49: The Brexit Isles’ Alter Ego?

ABSTRACT This article reexplores Ireland’s final exit from the Commonwealth in 1948–49, deploying Brexit as a comparative heuristic and organising device. The existing literature has stressed both Ireland’s symbolic motives in fully breaking with the Crown and how it retained many the advantages of Commonwealth membership whilst avoiding its obligations. It is true that, at least from the later 1930s, Ireland was more akin to an associate as opposed to a full Commonwealth member and that both significant support for the Irish position from Commonwealth members with large Irish diaspora populations and decentralisation in the Commonwealth itself made for a relatively hospitable negotiating environment. Nevertheless, the Brexit comparison helps highlights the considerable trade and citizenship links, including with the UK, which were linked to Commonwealth association and which secession thereby put at risk. It similarly highlights the price Ireland paid for its exit including a public commitment to make reciprocal citizenship rights generally available to all Commonwealth members, a strengthening of Northern Ireland’s links with Great Britain and a loss of participation rights in key Commonwealth preference, Sterling Area and related fora. The ultimately rather limited significance of that price may relate more to a subsequent fundamental refocusing of both Irish and UK geographic priorities towards Europe in subsequent decades.

Southern Rhodesia and Britain’s Discriminatory Sterling Area: The Dollar Crisis and Post-War Colonial Tobacco Trade, 1947–1960

ABSTRACT Drawing on archival material from the National Archives of Zimbabwe, Adam Matthews Digital Archives and newspaper reports, this study locates Southern Rhodesia’s tobacco industry within post-war currency developments and the politics of international trade. Following the Second World War, the shift in the financial balance of economic power triggered by the shift from the gold standard to the reformed gold standard had a lasting impact on global trade. This resulted in the British retreat from the position of hosting the global key currency denominated in sterling towards the US dollar from 1944 onwards. This study utilises the effects of this shift in the case of Southern Rhodesia, a British colony, and its impact on one specific commodity: tobacco. Because of the dollar crisis of 1947 in Britain, however, and Cold War geopolitical considerations explored in this paper, Britain was extended some leeway by the United States to recover from the losses of two world wars and a depression, as well as the loss of key currency status in ways that resulted in the establishment of a discriminatory sterling area that informed colonial trade dynamics in interesting ways. This paper thus brings the experience of Southern Rhodesia’s tobacco industry into sharp focus by centring it in the context of international exchange arrangements and trade considerations in the post-Second World War period. In doing so, it illuminates imperial-colonial relations in a settler colonial setting against the background of post-war Anglo-American economic relations.

Sterling's farewell symphony: The end of the Sterling Area revisited

AbstractWhen and why did Sterling Area countries stop holding sterling as the majority of their foreign exchange reserves? This paper takes a comparative approach to examine the relative importance of various determinants of adherence to sterling in its declining years as an international currency. Using an original cross‐national panel dataset covering the period 1965–79, we conduct survival analysis which systematically evaluates a comprehensive set of economic and political factors, at the country level as well as in international relations, about when and why countries chose to diversify their reserves away from sterling. Our results highlight the significance of international transactional factors in influencing adherence to sterling, while the effects of British geopolitical retrenchment, Commonwealth cultural ties, and distributional issues were more ambiguous and sensitive to local conditions. We also find that domestic political and historical factors, such as democracy and imperial legacy, played a role in sterling's international unravelling. Finally, we use our results to examine the experience of individual sterling countries and their decisions to diversify.

The Fate of International Monetary Systems: How and Why They Fall Apart

The collapses of the interwar and Bretton Woods monetary regimes have been understood as evidence that international monetary regimes fail when sudden economic shocks destabilize the political coalitions or shared ideas underpinning them. But while these histories are important, other monetary regimes, such as the Sterling Area and Latin Union, disintegrated over long periods of time. If exogenous shocks do not account for varied patterns of destabilization, what does? Using the tools of comparative-historical analysis, I argue that these patterns are the result of strategic choices made by hegemonic powers, choices that are in turn governed by the historical-structural foundations of regimes. From these foundations emerge alternative leadership strategies and membership behaviors responsible for endogenous macro-institutional effects that drive the observed regime trajectories. Regime leaders may establish visibly unequal collective arrangements that maintain their positions but leave a system vulnerable to overt internal resistance and sudden breakdown. Or leaders may reject collective arrangements in order to secretly discriminate among members, slowly building dysfunction into a system, driving its gradual abandonment by members and institutional decline. The analysis both suggests that more equal state power may improve long-run regime performance, and also locates structural vulnerabilities in contemporary regimes.

