British Banks, U.S. Politicians, and the Return of Anglophobia

17 08 2012

Canary Wharf at Night

British banks have been the subject of a wave of criticism by U.S. politicians in recent months. The Libor Scandal and the money laundering charges against HSBC’s Mexican operations grabbed headlines earlier this summer. Last week, the New York Department of Financial Services accused Standard Chartered, a London-based bank, of violating the U.S. sanctions on Iran. Some British observers have argued that these accusations are motivated by simple protectionism and a desire to ruin London’s reputation as a financial centre and thus drive business back to New York. Many Britons remember that in the aftermath of the 2010 Deep Water Horizon oil spill in the Gulf of Mexico, American politicians stressed that “British Petroleum” was a foreign entity.

The attacks on British corporations in the United States appear to have involved a certain amount of grandstanding by Congressmen and ambitious prosecutors. However, the frequency and virulence of these attacks may also be a sign of decreasing American self-confidence in an age of perceived relative decline. We have seen the revival of the sort of anti-British sentiment that was last popular in the United States in the nineteenth century, when Britain was still the world’s most powerful nation.

Pulling Down the Statue of King George III, N.Y.C. A romanticized depiction of the Sons of Liberty destroying the statue after the Declaration was read by George Washington to citizens and his troops in New York City on July 9, 1776.

Pulling Down the Statue of King George III, N.Y.C. A romanticized depiction of the Sons of Liberty destroying the statue after the Declaration was read by George Washington to citizens and his troops in New York City on July 9, 1776.

Prior to the First World War, Britain was the primary target of U.S. economic nationalism.  Most Americans welcomed British investment in the American economy but they also feared it might undermine their political independence.  Memories of the American Revolution and the War of 1812 were still fresh.  During Andrew Jackson’s war with the Second Bank of the United States in the 1830s, critics of the bank noted that some of its shareholders were British. Britain’s perceived support for the cotton-producing South in the Civil War intensified Anglophobia in the northern states.

After 1865, both of the major political parties engaged in selective Brit-bashing. The Republicans, the protectionist party, focused on the need to keep the tariff high so as to include foreign manufactured goods, a policy that clearly harmed Britain, which was then the workshop of the world. Somewhat ironically, most Republicans were ardent supporters of the gold standard, which was essentially a British invention: in the nineteenth century, countries from Portugal to Japan adopted the gold standard so as to link their currencies to those of the world’s foremost power. Democrats typically favoured lower tariffs, a policy that was popular in the western and southern states and which would have helped British manufacturers. However, many Democrats were hostile to the gold standard. The 1896 Presidential election, which pitted Democrat William Jennings Bryan against Republican William McKinley, became a de facto referendum on whether the United States should remain on the gold standard. Republicans charged that departing from the gold standard would destroy the confidence of European, largely British investors and would, in effect, be an act of confiscation. Gold, they declared, was the currency of Western civilization, since only backward nations such as China still based their currencies on silver. The Republicans, along with their friends on Wall Street and in the City of London, predicted apocalyptic consequences should Bryan be elected.

McKinley stands on a gold coin, a very subtle reminder to voter that he supported the gold standard

For his part, Bryan replied that his Republican opponents were the henchmen of the great financial interests of New York and, above all, London. Bryan invoked the Declaration of Independence in his famous “Cross of Gold Speech” to the Democratic National Convention in Chicago. Taking issue with the Republican argument that the United States needed to be on the gold standard as long as Britain was on it, Bryan declared that “it is the issue of 1776 over again. Our ancestors, when but three million in number, had the courage to declare their political independence of every other nation; shall we, their descendants, when we have grown to seventy millions, declare that we are less independent than our forefathers?”[1]

To twenty-first century ears, Bryan’s rhetoric is remarkably similar to that sometimes used by leftist leaders in the Third World whenever they seize the assets of a Western company. In the 1890s, they were as American as apple pie.

The 1880 and 1890s also witnessed a political campaign in the United States against foreign, especially British investment. As historian Mira Wilkins has shown, the flood of British capital into the United States after 1865 contributed enormously to U.S. economic development: British investors financed everything from transcontinental railroads to ranches to factories. She also shows that there was a political reaction against British control.  British investors were demonized in some newspapers and laws limiting foreign investment were passed by some western states.[2]

In 1887, Congress prohibited land ownership by foreign citizens in the western territories in response to complaints from small ranchers that rich British cattle companies were engrossing grazing land.  This statute influenced state politicians: laws banning land ownership by non-citizens were passed in Illinois, Kansas, and Texas.[3]  The Glasgow Herald dubbed this trend the “Monroe Doctrine” applied to capital.[4] The attacks in the American press on William Scully, an Irish landlord who had acquired vast numbers of tenanted farms in the mid-west, intensified so much so that he decided to take the precaution of acquiring American citizenship in 1895.

