Economic Blocs

Also called: Ottawa Conference, Imperial Preference, Sterling bloc

Amid the Depression Britain, France and others bound home countries and colonies together and raised high tariffs against outsiders. The world economy split into separate blocs.

Britain left the gold standard in 1931 and abandoned free trade the following year. At the Imperial Economic Conference in Ottawa in July–August 1932, Britain and its dominions and colonies agreed to give one another’s goods lower tariffs under imperial preference (the sterling bloc). France likewise grouped its colonies and the countries still on gold (the franc bloc), and the US expanded trade within the Americas through the Good Neighbor Policy (the dollar bloc).

Unlike these nations with vast colonies and resources, Germany, Italy and Japan sought to enlarge their blocs by conquest. Germany built up barter trade with south-eastern Europe and demanded “living space”, while Japan moved from a yen bloc joining Manchuria and China to the Greater East Asia Co-Prosperity Sphere. The 1933 London World Economic Conference ended without result, and the division of the world economy into blocs sharpened the rivalries that led to war.