Comment on “Trade Blocks and Trade Wars during the Interwar Period”

Comment on “Trade Blocks and Trade Wars during the Interwar Period”

The Political Economy of Imperial Relations: Britain, the Sterling Area and Malaya 1945–1960, by Alex Sutton

The Political Economy of Imperial Relations: Britain, the Sterling Area and Malaya 1945–1960, by Alex Sutton

British Sterling Imperialism, Settler Colonialism and the Political Economy of Money and Finance in Southern Rhodesia, 1945 to 1962

This article contributes to the emerging field of African financial history. Although there has been work on Britain's sterling arrangements in its colonies, very few studies examine the specific experiences of particular colonies within the sterling area. Foregrounded by an account of the establishment of Southern Rhodesia's monetary and banking system, this article focuses on that colony's experiences during the post-Second World War period when Britain established and eventually dismantled its discriminatory sterling area as a way to bolster post-war economic recovery. This coincided with the rise of economic liberalism as the United States became more prominent in global financial arrangements while the colony of Southern Rhodesia sought political and economic independence to operate in this emerging world order. Because the Salisbury agreement was so crucial to the recovery of London, Southern Rhodesia was forced to remain within the discriminatory sterling area until the mid-1950s. Thereafter, as Britain retreated from empire and abandoned discriminatory sterling, it became interested in a majority-ruled Rhodesia. However, the white minority government retaliated, interested in maintaining political power. The article unpacks how the political and economic development of empire and its aftermath in the post-war period to 1962 was so inextricably intertwined with Rhodesia's political, financial, and economic development.

Depoliticisation and the politics of imperialism

Approaches to depoliticisation have tended to focus on its use as a domestic strategy. Where the literature tends to be lacking is in consideration of its international role. This article examines the way in which imperialist policies have been depoliticized through technically managed or apparently economic institutions. It explores the way in which British imperial strategy was depoliticised by the use of the Sterling Area, analysing an episode in British-Malayan relations in which the apolitical character of the Sterling Area was brought into question.

The first Sterling Area†

Between the eleventh century and mid‐thirteenth century a Sterling Area evolved in the British Isles, with a common currency based upon the English silver penny and equivalents of it produced in Scotland and Ireland. This Sterling Area began to contract in the second half of the fourteenth century, when reductions in the bullion content of Scottish coins ended the equivalence of the English and Scottish currencies, and in the fifteenth century Ireland developed its own coinage. Estimates of the currency of the Sterling Area are provided, taking the chronology of its growth and contraction into account. Estimates of the sterling currency are not estimates of the currency of England, and they cannot be combined with data relating exclusively to England in economic modelling, without qualification. Per capita currency estimates and values of coin hoards and single coin finds are at a high level around 1400, falling in the second half of the fifteenth century, indicating that the European ‘bullion famine’ of the 1390s to c. 1415 had less effect on the currency than the second late medieval bullion crisis, from the 1430s to the 1460s.

The Sterling Area and Economic Disintegration

Abstract While the sterling area was not strictly an example of monetary integration, it did provide a sustained framework for international monetary relations among a diverse group of large and small, high and low income per capita economies for almost thirty years from1945 to 1972. That it persisted for so long through the transformation of the international monetary system is remarkable. This article establishes a periodisation for the analysis of the sterling area and identifies the changing distribution of benefits among members. It also attributes the system's longevity to the multilateral external cooperation that supported it during the disintegration of the BrettonWoods exchange rate system.

‘A Little Marshall Plan’: Britain and the formation of the European Payments Union, 1948–50

‘A Little Marshall Plan’: Britain and the formation of the European Payments Union, 1948–50

In Search of a Greater Economic Entity: Norway and the Sterling Area Episode of the Early 1950s Reconsidered

In Search of a Greater Economic Entity: Norway and the Sterling Area Episode of the Early 1950s Reconsidered

New Zealand's Exchange Rate Regime, the Collapse of Bretton Woods, and the Twilight of the Sterling Area

How did developing countries adapt to the collapse of the Bretton Woods system? Using new archival evidence, we argue that New Zealand offers an interesting case study of decision-making in a small economy dependent on primary production with close economic and political links to two larger partners - Britain and Australia - with divergent domestic policies. After some experimentation, New Zealand adopted an innovative intermediate solution for the exchange rate that aimed to generate stability for primary producers during a period when the direction of trade was diversifying and most currencies were floating. This imaginative policy was not accompanied by comparable changes in reserves management, and until 1975 New Zealand continued to hold the bulk of it reserves in sterling. The article explores the different priorities and institutional constraints affecting the choice of anchor currency and reserve currency in this context.