Hostility towards British investment dissipated largely because of the growing power and self-confidence of the United States after 1914. The First World War dramatically changed the position of the United States in the world economy. Within the space of a few short years, it replaced Britain as the world’s largest creditor nation. In this new context, it was anachronistic to worry that British investment as somehow going to undermine American sovereignty. By 1945, the transition from British to American global hegemony was essentially complete: the City of London was just a shadow of its former self: Wall Street was now the undisputed financial capital of the world and the British economy was dependent on Marshall Plan aid. Few if any American politicians in the 1940s or 1950s worried about the extent of British economic power in the United States. In fact, they were more likely to complain about Britain being a charity case.

In recent years, we have heard much about America’s relative decline. Books with titles such as “The Post-American World” have become best-sellers. Those who speak about American relative decline usually focus on the rising fortunes of the BRIC countries, not Britain, which is itself suffering from the problems in the Eurozone. However, the fact a great deal of business migrated from Wall Street to London after the passage of SarbOx is a datapoint that has been used to support the overall narrative of American decline.

The sapping of American self-confidence and the resurgence of U.S. economic nationalism has serious implications for European companies, especially British ones. Britons may like to think that their close cultural ties and military alliance with the United States will protect their companies from U.S. economic nationalism. It may be that the social memory of the American Revolution will be a greater influence on U.S. thinking about British companies.  A certain degree of anti-British sentiment is still present in U.S. culture. Every U.S. schoolchild learns about the revolutionary struggle against British rule.  Even seemingly apolitical films have a whiff of Anglophobia: in the 1977 film Star Wars, the soldiers on the nefarious Death Star were played by actors with British accents.

All of this means that grandstanding U.S. politicians have a rich cultural legacy to tap into when targeting British firms.

[1] Speech by William Jennings Bryan in Official Proceedings of the Democratic National Convention Held in Chicago, Illinois, July 7, 8, 9, 10, and 11, 1896, (Logansport, Indiana, 1896), 226–234.

[2] Mira Wilkins, The History of Foreign Investment in the United States to 1914 (Cambridge, Mass: Harvard University Press, 1989), 566.

[3] New York Times, “Alien Land Law” 24 December 1891,  New York Times, “Irish Landlords in America” 20 March 1886.

[4] Glasgow Herald, leading article, 26 September 1891, 6.

 [ADS1]Citation needed

War of 1812 Bicentennial and the Great North American Peace

16 09 2011

The bicentennial of the War of 1812 is rapidly approaching. I’m moderately interested in social memory (i.e., how people who aren’t trained historians think about historical events and how the memory of events are manipulated for present-day political purposes), so I’m going to make some predictions about how the anniversary of the war will be exploited by political commentators and governments in Britain, the United States, English-speaking Canada, and Quebec. Historians should rarely make predictions, but in this case I think that I can prognosticate with a reasonable degree of confidence.

Americans like to believe that their country won a clear victory in the War of 1812. In reality, the terms of the peace were  ambiguous enough to allow both sides to claim victory. I suspect that much of the American media coverage of the War and its various anniversaries over the next four years will emphasize that the United States was the clear victor.

In Britain, the War of 1812 is rarely discussed, in part because it is overshadowed by the Napoleonic Wars, and because paying attention to this particular conflict would be inconsistent with the idea of the “special relationship”, the powerful myth that Britain and the United States ought to be close and permanent allies. (Note that I am using the word myth in its original, non-pejorative sense). Of course, not all British people buy into this myth, as was illustrated most vividly during the Iraq War, when Tony Blair was routinely denounced as George Bush’s poodle.

Some British people view the special relationship in terms of a strictly bilateral relationship between the UK and the US, which leaves the smaller English-speaking countries out of the analysis. In other cases, the idea of the Anglo-American special relationship is wrapped up in a modernized version of the pan-Anglo-Saxon “race patriotism” once articulated by Andrew Carnegie and Winston Churchill. Carnegie, it will be remembered, was an enthusiastic supporter of the idea of an Anglo-Saxon union embracing the United States and the British Empire. Churchill played with similar themes of Anglo-Saxon unity and superiority in his writings on the history of the English-speaking peoples. Since 2000, the idea of Anglo-Saxon unity has been revived by such authors as Niall Ferguson, Andrew Roberts and Walter Russell Mead. Mead, who is one of the most influential foreign policy intellectuals in the United States, makes just one brief reference to the War of 1812 is his massive tome God and Gold: Britain, America, and the Making of the Modern World.  Mead’s narative emphasizes cooperation between the two Anglo-Saxon powers. Similarly, Roberts downplays the disagreements within the Anglo-Saxon family of nations in his recent and quasi-Churchillian history of the English-speaking peoples.

