THE government will this week close a chapter in BritainÂ’s wartime history by completing the repayment of a loan taken out with America more than 60 years ago, just after the second world war. Treasury officials said the repayment of the US war loan taken out under a 1945 agreement would be completed by December 31.The loan dates back to September 1945. From 1941, Britain and other allied nations had received large quantities of equipment and supplies under Franklin RooseveltÂ’s Lend-Lease programme.
Britain received about $30 billion of goods — just over £7 billion at the prevailing exchange rate — during the war years, in effect gifts from America. But in September 1945 the US abruptly announced an end to the Lend-Lease programme, despite the need for large-scale reconstruction and with Britain on its knees economically.
Goods already in Britain or in transit were sold to the UK government at heavily discounted prices — one-tenth of their value — the amount paid being in the form of a loan. The amount, together with a line of credit, was $4.34 billion with a 2% interest rate, originally intended to be paid back over 50 years beginning in 1950.
Some critics, including Lord Keynes, saw the loan as a means used by America to subjugate Britain after the war.
As it was, keeping up the payments was often difficult. There were six years when Britain deferred payment as a result of economic crises and pressure on the official reserves. But this week’s £43m remittance will pay it off. Many war loans are never repaid.
Britain borrowed money from America during the first world war but never fully settled the debt. This was because President Herbert Hoover declared a debt moratorium during the global financial crisis of 1931. At the time of the moratorium, Britain was owed more in war debt by other countries than it owed to America.