15 January 2006
“America did really well from the war right from the start in terms of conventional trade, because Britain was spending money on ordering aeroplanes and tobacco, and in fact the Brits were spending half a billion more a year, on average, buying stuff from America compared to before the war broke out.”
The US also benefited from British scientific and military advancements such as radar, antibiotics, jet aircraft and developments in nuclear research, without having to pay for the privilege.
Britain pays back £70bn US war loan … after 55 years
By Rachelle Money (appropriately enough)
After 55 years and $70 billion, this year Britain will finally have paid back its second world war debt to the United States.
The debt, which amounted to £70bn ($130bn), was a loan granted to Britain in August 1945 after the US government stopped the Lend-Lease scheme which had been crucial to the country’s economic recovery.
On December 31, Gordon Brown’s Treasury will hand over the last payment of £46.9 million ($83m). The previous payment of £81m was received by the US last month.
Author and journalist Selwyn Parker was researching his forthcoming book on the history of the British pound when he discovered the outstanding debt and the story behind it.
Parker said: “The trouble with the second world war was that it was a massive land war and required huge amounts of equipment, people and ships, quite unlike Iraq, and it cost Britain everything it had.
“I don’t think people know about this, and most people are stunned when I say, ‘Do you know we’re still paying off our second world war debt?’”
A Scottish peer, Lord Lothian, then ambassador to Washington, paved the way for the Lend-Lease scheme which provided Allied nations with US-supplied tanks, munitions and equipment. Lothian informed the US in 1940 that Britain was virtually bankrupt.
The Lend-Lease scheme was in operation for the duration of the second world war and the US distributed the equivalent of £25.8bn ($47.9bn) to 38 nations, of which Britain received the lion’s share. All the money was spent on winning the conflict.
Parker continued: “The Lend-Lease ran until 1944 and was meant to last until the end of the war. Germany was defeated, but we still had Japan to fight and the new government was pretty confident the US would keep on extending Lend-Lease, which was worth £2bn a year, which was a staggering sum in those days.
“When Truman came to power he canned the Lend-Lease and Britain was horrified, but America knew it couldn’t completely cut the painter on Britain so the result was the replacement loan.”
The US provided a line of credit up to approximately £2bn ($3.75bn) at a rate of 2% interest, with repayments spreading over 50 years from 1951. Missed payments meant the debt was extended.
“The Americans knew Britain was broke and this was a negotiating advantage they really couldn’t afford to pass up,” said Parker.
Although some governments since 1945 might have been tempted to repudiate the debt, they did not. As a Treasury spokesman said: “The government intends to meet its obligations in full.”
The US not only had the upper hand when discussing the new loan; it also continued to dominate the global economic market while Britain was in, as the then economist and government advisor Lord Keynes described, “a financial Dunkirk”.
Parker said: “America did really well from the war right from the start in terms of conventional trade, because Britain was spending money on ordering aeroplanes and tobacco, and in fact the Brits were spending half a billion more a year, on average, buying stuff from America compared to before the war broke out.”
The US also benefited from British scientific and military advancements such as radar, antibiotics, jet aircraft and developments in nuclear research, without having to pay for the privilege.
Labour prime minister Harold Wilson later wrote: “Had Churchill been able to insist on adequate royalties for these inventions, both our wartime and our post-war balance of payments would have been very different.”
Parker described the financial burden the multi-billion pound debt has been on the UK economy. “In the 1950s, 1960s and 1970s Britain was in desperate straits. They weren’t able to repay in 1956, 1957, 1964, 1968 and 1976.
“When the American negotiators forced the replacement loan package, Britain’s problem was that it had lost its ability to earn sterling, to export, because Britian’s factories had spent the last six years producing stuff for the war, and they had to retool to earn exports and to allow for the economy to recover.
“Britain was truly in hock to America and the mighty dollar well into the 1980s, and it’s really only in the late 1990s that the British economy recovered.”
The Treasury has no plans to mark the event when December 31 comes. A spokesman said there were “no plans at present for a celebration”. But Parker said: “The Treasury aren’t really known for their sense of humour, but I think there’s got to be something, and maybe closer to the day the Treasury will be more interested in it. It should be marked. There will have to be some sort of ceremony or acknowledgment.”
www.sundayherald.com . . .
