Britain’s military spending had soared during the First World War.  It remained high in the immediate aftermath of the war: £766 million in 1919–20.  Then, in August 1919, led by the Secretary of State for War and Air,[1] the Cabinet’s Committee of Imperial Defence adopted the “Ten Year Rule”: the government would base its defense budgets “on the assumption that the British Empire would not be engaged in any great war during the next ten years.” 

            From January 1920 to July 1921, Britain suffered a severe recession.  In 1921, the media titan Lord Rothermere founded the “Anti-Waste League” to pressure the government.[2]  It worked: the government appointed a budget-cutting Committee on National Expenditure with Sir Eric Geddes as chairman.  What followed became known as the “Geddes Axe.”[3]  In the end, total defense spending fell from £189.5 million (1921–22) to £111 million (1922–23), before rebounding to £114.7 million in 1924–25.[4] 

            Then a series of international agreements altered the context.  The Washington Naval Conference (1921-22) prevented a naval arms race between Britain, the United States, and Japan.  The Dawes Plan (1924) conceded to German objections on reparations.  The Locarno Pact (1925) stabilized relations in Western Europe between Germany and its former opponents.  In 1925, the new—and very popular in Britain–League of Nations began pushing for a World Disarmament Conference that would reduce “offensive” weapons almost out of existence.  The Versailles treaty had substantially disarmed Germany; now it was time for the other powers to follow suit.  A reduced chance of war would justify deep cuts in military budgets.  In 1928, in light of all these developments, the Chancellor of the Exchequer[5] persuaded the Cabinet to make the “Ten Year Rule” permanent unless specifically changed by the government.   

In the early Thirties, the Great Depression forced still more economies: defense spending fell to £102 million in 1932.  In April 1931, the First Sea Lord told the Committee of Imperial Defense that “owing to the operation of the ‘ten-year-decision’ and the clamant need for economy, our absolute [naval] strength also has … been so diminished as to render the fleet incapable, in the event of war, of efficiently affording protection to our trade.”  Moreover, if the Navy had to move the bulk of its strength to the Far East to deal with Japan, it would have the means to defend neither Britain’s overseas trade nor Britain itself. 

            In September 1931, Japan seized the Chinese outlying province of Manchuria.  On 23 March 1932, the Cabinet formally abandoned the “Ten Year Rule.”  However, it stipulated that “this [change] must not be taken to justify an expanding expenditure by the Defence Services without regard to the very serious financial and economic situation” of Britain. 

Then, in January 1933, Adolf Hitler came to power in Germany.  War was less than seven years, not ten, away.  Much rearmament would have to be done in great haste. 

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[1] Winston Churchill. 

[2] See: Anti-Waste League – Wikipedia and Harold Harmsworth, 1st Viscount Rothermere – Wikipedia  Comic in light of current events.  However, it was his rival, Lord Beaverbrook, who was the immigrant. 

[3] On Geddes, see: Eric Geddes – Wikipedia   On the Committee on National Expenditure, see: Geddes Axe – Wikipedia 

[4] For its part, social spending (education, health, housing, pensions, unemployment) fell from £205.8 million (1920–21) to £182.1 million (1922–23) to £175.5 million (1923–24), before rising to £177.4 million (1924–25). 

[5] Winston Churchill.