‘A Vulnerable Point in the Sterling Area’: Kuwait in the 1950s

The extraordinary expansion in Kuwait's oil revenues in the 1950s presented Britain with a formidable challenge. Britain's relative indifference to Kuwait before 1939 had allowed the Shaikhdom to develop a strong sense of independence, especially in the conduct of internal affairs. Local autonomy, however, conflicted with Britain's determination to manage the economy of Kuwait in a manner which would bring maximum benefit to the sterling area, while minimising the potential damage which Kuwait's sudden acquisition of oil wealth could inflict on sterling. Britain's support for Kuwaiti independence from the late 1950s did not signify a decline in the value which Britain placed on the sterling area in general, or on Kuwait in particular. Instead, it reflected a belief that an independent Kuwait represented the best means of preserving British economic interests.

'A Vulnerable Point in the Sterling Area': Kuwait in the 1950s

'A Vulnerable Point in the Sterling Area': Kuwait in the 1950s

The Commonwealth as an Economic Network

Research on the economics and sociology of business networks also sheds light on the development of networks of countries. The British Commonwealth was an important global network, or group of networks, in the mid‐twentieth century. Commonwealth members, including Australia and New Zealand, cooperated in the management of the Sterling Area and the Commonwealth Preference Area. Yet Commonwealth members also had links to other networks and other sources of influence including the USA, continental Europe and Japan. During the 1950s and 1960s, there was a gradual change in the network relations of Australia and New Zealand, involving a diminution in the importance of bilateral ties with Britain.

Second Image Reversed Politics: Britain's Choice of Freer Trade or Imperial Preferences, 1903-1906, 1917-1923, 1930-1932

In 1903-1906, 1917-1923, and 1930-1932 British decision makers debated whether to adopt a system of imperial preferences. Preferences were rejected in 1906 and 1923, but adopted in 1932 at the Ottawa Conference. The existing political economy literature focuses primarily on the hegemon's position in the international system, state or society centered arguments, and the role of ideas and beliefs to explain changes in a hegemon's foreign commercial policy. Using a second image reversed argument, I contend that changes in the commercial composition of the emerging contenders from a mix of liberal and nonliberal contenders in the first and second periods (1903-1906; 1917-1923) to nonliberal contenders in the third period (1930-1932) strengthened economic nationalists over free traders, contributing to Britain's adoption of imperial preferences. Although greatly diminished in strength, free traders were able to moderate the protectionist policies through the Ottawa Agreements and the Sterling Area. Why did Britain's foreign commercial policy prior to World War I and the immediate postwar years differ from its commercial policy in the decade prior to World War II when all three periods were characterized by relative British industrial decline, foreign protectionism, unemployment (in the latter two periods), and emerging competitors for regional hegemony?1 In particular, why did Britain's leaders reject a foreign commercial policy of imperial preferences in 1906 and 1923, but in 1932, at the Ottawa Conference, adopt a system of imperial preferences? The existing political economy literature focuses primarily on changes in the hegemon's position in the international system (hegemonic stability theory), state or society centered arguments, and the role of ideas and beliefs to explain changes in a hegemon's foreign commercial policy. For the most part, these explanations emphasize insideout arguments; the underlying forces that shift a hegemon's foreign commercial Author's note: The ideas in this article originated during a fellowship from the University of California's Institute on Global Conflict and Cooperation (IGCC) and TheJohn D. and Catherine T. MacArthur Foundation and I am grateful

The decline of economic complementarity? Australia and Britain 1945—1952

At the end of the Second World War, Australia implemented a development program designed to improve the nation’s defence capabilities through a rapid increase in population and the growth of manufacturing industry. These plans were contrary to the vision of `complementarity’ promoted by the United Kingdom, in which the British economy would export manufactured goods to other members of the Commonwealth in return for primary products. Despite British objections, the Chifley government persevered in its development policy although Australia did control the level and origin of its imports to fit the availability of dollars within the Sterling Area. In the early 1950s, however, the Menzies government attacked the autarchic policies of the Sterling Area, first by arranging to borrow dollars directly from the World Bank, and later by calling for an abandonment of the inward focus of the Sterling Area.

The Decline of Economic Complementarity? Australia and Britain 1945–1952

At the end of the Second World War, Australia implemented a development program designed to improve the nation’s defence capabilities through a rapid increase in population and the growth of manufacturing industry. These plans were contrary to the vision of ‘complementarity’ promoted by the United Kingdom, in which the British economy would export manufactured goods to other members of the Commonwealth in return for primary products. Despite British objections, the Chifley government persevered in its development policy although Australia did control the level and origin of its imports to fit the availability of dollars within the Sterling Area. In the early 1950s, however, the Menzies government attacked the autarchic policies of the Sterling Area, first by arranging to borrow dollars directly from the World Bank, and later by calling for an abandonment of the inward focus of the Sterling Area.

Gentlemanly Imperialism at Work: The Bank of England, Canada, and the Sterling Area, 1932-1936

Gentlemanly Imperialism at Work: The Bank of England, Canada, and the Sterling Area, 1932-1936