all other indicators of national power.
Gross Domestic Product
British economic predominance evaporated at the turn of the twentieth century as the United States and Germany emerged as leading powers. Great Britain in 1870 had the largest GDP of any Western nation. The United States, with a GDP more than 98 percent of Great Britain’s, was close behind. Germany, a relative latecomer to the industrial revolution, had about 72 percent of Great Britain’s national wealth. Although Great Britain’s GDP increased from 1870 to 1913, the economies of the United States and Germany grew at a much faster pace. During this period, British economic growth averaged 1.6 percent annually, while the U.S. economy expanded at a per annum rate of 5 percent, and Germany grew at 4.7 percent.1 Uneven growth rates brought about a marked shift in the distribution of national wealth. By the eve of World War I, Great Britain’s GDP ranked behind that of the United States and Germany. Having surpassed Great Britain in 1872, the United States by 1913 had an economic output equivalent to 230 percent of British GDP. Germany, starting from a smaller base, overtook Great Britain in 1908, and by 1913, had a GDP 5 percent larger.2
International Trade
British commercial supremacy, once beyond challenge, became increasingly tenuous as U.S. and German involvement in international trade expanded. In 1870, the volume of British trade exceeded that of the United States and Germany combined. The trade conducted by each of these states stood at 38 percent of Great Britain’s total. Between 1870 and 1913, British trade grew in absolute terms but experienced relative decline as the United States and Germany penetrated foreign markets traditionally dominated by Great Britain. U.S. exports to Europe, Japan, and China surged; German exports advanced in Europe, Latin America, and China.3 By 1913 the value of U.S. trade had grown to 73 percent of Great Britain’s, while German trade, rising even more rapidly, was 85 percent.4
Military Expenditures
Military expenditures (as opposed to naval expenditures) never constituted a major pillar of British primacy. Nonetheless, it is worth noting that on this dimension of national power, Germany, and subsequently the United States, closed an initial gap with Great Britain.
Unwilling to provide for a large standing army during peacetime, Great Britain in 1870 only maintained a substantial lead in military expenditures vis-à-vis a likeminded power—the United States. For a decade and a half, U.S. military expenditures actually declined as a share of Great Britain’s, dropping from 65.9 percent in 1870 to 25.6 percent in 1885. This was the result of growth in British military spending coupled with U.S. demobilization following the Civil War.5 U.S. military expenditures rebounded thereafter. In the first half of the 1890s, per annum military allocations in the United States averaged 50 percent of Great Britain’s. The Spanish American War and the Boer War produced great volatility in each state’s military expenditures, so the period bracketing these conflicts is atypical. In the decade before the outbreak of World War I, U.S. annual military expenditures were about 91 percent of Great Britain’s.
Unsurprisingly, Great Britain was never overwhelmingly predominant in military spending relative to Germany, a nation founded on a powerful standing army. From 1872 to 1886, Great Britain retained a modest lead in military expenditures. On a per annum basis, German allocations averaged 78 percent of Great Britain’s. However, from 1887 to the start of the Boer War, each state’s annual military expenditures were roughly equal. Last, between 1904 and 1913, Germany held its own in an arms race with Great Britain. During this period, German military spending on average stood at 98 percent of yearly British allocations.6
Steel Production
Great Britain led the first industrial revolution but eventually ceded its status as the world’s workshop to the United States and Germany. Nowhere was this more apparent than in steel production. Great Britain in 1870 forged more than twice as much steel as the United States and Germany combined. The steel production of these two states was respectively 28 and 21 percent of the British total. Yet four decades later Great Britain had surrendered the jewel in its industrial crown. The United States surpassed Great Britain in 1890, and by 1913 produced four times as much steel. Germany, undergoing a similar process of rapid industrialization, overtook Great Britain a decade later than the United States, and by the eve of World War I, produced 226 percent as much steel.7
Warship Tonnage
Great Britain’s unparalleled maritime primacy waned as the United States and Germany rose. In 1880, the Royal navy was supreme in every corner of the globe and dwarfed the navies of both powers. The U.S. fleet, after becoming a formidable force during the course of the Civil War, was sold off or allowed to rot away. The remainder, an “alphabet of floating wash-tubs” in the words of one American observer, had a tonnage 26 percent that of the Royal navy. Germany, a nation forged by Prussia, a traditional land power, scarcely possessed a navy at all. German warship tonnage in 1880 was only 14 percent of Great Britain’s.8
However, by the eve of World War I, Great Britain’s reign as unchallenged ruler of the seas had ended.9 Beginning in the late 1880s, the United States moved to reconstitute its navy. The Spanish-American war of 1898 provided a powerful impetus for additional shipbuilding, as did the later presidency of Theodore Roosevelt.10 Consequently, the U.S. navy in 1914 reached 36 percent of the Royal navy’s warship tonnage. The expansion of the German navy, beginning in 1898 with the passage of the first naval bill, ultimately posed an even greater challenge to Great Britain’s control of the ocean. From 1900 to 1905, the German navy launched fourteen battleships, sparking a maritime arms race. When Great Britain escalated the arms race by introducing a revolutionary type of capital ship, Germany soon followed suit.11 The construction of naval armaments by both sides continued at a feverish pace, and by 1914 the German navy had 48 percent of the Royal navy’s tonnage. Table 5 summarizes the eclipse of Pax Britannica that occurred as the United States and Germany ascended.
The Balance of Perceptions
British fear of relative decline, though evident among a handful of farsighted intellectuals as early as 1882, only became widespread among elites during the mid-1890s.12 Initially, concerns about Great Britain’s loss of predominance were largely economic in nature. By the century’s turning, British elites also began to foresee an erosion of their country’s maritime supremacy.
Table 5: Anglo-U.S. and Anglo-German Balance of Power (%)
*German military outlays remained above peacetime levels in the immediate aftermath of the Franco-Prussian War and spiked in the year before World War I. For this reason, the comparison is military expenditures from 1872 to 1912. The long-term increase in U.S. and German military expenditures relative to that of Great Britain masks substantial short-term variation.
Premonitions of Economic Decline
Observers at the turn of the twentieth century lacked the tools to calculate gross domestic product. Elites had no means of estimating the size of the British economy or its growth rate relative to others. Indeed, the only regular statistics collected by the British government were the Customs Department’s record of exports and imports.13 The use of trade returns as a measure of relative economic performance precluded a consensus on Great Britain’s declining competitiveness. Given the fluctuations of trade returns, and the malleability of the statistics collected, no unassailable conclusions could be drawn.14
Early warnings of economic decline thus failed to resonate among British elites. In 1886, a royal commission reported on the “Depression of Trade and Industry.” The commission observed a growing challenge
