In 1902 King Edward VII of England paid a state visit to Lisbon. He reaffirmed the ancient Alliances and agreed with the advisors (the Regenerator party) of king Carlos I a restructuring of the Portuguese debt to foreign bondholders at a fixed rate of 3%. This brought to an end a precarious financial crisis which Portugal had suffered for a decade during which Dom Carlos and his Finance Minister had made several visits to London, Paris and Germany to secure loans. In 1898 , the government endeavoured to raise £8,000,000 to meet its debts but the Germans had tried to use this as a political lever with which to take control of Portuguese colonial possessions and to swop them (and their customs duties) with Britain for territories in the region of the Zambezi . Salisbury, the British prime minister, would have none of this and offered to support Portugal financially in return for assurances under the ancient Treaties of exclusive access to Angola and Moçambique.
The political reception for the reaffirmation of the Alliance was mixed with opposition coming from both the Republicans and Monarchists and in 1906 Dom Carlos offered absolute power to João Franco whose dictatorial management of the country lasted until 01 February 1908 when the king and his heir, Prince Luis Filipe were assassinated in Lisbon by members of a secret society. The throne passed to the unprepared Dom Manuel whose brief reign was subject to mounting agitation which culminated on 04 October 1910 with the bombardment of the royal palace by rebellious warships and the abdication of Manuel I who fled in the yacht Dona Amelia to take refuge in Twickenham, England where he died in 1932.
Provisional, constitutional and “democratic” republican governments ensued to the consternation of the Kaiser but acceptable to the French and British rulers who established diplomatic relations and renewed loans which encouraged Portugal to enter WW II in March 1916 on the side of the allies. This was done without invoking the Alliances with Britain. More than thirty German ships were arrested and a military force of two divisions was sent in January 1917 to join the carnage of the western front. Following this a new Republic was established by Sidónio Pais until March 1919 when the Democrats regained power and the republic entered a seven year period of instability during which various ministers were assassinated, inflation soared and the Bank of Portugal was forced to print money and pay a rate of 13% for loans. This was not helped by the action of gangsters who stole banknote paper and tricked Waterlows of London into printing half a million high value notes which were circulated through the Banco de Angola e Metrópole. The scandal led to a military takeover with General Carmona acting as president from 1926 to 1951.
The New State found that the debts of the Republic were five times greater than had been declared by the previous administration. Even after Winston Churchill scaled down the WW II debt to £23 million it was still an intolerable burden to repay in the short term. The League of Nations was asked to lend £12m but would only do so on the ignominious terms offered to the defeated countries.
Into this dire situation came an unknown economist, Dr. António de Oliveira Salazar, who accepted the post of Finance Minister on condition that he had full control over all government expenditure. He introduced a stiff programme of fiscal reform which encouraged exports and eventually reduced external debt to a surplus and enabled Portugal to weather the financial crises of the thirties in better shape than other European countries.
Salazar became prime minister at the end of 1932 and introduced a new constitution which gave him dictatorial powers of an administration which banned both strikes and lockouts. Although he was a nationalist conservative, he was critical of both the fascist regimes in Germany and Italy and the communism of the USSR. Consequently, when the clouds of WWII began to appear he declared that Portugal would remain neutral which suited well the British plan to prevent Spain from entering as an ally of the Axis powers. But this was put to the test by the existence in Portugal of the largest reserves of wolfram in Europe; which was a tungsten ore consisting of iron and manganese and essential for the manufacture of armoured military equipment. Inside one month of 1941 Hitler´s agents in Portugal cornered the market by forcing the price upwards from £2,500 to £6,000 a ton for which they paid in gold bars stamped with the swastika. They continue to form part of the reserves held by the Bank of Portugal.
As the war progressed, Nazism was largely condemned by the Portuguese people due to attacks by u-boats on neutral merchant shipping so there was no difficulty in June 1943 when Britain invoked the Treaty signed in 1373 by requesting the use of the Azores as a transit base for allied forces. Speaking in the House of Commons Winston made a Churchillian speech in which he recounted the historic importance : “ I do not suppose any such continuity of relations between two Powers has ever been, or will ever be, set forth in the ordinary day-to-day work of British diplomacy”. Thirty years later, at the time of the Falklands war the “special relationship” was again activated. This was despite the reception given to Dr. Marcello Caetano, Salazar´s successor, when he came to London in July 1973 for the 600th celebration of the Treaty and was met by vociferous criticism in the British press for alleged acts of repression in the African colonies.
Since 1973 the Alliances have often been recalled by politicians of both countries but never have they again been invoked for either military or commercial needs.
Portugal was a founder member of EFTA and the EEC which brought constructive cohesion with former European enemies and friends alike ; Long may that continue despite the unwelcome aberration of Brexit.
Conclusion. This brings to an end the series concerning Anglo-Portuguese Alliances and Ruptures. I am grateful for the many kind commentaries which I have received and the Portuguese historians who have aided my research and taught me some home truths which I did not know. I apologise for the silly error in Part 4 where I gave the date of the wedding of Catherine of Braganza to King Charles II as being 1642 instead of the true 1662 . This was due to the growing lack of co-ordination between an arthritic digit and an ageing brain.