Sterling-Dollar Diplomacy: Anglo-American Collaboration in the Reconstruction of Multilateral Trade

By Richard N. Gardner | Go to book overview

CHAPTER XII
PASSING THE LOAN

THE signing of the Financial Agreement on 6 December 1945 was by no means the end of this important episode in Anglo-American economic relations. It was still necessary to secure approval of the Agreement on both sides of the Atlantic. The consequences of rejection by Parliament or Congress would be extremely grave. The United Kingdom would have to do without $3·75 billion in transitional assistance from the United States and perhaps also the $1·25 billion which Canada had agreed to grant on similar terms. Far from receiving additional credits to wind up its Lend-Lease account, Britain might be asked to make payment immediately, either in cash or in some other form, both for Lend-Lease of post-war value and for articles consumed in the course of the war. Deprived of transitional aid from the United States and Canada and faced with this additional burden of repayment, Britain would face a drastic cut in its living standards and a serious setback in its reconstruction plans.

There were still other things at stake. Rejection of the Financial Agreement might shatter the whole structure of economic co-operation on which the two countries had lavished such time and effort. Without the loan, Britain would not join the Bretton Woods institutions.1 Without Britain, the Fund and Bank could not begin operations.2 For the same reasons, there would be little prospect for the early establishment of an International Trade Organization. Thus rejection of the Financial Agreement would not only upset existing plans for the revival of multilateral trade; it would blight the outlook for multilateralism for an indefinite future. It was clear that grave matters hung in the balance.

____________________
1
The British leaders made it clear on several occasions that the American loan was for Britain a prerequisite to Bretton Woods. See Dalton's statement on this point during the loan debate. 417 H.C. Deb. 431 ( 12 Dec. 1945).
2
By 31 Dec. 1945 neither Australia nor New Zealand had ratified the Bretton Woods agreements and India had only ratified provisionally. Had Britain failed to join the Bank and Fund it is unlikely that these three countries would have done so. Their absence, coupled with that of Britain and the Soviet Union (which also failed to ratify), would have prevented ratification by countries with 65 per cent. of Fund and Bank quotas as required by the Articles of Agreement.

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