BOOK REVIEW / The gentle art of making a pile of money: 'BRITISH IMPERIALISM: Volumes I and II' - P J Cain, A G Hopkins: Longman, 16.99 pounds / 12.99 pounds

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AT WHAT stage did the British Empire cease to bring economic benefits to this country and begin to become a burden? Was it about 1890, or at the time of the First World War, or not until after the Second? It is an important question, not just for economic historians, but also for anyone interested in understanding Britain's economic difficulties (and successes) during the post-1945 period.

The conventional view is that the decline of the British Empire began with the First World War, or even earlier - towards the end of the last century. This is now challenged in an important two- volume work by two economic historians, Peter Cain and Tony Hopkins. They argue that the inter-war period saw a successful rebuilding of much of the economic structure of empire, and that a legacy of empire remains in the City's international financial role today. In the first volume, 'Innovation and Expansion 1688-1914', the authors go back to the Glorious Revolution of 1688 and take the economic story through to 1914; in the second, 'Crisis and Deconstruction 1914-1990', they consider Britain's performance in the 20th century.

Their conclusion is that Britain's modern economic development has always leant much more heavily on financial and commercial services than the standard texts allow. These activities preceded the Industrial Revolution, continued to expand during the heyday of industrialisation and became even more significant after relative industrial decline set in. One might even argue that it is more 'natural', or at least more consistent with our economic history, for Britain to emphasise international finance, than it is to think of ourselves prin-

cipally as a manufacturing nation.

It is easy to see the importance of this. It implies that our period as a large exporter of manufactured goods was not only relatively brief, but also much less deeply rooted in British culture and society. Being 'something in the City' was always a path to social status and political power in a way that being a successful industrialist was not.

One could then take this argument one of two ways. We can say that finance and commerce has skewed British development, making it very difficult for post-war Britain to rebuild a successful manufacturing economy in the way that Germany and Japan did. And because of the political power of the City, we could argue that British policy is skewed towards the country's commercial and financial interests, rather than its industrial ones.

But we could also sugest that, since manufacturing know-how now crosses national boundaries in a matter of months, if not weeks, competence in finance and commerce is actually a more secure comparative advantage than competence in manufacturing. It is harder to imitate a tradition of financial imperialism dating back three centuries than it is to build a car plant. For the next few decades, according to this view, commercial and financial expertise will actually be more important than manufacturing power. However good the Western industrial countries are at manufacturing, there will always be cheaper competitors able to make equally good products in places such as East Asia.

The picture the authors paint - Britain as an imperial power on the one hand, and a commercial and financial one on the other - is particularly compelling in that it make us reconsider the validity of our myths. The authors argue that at root we truly are a nation of shopkeepers - Napoleon's sneer - rather than the workshop of the world. Of course, for a period during the last century, we were both, but we were shopkeepers, international shopkeepers, for much longer and shopkeepers we are now.

Finally, we invented myths such as the 'English gentleman' to help soften the blow of our imperialist aims: we invented a camouflage - the high-minded disdain for vulgar money - behind which we could allow our commercial zeal to flourish. Anyone who knows the City will recognise that quality now.