24:
78:. Problems arose on the American side, with many in Congress reluctant, and with sharp differences between the treasury and state departments. The loan was for US$ 3.75 billion (equivalent to $ 58.59 billion in 2023) at a low 2% interest rate; Canada loaned an additional US$ 1.9 billion (equivalent to $ 29.69 billion in 2023). The British economy in 1947 was hurt by a provision that called for convertibility into dollars of the wartime sterling balances the British had borrowed from India and others, but by 1948, the
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to obtain essential consumer commodities such as food while it could no longer afford to pay for these items using export profits. The end of Lend-Lease thus came as a great economic shock. Britain needed to retain some of this equipment in the immediate post war period. As a result, the Anglo-American loan came about. Lend-lease items retained were sold to
Britain at the knockdown price of about 10 cents on the dollar, giving an initial value of £1.075 billion.
156:
earned from buying
British exports, and which they were now permitted to sell to Britain in exchange for dollars) had drawn almost a billion dollars from British dollar reserves, forcing the British government to suspend convertibility and to begin immediate drastic cuts in domestic and overseas expenditure. The rapid loss of dollar reserves also highlighted the weakness of sterling, which was devalued in 1949 from $ 4.02 to $ 2.80.
148:, but in the end the country had no choice." America offered US$ 3.75 billion (equivalent to $ 58.59 billion in 2023) and Canada contributed another US$ 1.19 bn (worth US$ 20 billion in 2024), both at the rate of 2% annual interest. The total amount repaid, including interest, was $ 7.5bn (£3.8bn) to the US and US$ 2bn (£1bn) to Canada.
168:
Much of the loan had been earmarked for foreign military spending to maintain the United
Kingdom's empire and payments to British allies prior to its passage, which had been concealed in negotiations through to the summer of 1946. Keynes had noted that a failure to pass the loan agreement would cause
116:
Large quantities of goods were in
Britain or in transit when the Lend Lease Act was terminated on 21 August 1945. The British economy had been heavily geared towards war production (constituting 55% of GDP in 1944) and had drastically reduced its exports. The UK therefore relied on Lend-Lease imports
177:
The last payment was made on 29 December 2006 for the sum of about $ 83m USD (£45.5m) to the United States, and about $ 23.6m USD (£12m) to Canada; the 29th was chosen as it was the last working day of the year. The final payment was actually six years late, the
British Government having suspended
155:
of sterling. Though not the intention, the effect of convertibility was to worsen
British post-war economic problems. International sterling balances became convertible one year after the loan was ratified, on 15 July 1947. Within a month, nations with sterling balances (e.g. pounds which they had
112:
was introduced. The Lend Lease Act provided aid for free on the basis that such help was essential for the defense of the United States. Congress passed the final extension of the act on April 16th, 1945, extending the aid for another year while adding an amendment stating that no aid could be
133:, then in poor health and shortly before his death, was sent by the United Kingdom to the United States and Canada to obtain more funds. British politicians expected that in view of the United Kingdom's contribution to the war effort, especially for the lives lost before the United States
159:
In later years, the term of 2% interest was rather less than the prevailing market interest rates, resulting in it being described as a "very advantageous loan" by members of the
British government, as elaborated below.
656:
70:
was a loan made to the United
Kingdom by the United States on 15 July 1946, enabling its economy after the Second World War to keep afloat. The loan was negotiated by British economist
169:
Britain to abandon its military outposts in the Middle
Eastern, Asian and Mediterranean regions, as the alternative of reducing British standards of living was politically unfeasible.
36:
391:
Documentary evidence can be found at www.nationalarchives.gov.uk/cabinetpapers, see CAB128/10. For a good account of the convertibility crisis, see Alec
Cairncross,
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137:, America would offer favorable terms. Britain was offered a loan at 2% interest to be paid over 50 years starting in 1950 by both Canada and the United States.
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payments due in the years 1956, 1957, 1964, 1965, 1968 and 1976 because the exchange rates were seen as impractical. After this final payment Britain's
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included financial support that was not expected to be repaid. The entire loan was paid off in 2006, after it was extended six years.