In any event, I suspect that most coverage of the War of 1812’s anniversary in the British press will emphasize that the War of 1812 took place in a very distant time and that today Britain and America are best friends. The stress will be placed on the special relationship and two centuries of Anglo-American friendship.

I suspect that the French language media in Canada will pay little attention to the war’s anniversary. The Rebellions of 1837-8 against British rule loom larger in the collective memory of French Canadians than the War of 1812, which saw French- and English-speakers unite in resisting the American invaders, as was seen at the Battle of Châteauguay River.

Let me turn now to English-speaking Canada.  The War of 1812 has a very important place in the social memory of [English] Canadian nationalists because it saw the invasion of what is now Canada by the United States. In the popular Canadian narrative, the invading Americans had their asses kicked by the brave Canadian citizen-soldiers, who then went on to burn the White House. When I taught at a Canadian university I was told repeatedly by students that Canadian troops from Toronto had destroyed the White House. At times when anti-Americanism has flared up in Canada (e.g., during the Vietnam and Iraq Wars), the memory of the War of 1812 has been invoked by nationalists in [English-speaking] Canada. Although academic historians do not subscribe to this view, it has considerable purchase with the general population. The late Pierre Berton’s works on the War of 1812 continue to sell well in Canada, seven years after the death of their author.

For history professors, teaching about the War of 1812 involves a certain amount of re-education. Typically, it requires pointing out the many anachronistic concepts have crept into the popular discourse surrounding this war. For instance, I always began my lecture on the War of 1812 by quoting media reactions to a recent survey that showed that many Canadians did not know that “Canada defeated the United States in the War of 1812”. Typically, media pundits deplored this evidence of Canadians` ignorance about their own past.  I then asked my students to explain what was wrong with this survey. Usually a bright student pointed out that Canada did not exist as a nation state at the time in question: territories that later became part of Canada were among the battlegrounds on which British and American forces fought. It is therefore a mistake to speak of a Canadian victory in this war. I then want on to explain that most farmers and other people living in Upper Canada and other borderland regions were emphatically neutral during this conflict between London and Washington. I also pointed out that many of them were New Englanders who had moved to Upper Canada in search of land and really didn’t care one way or the other about which flag they lived under. I suggested in lecture that the Upper Canadians’ laregly indifferent attitude to the outcome of the war is consistent with the behaviour of peasants people in conflict zones around the world today: most peasants in Kashmir don”t really care whether they live under the flag of India or Pakistan.

A recent article in the Globe and Mail spoke about the planning for the bicentennial events. Historian Jack Granatstein was quoted— he is very concerned that the commemoration might degenerate into anti-Americanism. This is a legitimate concern, but I also expect that the social memory of this War will be twisted or spun a variety of directions.

I predict that spin placed on the War of 1812 by the Canadian media will follow a limited number of tropes or narratives, or which anti-Americanism is but one. I have listed these tropes below in ascending order of intellectual respectability.

1)     a) Crude Anti-Americanism. This trope goes as follows: Canadians in 1812 united to fight the evil American invaders. Canadians in 1812 were anti-American, ergo, present-day Canadians should also be hostile to the United States, American mass culture, etc.

b) The memory of the War of 1812 will also be used to try to justify the mindlessly pro-American attitude typical of much of the political right in present-day Canada. We will hear it said that the War of 1812 shows that Canada and the United States have always been and always should be allies. In other words, present-day Canada should therefore support American wars in Iraq, Afghanistan, or wherever the next country might be. This somewhat absurd historical argument in favour of a pro-American position has been articulated in the past.

For instance, in the second week of April 2003, a group called “Canadians for Bush” organized a rally at Queenston, the site of a famous War of 1812 battle where an American invasion force was defeated. The battlefield is now marked by a monument to Sir Isaac Brock, who died there. The people at this rally celebrated the fact that Americans、Britons, and Canadians had fought alongside each other in the War of 1812 and about that it was unfortunate that Canada did not participate in the Anglo-American invasion of Iraq.

