The Two World Wars and the Great Depression
By the beginning of the 20th century，Britain faced strong challenges from other major European nations and the United States，which had also industrialized and were eager to protect their own markets and expand their influence.The power balance in Europe had undergone great changes.The establishment of the German Empire in 1871 after the Franco⁃Prussian War upset the status quo in Europe.Conflicts of interests and colonial rivalry divided Europe into two camps，the Central Powers and the Allied Powers，and plunged the whole world into a devastating world war.More than 30 countries were involved，including the United States and Japan.
The First World War was the cruelest war ever fought up to that time due to the modern armaments used in the fight.By the time it ended on November 11，1918，both sides had sustained heavy losses.About 13 million people died as a result of the war.Although the Allies finally emerged victorious，Britain was drained of manpower.Of the six million people who served in the British armed forces，more than 750，000 died and nearly two million more were injured.Economically，Britain lost its unrivaled prewar trading position.About 70％ of its merchant fleet was sunk during the war.In order to finance the war，it sold a quarter of its￡4 billion in foreign investments and borrowed￡840 million from the United States.This left Britain，for the first time in its history，as a debtor country.In addition，London was replaced by New York as the world’s financial center.Militarily，Britain’s over two hundred years of naval supremacy ended，as 40％ of its warships had been sunk during the war.In 1921，nine countries got together to discuss disarmament.It was known as the Washington Naval Conference which regulated the naval forces of the major sea powers at a ratio of 5：5：3：1.75：1.75 between Britain，the United States，Japan，France，and Italy.Thus，Britain formally relinquished its supremacy in sea power.
Within the British Empire，there was a trend towards greater independence after the war.The dominions demanded more autonomy in light of their contributions toward the victory.As a result，Canada，Australia and New Zealand entered the League of Nations，an international organization founded after WWI with the purpose of maintaining world peace，as separate countries.The British Empire was on its way towards decline，although it held more territories under its mandate as the result of Germany’s defeat in the war.
In Ireland，the nationalist Irish Republican Army fought a War of Independence against British rule beginning in 1919，which resulted in the establishment in 1921 of the Irish Free State.The new Irish state was founded as a British dominion with autonomy like that of Canada，Australia and New Zealand.Its territory comprised the 20 predominantly Catholic counties of Southern Ireland，but Northern Ireland，home to many Protestants descended from British settlers，quickly broke off from the Irish Free State in order to remain an integral part of the United Kingdom.
Economically，Britain faced many problems after the war.Although there was a very short boom immediately after the armistice，the economy began to suffer from reduced markets，inflation and high unemployment.During the war，Britain directed its industrial power towards the production of military goods.As a result，its traditional export sectors suffered;for example，the textile manufacturing industry lost much of its overseas markets to the United States and India.In addition，a lack of currency and the rise of nationalism in the colonies led colonial inhabitants to purchase fewer manufactured foods from Britain as they did before the war.Almost all traditional industries，including coal mining，shipbuilding faced difficulties.People suffered a lot from the economic difficulty.In 1926，workers went on a general strike to protest a reduction in the wage of coalminers.
The Great Depression，a severe worldwide economic depression originating in the United States in 1929 after the New York stock market crash，brought more problems to the British economy.American financiers stopped their loans to Germany，and Germany in turn stopped paying war reparations to France and Britain.As a result，Britain and France could not pay back their war loans to the United States.There was a tremendous shortage of currency and international trade was greatly reduced everywhere.Britain suffered tremendously since its economy depended heavily on foreign trade.Between 1929 and 1932，the total value of Britain’s export dropped by half.Production of iron and steel also dropped drastically and shipbuilding virtually stopped.Unemployment soared from one million in 1929 to three million in 1932，and one⁃sixth of the total population was dependent on unemployment benefits.In order to stimulate exports，the British government devalued the pound sterling and finally took it off of the gold standard in September，1931.Because of these measures，conditions began to improve after 1933，but the problem of unemployment was not fully resolved until World WarⅡ.
The Second World War was in part a continuation of the First World War.After World WarⅠ，the Allies dictated very harsh conditions in the Treaty of Versailles.Germany had to surrender all of its colonies and was required to disarm permanently.In addition，Germany was blamed for starting the war and was compelled to pay a huge sum of financial reparations.This added a tremendous burden to an economy already seriously damaged by the war，and caused great suffering to the German people.The Great Depression made things even worse，and led to the rise of fascism.Many Germans saw the Treaty of Versailles as the cause of all their suffering，and began to turn towards extreme nationalism.In 1932，the extremist National Socialist Party（Nazi Party），which advocated the renunciation of the Treaty of Versailles，won more votes than any other party.Its leader Adolph Hitler（1889—1945）became Chancellor in January 1933.