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has commented that, "the U.S. didn't seem to realize that Britain was bankrupt", and that the loan was "denounced in the
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Sterling-Dollar Diplomacy in Current Perspective: The Origins and the Prospects of Our International Economic Order
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Britain and America after World War II: Bilateral Relations and the Beginnings of the Cold War
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At the start of the war, Britain had spent the money that it did have in normal payments for
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Rosenson, Alex (March 1947). "The Terms of the Anglo-American Financial Agreement".
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Grant Jr., Philip A. "President Harry S. Truman and the British Loan Act of 1946,"
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Philip A. Grant Jr., "President Harry S. Truman and the British Loan Act of 1946,"
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The loan was made subject to conditions, the most damaging of which was the
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The Third Reich at War: How the Nazis led Germany from Conquest to Disaster
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108:, but by 1941 Britain was no longer able to finance cash payments and
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501:. Berkeley, Calif.: University of California Press. pp. 32–69.
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689:"Britain to make its final payment on World War II loan from U.S."
104:" scheme. Basing rights were also traded for equipment, e.g., the
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Anglo-American economic collaboration in war and peace, 1942–1949
647:"Britain pays off final instalment of US loan – after 61 years"
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John Maynard Keynes. Vol. 3: Fighting for Freedom, 1937–1946
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A Changing of the Guard: Anglo-American Relations, 1941–1946
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302:
John Maynard Keynes. Vol. 3: Fighting for Freedom, 1937–1946
222:"The special relationship and the 1945 Anglo-American Loan"
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Clarke, Sir Richard (1982). Cairncross, Sir Alec (ed.).
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Signature of the loan. Bottom row from left: economist
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Years of Recovery: British Economic Policy, 1945–1951
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186:, formally thanked the US for its wartime support.
759:Anglo-American Financial and Commercial Agreements
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687:International Herald Tribune (28 December 2006).
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784:Aftermath of World War II in the United Kingdom
113:provided for postwar relief or reconstruction.
824:Aftermath of World War II in the United States
679:The Collected Writings of John Maynard Keynes,
499:The Origins of International Economic Disorder
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18:Loan from the US to the UK after World War II
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814:United States foreign relations legislation
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196:Economic history of the United Kingdom
779:Economic history of the United States
645:Thornton, Philip (29 December 2006).
596:A Financial History of Western Europe
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31:, leader of the British negotiators;
804:Presidency of Franklin D. Roosevelt
561:Australian Broadcasting Corporation
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549:Epstein, Rafael (3 January 2007),
534:(1982 ed.). Clarendon Press.
180:Economic Secretary to the Treasury
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736:"The NHS: A 70-year-old Mistake?"
722:from the original on 10 June 2010
659:from the original on 12 July 2010
341:British Decolonisation, 1946–1997
314:International Herald Tribune 2006
220:Gannon, Philip (2 January 2014).
799:Economic aid during World War II
411:. UNC Press Books. p. 374.
226:Journal of Transatlantic Studies
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819:1946 in international relations
582:Presidential Studies Quarterly,
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344:. Macmillan Press Ltd. p.
326:Presidential Studies Quarterly,
55:. Future US Secretary of State
559:(radio broadcast transcript),
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238:10.1080/14794012.2014.871426
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201:Postwar Britain (1945–1979)
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135:entered the fight in 1941
834:1946 in economic history
592:Kindleberger, Charles P.
544:– via archive.org.
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584:(1995) 25#3 pp 489–496
74:and American diplomat
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515:Callaway, C. Darden.
90:Further information:
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600:Taylor & Francis
573:Gardner, Richard N.
497:Block, Fred (1977).
675:(I.B. Tauris, 2012)
637:Skidelsky, Robert.
131:John Maynard Keynes
72:John Maynard Keynes
64:Anglo-American loan
29:John Maynard Keynes
742:. A+E Networks UK.
693:The New York Times
304:(2001) pp. 403–458
300:Robert Skidelsky,
266:Richard J. Evans,
76:William L. Clayton
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671:Wevill, Richard.
641:(2001) pp. 403–58
598:(2006 ed.).
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207:References
140:Historian
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92:Lend-Lease
86:Background
254:153493379
246:1479-4012
173:Repayment
142:Alan Sked
121:Agreement
720:Archived
715:BBC News
657:Archived
594:(2006).
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