Anglo-American loan

Anglo-American loan

The Anglo-American loan was a post-Second World War loan made to the United Kingdom by the United States in 1946.

The loan was made to enable the British to pay for lend-lease equipment that they needed to retain in the post war period though that equipment was sold to them at only 10% of its value.

At the start of the war, Britain had spent the money that they did have in normal payments for materiel under the "US cash-and-carry" scheme. Territory was also traded for equipment eg the destroyers for bases agreement but by 1941, Britain was in a terrible financial state and Lend-Lease was introduced.

The loan was made subject to conditions. The loan, $586m (£145m in 1945) and $3,750m in line of credit (£930m in 1945), was to be paid off in 50 annual repayments. The most important term was monetary convertibility of the pound sterling. Though not the intention, the effect of the convertibility was to damage the economy. Companies could demand payment in dollars rather than the pound sterling. These dollars were then spent in the US rather than in the UK depressing industrial demand — this all ate into the loan rather than the money being spent on improving post War Britain. Rationing of food became more stringent than during the war.

The rate of interest was 2 percent, beginning after five years.

The last payment was made on 31 December 2006 for the sum of about $83m (£45.5m). [cite web|url=http://news.bbc.co.uk/1/hi/magazine/4757181.stm|title=What's a little debt between friends?|accessdate=2007-11-11] [cite web|url=http://www.abc.net.au/am/content/2007/s1820797.htm|title=UK pays off WWII debt to US|accessdate=2007-11-11]

Sir Christopher Meyer presented a history of the loan and its effects in the BBC series "Mortgaged to the Yanks".

References

External links

* [http://www.trumanlibrary.org/oralhist/snyder25.htm Oral History Interview with John W. Snyder]

* [http://www.wymaninstitute.org/articles/2007-1-loanbattle.php]


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