Brock Monument

It appears that the organizers of this rally were operating on the assumption that the American, Canadian, and British troops at Queenston had been fighting against some common enemy, perhaps the Germans or someone like that. I thought that this rally especially curious, as there are blue plaques at the site clearly explaining that the British regulars and colonial militiamen were fighting the forces of the United States.  This rally was organized by an American-educated  pastor who had previously been a candidate for the Christian  Heritage Party and who had once protested against the dinosaur skeletons in the Royal Ontario Museum. The really interesting thing about this rally was  that it was attended by Tim Hudak, now the PC leader in Ontario,  and Jim Flaherty, who is now Canada’s Minister of Finance, which shows that the idea of Anglo-Saxon race patriotism has infected relatively mainstream politicians as well.

2) We can also expect to hear something about North American/Western moral superiority and two centuries of peace. Some commentators will use the anniversary of the war to point out that there hasn’t been a major war along the Canadian-American border since 1815. In the 1920s and 1930s, it was common for commentators in North American to contrast the rationality and peacefulness of the North Americans with the warlike disposition of the Europeans, who were constantly slaughtering each other over Alsace-Lorraine and other territories. Of course, the proponents of this self-congratulatory view were overlooking all sorts of evidence of the warlike propensities of North Americans, such as the Civil War in the United States, the massacres of Native Americans,  or the now notorious plans by Canadian army officers to invade the United States. Nevertheless, some good scholarly research on why Canada and the United States had refrained from fighting each other for so long was produced in the 1920s and 1930s, much of it sponsored by the Carnegie Endowment for International Peace. Anyway, we can expect to see this sort of rhetoric revived as 1812 approaches, although I suspect that North America will no longer be contrasted with Europe. After all, the French and the Germans now share a currency and have turned their swords into ploughshares. I suspect that the pacific North Americans of the last two centuries will be contrasted by commentators with the inherently violent and warlike races of the Middle East.

3) The role of the First Nations in the conflict will also be highlighted, quite legitimately. We will also hear it said that without the support of First Nations warriors, Canada would have been conquered by the United States. Of course, we won’t hear much about the subsequent transformation of the First Nations from warriors to wards of the state, nor will the public hear about how the Canadian and American governments subsequently cooperated in assaulting the sovereignty of native peoples. I predict that the following Heritage Minute video will be broadcast ad naseum in the next few years.

4) a) The proponents of the theory of the democratic peace will also use the War of 1812 bicentennial as a vehicle for disseminating their pet theory. They will be able to do so since the long period of peace between the United States and the British Empire that followed the end of this conflict is an important data point that supports this theory of international relations. Democratic peace theory holds that democracies never go to war with each other and that as nations move from non-democratic regimes (e.g., monarchy or dictatorship or rule by tiny elites) to universal suffrage, the chances of wars breaking out will decrease. Establishing when exactly Britain and the United States became truly democratic countries is tricky, especially since a large proportion of US households (i.e., Blacks) were massively underrepresented in legislatures until the 1960s, but it is clear that both countries experienced democratization in the decades after 1815. Subsequently, there were diplomatic incidents in which Britian and the United States pulled back from the brink of war.  There are serious limits to the explanatory power of democratic peace theory, but it is a theory that deserves to be exposed to the wider public. One hopes that the references to “two centuries of peace” one will hear in the media in the next few years will be coupled with some attempt to provide an explanation for why there has been peace between the United States and the British Empire. There will probably be references in the press to a book called The North American Democratic Peace: Absence of War and Security Institutions Building in Canadians-U.S. Relations (1867-1958) by Stéphane Roussel.

b) The theory of the commercial peace is one of the major rivals of the theory of the democratic peace. Basically, it holds that the way to prevent countries from going to war with their neighbours is to promote economic integration. In other words, cross-border trade promotes peace. The history of Canada-US relations would appear to support this idea. The merits of the theory of the commercial peace were debated a few months ago in the Cato Unbound forum devoted to explain why today’s world is relatively peaceful. There are, of course, problems with the theory of the commercial peace. After all, Germany and Britain went to war in 1914 despite being each other’s best customers. Nevertheless, it is a theory that is worth being aired in newspapers. One expects that Erik Garztze and the other proponents of commercial peace theory will use the 1812 bicentennial as a teachable moment for communicating their ideas to the general public. The journalist Tom Friedman has tried to popularize this theory with his famous quip that no two countries with McDonald’s restaurants have ever gone to war with each other. This statement was true until 2008, when Russia and Georgia fought a very brief war.