“America did really well from the war right from the start in terms of conventional trade, because Britain was spending money on ordering aeroplanes and tobacco, and in fact the Brits were spending half a billion more a year, on average, buying stuff from America compared to before the war broke out.”
The US also benefited from British scientific and military advancements such as radar, antibiotics, jet aircraft and developments in nuclear research, without having to pay for the privilege.
Britain pays back £70bn US war loan … after 55 years
By Rachelle Money (appropriately enough)
After 55 years and $70 billion, this year Britain will finally have paid back its second world war debt to the United States.
The debt, which amounted to £70bn ($130bn), was a loan granted to Britain in August 1945 after the US government stopped the Lend-Lease scheme which had been crucial to the country’s economic recovery.
On December 31, Gordon Brown’s Treasury will hand over the last payment of £46.9 million ($83m). The previous payment of £81m was received by the US last month.
Author and journalist Selwyn Parker was researching his forthcoming book on the history of the British pound when he discovered the outstanding debt and the story behind it.
Parker said: “The trouble with the second world war was that it was a massive land war and required huge amounts of equipment, people and ships, quite unlike Iraq, and it cost Britain everything it had.
“I don’t think people know about this, and most people are stunned when I say, ‘Do you know we’re still paying off our second world war debt?’”
A Scottish peer, Lord Lothian, then ambassador to Washington, paved the way for the Lend-Lease scheme which provided Allied nations with US-supplied tanks, munitions and equipment. Lothian informed the US in 1940 that Britain was virtually bankrupt.
The Lend-Lease scheme was in operation for the duration of the second world war and the US distributed the equivalent of £25.8bn ($47.9bn) to 38 nations, of which Britain received the lion’s share. All the money was spent on winning the conflict.
Parker continued: “The Lend-Lease ran until 1944 and was meant to last until the end of the war. Germany was defeated, but we still had Japan to fight and the new government was pretty confident the US would keep on extending Lend-Lease, which was worth £2bn a year, which was a staggering sum in those days.
“When Truman came to power he canned the Lend-Lease and Britain was horrified, but America knew it couldn’t completely cut the painter on Britain so the result was the replacement loan.”
The US provided a line of credit up to approximately £2bn ($3.75bn) at a rate of 2% interest, with repayments spreading over 50 years from 1951. Missed payments meant the debt was extended.
“The Americans knew Britain was broke and this was a negotiating advantage they really couldn’t afford to pass up,” said Parker.
Although some governments since 1945 might have been tempted to repudiate the debt, they did not. As a Treasury spokesman said: “The government intends to meet its obligations in full.”
The US not only had the upper hand when discussing the new loan; it also continued to dominate the global economic market while Britain was in, as the then economist and government advisor Lord Keynes described, “a financial Dunkirk”.
Parker said: “America did really well from the war right from the start in terms of conventional trade, because Britain was spending money on ordering aeroplanes and tobacco, and in fact the Brits were spending half a billion more a year, on average, buying stuff from America compared to before the war broke out.”
The US also benefited from British scientific and military advancements such as radar, antibiotics, jet aircraft and developments in nuclear research, without having to pay for the privilege.
Labour prime minister Harold Wilson later wrote: “Had Churchill been able to insist on adequate royalties for these inventions, both our wartime and our post-war balance of payments would have been very different.”
Parker described the financial burden the multi-billion pound debt has been on the UK economy. “In the 1950s, 1960s and 1970s Britain was in desperate straits. They weren’t able to repay in 1956, 1957, 1964, 1968 and 1976.
“When the American negotiators forced the replacement loan package, Britain’s problem was that it had lost its ability to earn sterling, to export, because Britian’s factories had spent the last six years producing stuff for the war, and they had to retool to earn exports and to allow for the economy to recover.
“Britain was truly in hock to America and the mighty dollar well into the 1980s, and it’s really only in the late 1990s that the British economy recovered.”
The Treasury has no plans to mark the event when December 31 comes. A spokesman said there were “no plans at present for a celebration”. But Parker said: “The Treasury aren’t really known for their sense of humour, but I think there’s got to be something, and maybe closer to the day the Treasury will be more interested in it. It should be marked. There will have to be some sort of ceremony or acknowledgment.”
www.sundayherald.com . . .
