British Informal Empire in South America
Authors: Rock David 
Published: January 2025

British informal empire in Latin America begins by exploring the origins of a widely used concept in overseas British history. The idea started in the mid-18th century with work by Josiah Tucker and continued by David Ricardo in the early 19th century. Informal empire, sometimes called the imperialism of free trade, acquired much wider vogue from the 1930s, led by C. R. Fay, and from the mid-1950s by John Gallagher and Ronald Robinson. It argued that British interests overseas would always be better served by trade, investment, and peaceful contact than by “formal” empire—namely, conquest and colonization. From the 1960s, the concept faced challenges chiefly by D. C. M. Platt, arguing that archives revealed little to support it.

The issues it entailed first appeared in Anglo-Latin American relations during the Napoleonic wars from 1808, when the closure of continental markets pushed the British into seeking commercial alternatives across the Atlantic. British merchants used Rio de Janeiro as a base to develop markets in major Spanish American ports and to promote British exports, mainly textiles, while avoiding any use of force. Such commerce continued into the late 1820s, supported by Spanish American revolutionaries seeking to emancipate the region from Spanish colonial rule.

From the 1830s, “informal empire” in this form suffered setbacks as a result of civil war and recession but acquired a renewed dynamic from the 1850s. At that time, Latin American countries began repaying debts from the 1820s on which they had earlier defaulted. The 1860s marked the inception of close financial links through large British foreign investment in the region that continued, amid disruptions caused by recessions, until the eve of World War I. During this period, considered the classic era of informal empire, the British constructed major rail networks in various countries led by Argentina, many other infrastructural works, and numerous import–export houses. British trade with Latin America also revived, becoming far greater in scope than during its earlier high point of the 1820s.

British critics of foreign investment included J. A. Hobson, who claimed that investment abroad occurred at the expense of investment at home, to the detriment of the British manufacturing economy and British consumers. In the event, investment ceased during World War I as surplus funds were absorbed by war expenditure. British trade also faced growing competition from US and German producers. Stagnation supervened during the 1920s, followed by further decline during the Great Depression. At that time, the British made abortive attempts to protect their commerce in Latin America, notably in Argentina, by bilateral trade agreements, often considered another major artifact of informal empire. They faced new setbacks during World War II, when exports collapsed and British foreign debt multiplied. After 1945, they decided to liquidate investments to settle their debts. Subsequently, British exports continued the secular process of decline beginning during World War I. For much of the 20th century, Britain’s trade in Latin America suffered from industry’s failure to develop new products and production methods and therefore a growing inability to compete with rivals led by the United States.