Economic Assistance of the US and Great Britain during World War II - Essay Example

? Without the Economic Assistance of the U.S., Great Britain would of Industrially Collapsed during World War II Name Without the Economic Assistance of the U.S., Great Britain would of Industrially Collapsed during World War II World War II has been the most violent and the largest armed conflict in the world history. It has taught some valuable lessons in line with some great insights on the profession of arms, designing of a global strategy, preparedness of the military and also how coalition is formed in fighting a war against fascism. It also depicted some interesting facts about the Allied Victory and the different phases that Britain and America experienced. It was by the end of this very devastating war that America emerged as a new, popular and powerful nation in the world. Often the World War II is referred to as the “Good War” representing that in the war the good forces triumphed over the evil. Since every war has its aftermaths especially when it’s a widespread conflict and is quite destructive as was the World War II. The role of United States during the outbreak of World War II in 1939 had been quite neutral. However, when the Germany victories began to rise in Europe it was then that president Roosevelt considered being the ally of Britain and started seeking ways through which they can aid Britain while not indulging themselves in the war. Under its Neutrality Act initially by which only some cash and carry purchases were made by the belligerents, in the mid of 1940s it was declared by president Roosevelt to send US weapons to Britain in surplus amounts (Hickman n.d.)1. The support provided to Britain was increased in view of the devastating setbacks in the war when the Netherlands, Norway, Belgium, Luxemburg and France fell to Nazis. Although America had taken a stance on providing a split two-to-one favor and to remain out of the war at every cost even at the stake of Britain’s loss. However by the end of 1940 in November, America decided to aid Britain and to take the risk of a war (Cole 1983)2. This was even declared by the candidates running for the Presidential elections in America 1940 just three days before the elections that: “Our policy is to give all possible material aid to the nations which still resist aggression across the Atlantic and Pacific Oceans” (Roosevelt) and “All of us – Republicans, Democrats and Independents – believe in giving aid to the heroic British people. We must make available to them the products of our industry” (Willkie). Thus, showing America’s utmost interest in providing aid to Britain (Churchill 1949)3 By March, 1941 America had maintained its stance of staying away from war and kept its isolationist sentiment, while Britain kept on fighting the war alone. The effects of war on the financial standing of Britain were apparent, its financial assets were ending, the Commonwealth assets from overseas were also dried up, and it had no aid coming from anyplace. At that time it was only the Cash and Carry option provided by America that was available to Britain for buying the war supplies and under this it was using American destroyers to protect the shipments. It was quite evident from the conditions that Britain was reaching the stage of Bankruptcy. This soon led to the Lend-Lease Act of March, 1941 that made America an ally for Britain. Under this Act, Britain was given the privilege to buy the war good without having to pay America upfront for the goods. Hence, Britain was given over $1 billion as aid at the end of the year believing it to be sufficient amount to keep Britain standing during the war time. It has been stated in the UK’s Guardian Unlimited that, under the American Lend-Lease Act, it transferred nearly $48 billion worth of war good to different nations during the period March 1941 to September 1945, out of which the aid send to Britain amounted to nearly $21 billion which nearly equaled to UKs entire years gross national product. The major good under the Lend-Lease included aircrafts, military vehicles, ships and the ship repair services and the ammunition which ranked highest according to quantity. Apart from that, another major export to Britain during this time was food (Lend Lease Bill 1941)4. Britain experienced an economic downturn from the year 1945, as the World War II concluded. Although the economic condition of Britain had been weak since the 1870’s but the cost to maintain its presence against the German resistance was estimated to be quarter of the national wealth of Britain at that time. By the year 1945, Britain had engaged its resources in various activities like; much of its labor was engaged in occupying Europe, Mediterranean and the Far East, while nearly four million of its people were associated with the armaments production. This excessive utilization of resources and about