During the nineteenth century, Great Britain moved away from mercantilist practices in a freer trade experiment. 1 This had a great impact on subsequent controversies about trading policy. Although many nations (including the United States, Germany, France, Russia, Japan, Austria, and Italy) used more protectionist policies to catch up with "free trade" Britain, economic thought was focused upon these issues and upon the extent to which tariffs and other encouragements to industries were desirable. But throughout the British free trade experiment Britain's colonies were kept largely secure for British investments, companies, and trading activity. Also, Britain could afford to eliminate tariffs in the 1830s and 40s because it enjoyed a substantial lead in technology, industrial scale economies, maritime predominance, and stronger banking-investment resources. Yet by 1900, when the United States, Germany, and others had caught up with British industries, British manufacturers began to seek Imperial Preference tariffs as a means to greater reciprocity. In the 1920s, as Britain suffered adjustment and competitiveness problems, British trade policy became increasingly controversial. The Safeguarding of Industries Act of 1921 was implemented timidly, but finally in 1932 Britain rejoined the great majority of industrial nations by establishing Imperial Preference tariffs.
Despite unequal trade openness, with tariffs and industrial development policies, economic progress flourished in much of Europe, the United States, and other areas. International investments and loans expanded greatly, opening up new markets. Technological progress was dramatic in most fields, including, in particular, armaments, warships, and even aircraft.
Then World War I disrupted things. Casualties and war costs were heavy. A harsh peace was imposed upon Germany, with unsustainable repa-
Tables 1.1 to 1.6 have been placed at the end of this chapter.