Hitler stoked racism and extreme nationalism in Germany by advocating the superiority of the Aryan race，and by promising to make Germany a great nation once more through different measures including the conquest of territory to provide more living space for the German people.In 1935，he formally renounced the Treaty of Versailles and started to rearm Germany.In 1936，he reoccupied the Rhineland region which had been demilitarized by the Versailles Treaty.In the same year，Hitler and Italian dictator Benito Mussolini（1883—1945）concluded an alliance which was known as the Rome⁃Berlin Axis.Hitler was ready to embark on a campaign of unprovoked military expansion.
British reluctance to fight another war and feelings of guilt about the harshness of the Treaty of Versailles caused the British government led by Neville Chamberlain to undertake a policy of appeasement.Chamberlain gave in to Hitler’s territorial demands until it was too late to stop him.At the Munich Conference in September 1938，Britain and France agreed to Hitler’s demand for the Sudetenland region in Czechoslovakia in return for Hitler’s promise of peace.However，Hitler didn’t keep his promise.He seized the rest of Czechoslovakia six months later and attacked Poland on September 1，1939.On September 3，Britain and France declared war on Germany because both countries had pledged to defend Poland if it was attacked.
In Asia，Japan also embarked on an expansionist policy.It attacked China in 1931 and set up the puppet state of Manchukuo in northeast China.In 1937，the Japanese launched a full⁃scale war against China and committed many atrocities such as the Rape of Nanjing.In the summer of 1940，Japan joined Germany and Italy in an alliance known as the Axis.
World WarⅡwas a war of movement involving the coordinated use of tanks and airplanes.The German army used these elements in its blitzkrieg（lightning war）strategy to rapidly conquer most of the Western European continent，culminating in the fall of France in June 1940.Britain was left to fight alone against Germany，but Britain under the leadership of Winston Churchill（1874—1965），who became Prime Minister in May 1940，was determined to fight Hitler to the end at all costs.Churchill put the whole country into total mobilization and the entire economy under government control to serve the war effort.Britain won the Battle of Britain when Germany bombed Britain in an effort to destroy the British Royal Air Force in preparation for an invasion.Thousands of German bombers and fighters bombed British airfields，ports，factories and defenseless cities，causing tremendous damage and sufferings to the British people.However，the British radar system made the Royal Air Force very effective in fighting the Germans.Finally，Hitler had to abandon the plan of invading England.
Hitler’s invasion of the Soviet Union in 1941，in spite of the Nonaggression Pact signed by the two countries in 1939，brought the Soviet Union into alliance with Britain.After great initial German successes that led them nearly to the gates of Moscow，the Soviet Red Army destroyed a large part of the German military force and checked Hitler’s advance.
Japan’s bombing of the U.S.naval base at Pearl Harbor on December 7，1941 brought the United States into the war.Britain and the United States agreed to concentrate their forces in the west to defeat Germany first.After years of fighting in North Africa and Asia，British and American forces opened a new front in Europe on June 6，1944，known as D⁃Day.On that day，the Allies launched the largest amphibious attack in military history.Thousands of vessels，protected by 800 warships and 11，000 airplanes，landed troops on the beaches of Normandy in northwestern France.Less than a year later，the Soviet Red Army marched into Germany from the east，while American and British forces crossed the Rhine River and entered Germany from the west.Germany surrendered unconditionally on May 7，1945.
Britain won the war，but the cost was great.About 357，000 people were killed and 600，000 more were disabled.The British merchant marine emerged 30％ smaller than before the war and Britain lost its naval supremacy forever to the United States.In addition，the British economy suffered tremendously.Exports were reduced by more than half.The country had exhausted its reserves of gold，dollars and overseas investments，and was deeply in debt to the United States.
On top of all these factors，Britain was to lose its vast empire largely as a result of World WarⅡ.Most of Britain’s colonies had contributed to the war effort，and after the war，they demanded and fought for independence.India，after a long period of struggle led by Mahatma Gandhi beginning in 1942，gained independence in 1947.Burma and Malaya followed suit in 1948，and the British military withdrew from Egypt in 1956.In the 1960s，an independence movement swept the entire British Empire，and more than 20 countries won their independence.By 1970，the major remaining colony was Hong Kong，which was returned to China in 1997.The“Empire on which the sun never set”no longer existed，although the inhabitants of some small overseas territories have chosen to remain under British rule.The British Empire was replaced by the British Commonwealth of Independent Nations，a loosely organized international community of former British colonies.