Economic tensions and conflict in the Commonwealth, 1945-c.1951

In the immediate aftermath of the Second World War, economic relations between Britain and the Commonwealth were very close, and the Empire was of greater economic importance to Britain than at any previous time. International economic conditions were dominated by the dollar shortage, and especially after the sterling crisis of 1947 most of the sterling area members of the Commonwealth were drawn into even closer interdependence. But, in contrast to the expectations of many policy makers, the world economy after the war was characterized by buoyant demand and limited supply. In particular, the demands placed on British production and finance highlighted the limitations of capacity. Development in both the independent and Colonial Commonwealth was frustrated. The inadequacies of the closed system revealed in the late 1940s encouraged Commonwealth countries to push for the restoration of currency convertibility and of multilateralism in the 1950s.