FINAL PAYMENT

by MONITOR
BRITAIN yesterday cleared the loans which it received in 1945 from the United States and Canada; the final payments amounted to $83 million and $23 million respectively. At the end of the Second World War Britain was virtually bankrupt with an exhausted economy, decimated overseas trade and shattered national infrastructure The financial burden of the war effort had been helped by the Lend-Lease programme introduced by President Roosevelt in 1941 by which war materials were provided to Britain under a deferred payments arrangement. Roosevelt once described Lend-Lease as being like “lending a neighbour a hopepipe to put out a fire”; some $31 billions worth of military supplies were shipped to Britain. This programme came to an abrupt end when Japan surrendered and the newly-elected British Labour government faced an economic crisis comparable to the military disaster at Dunkirk in 1940. The economist John Maynard Keynes was sent to Washington to see what help might be forthcoming. He returned with a $4.34 billion credit, the equivalent of about $120 billion in today's money, at fixed 2 per cent interest. At the time there was criticism in Britain that the US had not been more generous to its wartime ally which had fought the war alone until 1942. However, massive aid came later in the form of the Marshall Plan, an outstanding example of enlightened self-interest on the part of Washington, which enabled the shattered economies of Western Europe, including Britain, to get back on their feet.