six years of military conflict made Britain turn from “world’s biggest creditor” to being the “world’s biggest debtor.” (Oblivion n.d.)5 While the Lend-Lease program provided nearly all the good to the Allies, in contrast a Reverse-Lend-lease program also emerged according to which the goods and services were provided to America. Under this program, when the American forces began arriving in Britain, Britain assisted US and provided the use of it Supermarine Spitfire Fighters. Also the commonwealth nations provided different support like bases, logistical support and food. During the course of war, from the Reverse Lend Lease program America received $7.8 billion out of which nearly $6.8 billion came from Britain and the other Commonwealth nations (Hickman n.d.)6 Lend-Lease program that was critical in winning the war came to an abrupt conclusion when America cancelled the program in the year 1945. Due to this cancellation of the aid by America, Britain was forced to request America for a loan, which if not received would impact Britain in a devastating way. According to Jon Maynard Keynes, “a large scale withdrawal on [Britain’s] part from international responsibilities.” In this time the political authorities were not ready to accept any loss of global influence or prestige. In the year 1945, Britain’s economic condition deteriorated and it was debilitated economically. It was then believed that Germany can prove to be a key factor for the revival of British economy. By year 1947, the economic conditions of Britain further became devastating as it faced the fuel crisis, harsh winters, dollar gap and an export deficit. The position of Britain during this time has been portrayed by Sir Henry Tizard in these words, “we are a bankrupt nation,” Furthermore he wrote that if the conditions of Britain didn’t change positively, then it would become “negligible in world affairs.” In these conditions of such devastating economic conditions the reaction of Britain to the America aid was positive as this was required for its survival and the moment it arrived was an opportune moment for Britain. In order to continue the American post-war loan Britain had to make some hard choices and had to give up to the American desires of having a multilateral trading and an open door policy on the potential available markets. This was provided under the Bretton Woods agreement (Oblivion n.d.)7 This reliance of Britain on the American aid made it quite clear that the war efforts allied and they owed to the logistical and material strength of America. The immediate post-war years were not easy for Britain and it was not in a position to financially or politically oppose Soviet Union directly and due to this reason it adopted a cautious policy of cooperation with the Kremlin so as to avoid any risk of conflict. However, it wasn’t long when in the end of 1940s Britain began to receive threats from Soviet Union which were demonstrated by it atomic tests explosion and the Berlin Crisis. For Britain, America was a wartime ally but one that can terminate the lend lease agreement in 1945. It was clear by the end of 1949 that Britain had no reliable ally and the country didn’t even have any resources to run the country independently. It was in this course that Britain had to turn up to America. It has been quoted by some historian that for Britain its wartime experience should’ve prepared it them ‘for the role of second fiddle.’ (Oblivion n.d.) Since 1950, Britain had been paying off the installments from the lend-lease program. The program initiated by America was quite a farsighted move and as Churchill quotes it: "the most unsorted act in the history of any nation". However it has been viewed by the Guardian as, “it was also the price of our survival. Repayment of debt may be unfashionable these days. But if ever a debt deserved paying it was lend-lease.” (Lend Lease Bill 1941) 8 The global industrial output in the period 1953 and 1957 has been at a rate of 6 percent. However by 1957 the industrial output saw massive growth when in the world trade of manufactured goods exceeded the primary produce. Europe also recovered impressively during this period, which had been preoccupied by war for a very long time in the past. It was this time for Britain to overcome the deficiencies which were created during the wartime and to exploit its economic potential. It was this time for Britain to learn from its past mistakes (Kennedy 1989)9. The last payment for the debt received from America was made to the US Federal Reserve in December 2006 amounting to ?45m as debt by Britain. In the year 1947 Britain has also been the major recipient of the Marshal Plan aid from America. As a reader states "The Marshall Plan resources were largely directed to the Continent. There were shortages of building materials, as Europe had the first call." Britain received nearly $ 3.3 billion as aid under