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  1. The British Empire was massive, covering nearly 24 percent of the world’s landmass at its peak.
  2. While there were plenty of factors, one component was key to its demise: money.
  3. Apparently “imperial amnesia” is a thing.

Some empires have better marketing departments than others, boasting outsized brand name recognition despite their relatively small size.

Take the Roman Empire for example. According to East-West Orientation of Historical Empires, the Romans peaked at roughly 1.93 million square miles, roughly 3.36 percent of the world’s landmass.

And while the Roman Empire was vastly influencial—it introduced the Julian calendar and fertilized the growth of Christianty—it was only the 24th largest empire in history by landmass. For comparison, the lesser-known Abbasid Caliphate peaked at roughly double the size (4.29 million square miles), placing it 7th all-time.

The three largest empires in history have a bit more cachet, perhaps because they did something singular: no empire outside the top three has ever controlled more than 10 percent of the world’s landmass. It’s even more impressive considering the most pervasive empire ever topped out at 23.84 percent of the world’s land area.

The British Empire

The British Empire, commonly described as existing between the late 15th century and 2007, was massive. Peaking in 1920 at 13.71 million square miles, it covered nearly a quarter of the globe.

By 1922, the British Empire comprised nearly 460 million inhabitants, 20 percent of the world’s population at the time. Its size and reach helped coin the phrase “the empire on which the sun never sets.”

To attribute the ascent and decline of any global empire to a single cause would be impossible. The historical timeline, however, gives us some clues.

The bulk of the British Empire began in the late 18th century as the Industrial Revolution took root. From 1750 to 1850, the empire brought over 20 territories under its rule.

At its peak, the British Empire controlled Canada, Australia, New Zealand, Tonga, Fiji, Western Samoa, India, Burma, Papa New Guinea, Malaya, Sarawak, Brunei, Oman, Iraq, Egypt, Libya, Sudan, Kenya, Uganda, Northern and Southern Rhodesia, Tanganyika, Zanzibar, Mauritius, the Maldives, South Africa, Swaziland, Nigeria, Gold Coast, and Sierra Leone. It has also held a portion of the United States and China.

The decline occurred in the middle of the 20th century as World War II ended. Thus, the unprecedented rise and fall occurred over roughly 150 years. (For comparison, the Byzantine Empire lasted over 1,000 years.)

Ray Dalio, founder of Bridgewater Associates, contributes the fall to basic economics. His argument is that when empires are at their peaks, the world places a higher value on their currencies, allowing them to over-borrow given an increased ability to do so. This ultimately leads to their decline—and the British Empire had quite the decline.

In his white paper How the Economic Machine Works, Dalio notes that “the size of the British Empire correlated with the level of its relative income.” That had a major impact on the sterling’s stature as a reserve currency, a status that allows countries to cheaply import goods and borrow across borders at attractive rates.

The chart below shows that the British Empire’s economy, on a per person basis, gradually shrank in size compared to the rest of the developed world (DW). It’s a bit confusing, but the takeaway is this: as the British Empire grew, its citizens grew poorer relative to their developed world peers. That’s not a recipe for long-term sustainability.

According to Dalio, the rise and fall of the British Empire can be broken down fairly simply:

  • Ascent: By 1850, the British Empire was cashing in on “the significant income earned from global asset holdings (both from colonies, and increasingly in the late 19th century from assets in the U.S.) and the profits made from global shipping and financial businesses.”
  • Decline: Following the First and Second World Wars, “it was left with large debts owed to foreigners and without its colonies.” The empire’s total debt as a percentage of its GDP (the size of the economy) peaked in 1950, roughly the same year as the peak of the empire itself. With declining relative incomes, a weakening currency, and a crushing debt load, the British Empire was overextended.

Dalio summarizes the decline thusly: “In a nutshell, at the end of World War II Great Britain was bankrupt and the U.S. was in a strong financial condition. As a result, the U.S. provided the Marshall Plan, the British Empire collapsed and the U.K. began a long deleveraging.”

While the British Empire peaked by 1950, British mainlanders continued to take pride in its history for decades to come. A 1998 Gallup poll found that 70 percent of the British public still took “pride in the fact that Britain once had a great empire.”

At the time, The Economist didn’t find the results surprising given the country suffered from “imperial amnesia.” For example, over half of British citizens had already forgotten that the United States was once a colony.

While those figures have come down in recent years, a 2016 YouGov poll found that 44 percent of the British public were still proud of Britain’s history of colonialism. Only 21 per cent regretted that it happened.

Learn More

  1. Guns, Germs, and Steel: The Fates of Human Societies — Jared Diamond
  2. The Dynamics of Global Dominance: European Overseas Empires, 1415-1980 — David B. Abernethy
  3. The Fall of Empires (video) — Khan Academy