the Marshall Plan, this was the largest amount aid provided to the countries which amounted to nearly 25 percent of the total disbursements made to different countries (Sayers 1956)10. The disastrous defeats of Britain between the years 1940 and 1942 completely destroyed it in every way. Britain’s economic and financial independence which formed the basis of its imperial system was shattered. Although Britain had managed to survive the war but it all came at the expense of its prestige, wealth and authority which were greatly affected. This catastrophic war also removed Britain’s balance of power on which its security largely depended. Britain came victorious out of the war but this victory and the defeat of Germany had only been possible because of the Soviet and power of America. Britain was able to recover its lost territory during the war and survived. But to regain all this it had to seek aid from America. This aid from America though helped Britain be victorious in the war but it also appeared to be a regal endgame in which Britain was locked and the only exit was to accept the Lend Lease Agreement. Conclusion The summer of 1940s was shaped by the decisions of the three personalities namely Adolf Hitler, Franklin D. Roosevelt and Winston Churchill. Where Hitler as a dictator made the decisions that impacted the peace and war matters in devastating ways. Churchill’s continuous guidance made Britain to continue fighting against all the odds hence he instilled determination in the country. Roosevelt’s role in the fateful summer had been of the one who piloted the development of American Policy to maintain a closer association with Britain (Barbier 2006)11. After the conclusion of World War II and during the post-war time, had Britain political economy taken some different decision, it would have been very difficult for Britain to maintain and control scarce foreign exchange and to place the ceiling prices in exports and to protect the consumption by working class. However, Britain did see some shattering of controls after the World War II in the factor and product markets, also in terms of restoring the prices and maintaining the exchange rate. This can be attributed to quite different factors such as the political and economic condition of Britain at that time were quite favorable, and the governments were also interested in having a mixed economy and thus they wanted to build strong pro-market orientation. Much of it can be attributed to the Marshall Plan in the World War II that gave the post-war Britain politicians some more space to maneuver and to carry out their intentions. The Aid from America came at a very opportune time and without such, Britain would have faced some very hard choices in the 1940s between the contraction to balance out their international payments and to impose severe controls on the imports. In the post-World War II era Britain required political compromise so as to balance the budgets and to halt inflation. It went through severe challenges where people had to accept to buy food and necessities on higher prices, workers had to work on moderate wages, the owners had to demand moderate profits and the retailers had to accept that because of the war they had destroyed their wealth. The distribution of income had to be fair. The aid served as a survival support for Britain as the agreement was made easier to reach and t division among the groups was just. Thus, the economic growth of Britain in view of the aid provided turned out to be virtuous circles for it (DeLong 1997)12 Works Cited Barbier, Mary Kathryn. "Nineteen Weeks: America, Britain, and the Fateful Summer of 1940 (Book Review)." Historynet.com. June 12, 2006. http://www.historynet.com/nineteen-weeks-america-britain-and-the-fateful-summer-of-1940-book-review.htm. Churchill, Winston S. The Second World War Volume II: Their Finest Hour. 1949. Cole, S Wayne. Roosevelt and the Isolationists, 1932-45. 1983. Cull, Nicholas John. Selling War: The British Propaganda Campaign Against American "Neutrality" in World War II. New York: Oxford University Press, 1995. DeLong, J. Bradford. "Post-WWII Western European Exceptionalism: The Economic Dimension." (University of California at Berkeley, and National Bureau of Economic Research) December 1997. Hickman, Kennedy. "World War II: The Lend-Lease Act." About.com Military History. n.d. Kennedy, Paul. The Rise and Fall of the Great Powers - Economic change and Military conflict from 1500 to 2000. London: Fontana Press, 1989. Lend Lease Bill. "Lend Lease Bill." Records of the U.S. House of Representatives, HR 77A-D13, Record Group 23, Januray 10, 1941. Oblivion, Act of. "Britian's Post War Decline 1945-50." 20th Century: Political History. n.d. Sayers, R.S. ""Financial Policy, 1939-45"." In ed. History of the Second World War: United Kingdom Civil Series, by Sir Keith Hancock. London: H.M. Stationary Office, 1956. Read More