"Anyone who has ever looked into the glazed eyes of a soldier dying on the battlefield will think hard before starting a war." Bismarck
PLEASE NOTE: This article does not diminish my respect for the many US soldiers who fought so courageously in two World Wars. Nor is this intended as a slight against the many hardworking, honest and God-fearing American people.The American people as much as America's friends have been betrayed by their successive governments. (the author)
THE TRAGEDY OF TWO WORLD WARS: how we beat our enemy, but got fleeced by our ‛friends’
Until 1914, the USA was heavily indebted to Britain. All this was about to change, reversed in fact. Britain risked everything and nearly lost everything going to the defence of Belgium despite being never directly attacked or threatened by anyone. In just four years, the heritage built up over ten generations was squandered in a bloody and arguably unnecessary struggle in a matter that was essentially none of our concern. The cost was high. 750,000 young men lost their lives and 500,000 were permanently disabled. Britain lent £1,740 million to her allies, especially France and Russia, receiving next to nothing in repayment. She borrowed £842 million from the USA to pay for food, munitions and various vital war supplies. This debt, let us remember, was acquired not on her own behalf, but to assist her allies. England sold £1,000 million of her foreign securities, at the same time accruing foreign debts of £1,200 million. It has been well argued by some historians and economists that had there been no war in 1914, World War II would have been less likely and Britain’s strength would not have been destroyed.
The USA emerged from the war very differently. She lost far fewer war dead, just 100,000. US troops in any numbers only arrived on the scene much later, just six months before hostilities ground to a halt. Not even the sinking of the Lusitania by a German U-boat in May 1915 with the loss of 128 American lives was sufficient to bring them into the war. Although denied at the time, it later became known that as well as carrying passengers the ship was also transporting arms to Britain. What worried the Americans most, and what probably brought them eventually into the war, was the fear of being sidelined in the shaping of the post-war world. Rather than disposing of foreign investments, the USA bought back £1000 million of these from Britain. If loans to allies are included in the calculation, then Britain’s expenditure on the war was three times that of the United States. If industrial capacity and population is added, then Britain’s contribution to the war effort was eight times greater than that of the USA. Britain and her allies may have won the war, but America was the real winner. By remaining non-belligerent for such an extended period the USA was able in the intervening time to expand its industrial machine later enabling it to seize markets from countries on both sides.
The sympathies of Americans during World War I lay largely with the Allies and there were a few voices calling on America to join the fight. Most Americans feared being drawn into the conflict. As details of the fighting drifted across the Atlantic antiwar sentiment grew. There were many Americans, especially those of German, Irish or Italian heritage, who sided with the Central Powers. President Wilson summed up the dilemma, “We have to be neutral since otherwise our mixed populations would wage war on each other.” The United States were hardly neutral. They were aware that their economic interest lay in supplying the Allies. Of what American banks lent only around one tenth went to the Central Powers measured against what went to Britain. The House of Morgan was deeply involved as the sole purchasing agent for the British Government from 1915 to 1917. Eighty-four percent of all Allied arms deals in those years were handled by Morgan.
The United States emerged from World War I as the wealthiest nation on earth, more by taking advantage of her allies than by her own exertions. The mighty dollar before 1914 had been but one currency among others. The war debts owed to the United States seemed beyond the wit of man to repay. The response of President Coolidge to his erstwhile allies financial troubles was as hardnosed as it was dismissive, “Well they hired the money, didn’t they?” Britain struggled to repay her debts to the United States. However, those who owed Britain money were either teetering on bankruptcy or in the case of the Soviet Union had no intention of repaying anything to capitalists. International finance after the war struggled. The exchange system, built on gold and confidence in the markets, was destroyed. There was little gold about and most of it was in America.
Twenty years later America repeated what it had done in World War I, but on a much grander scale and with a like devastating effect on Britain. Once more hanging back from entering the war for two years whilst Britain bled, the USA emerged as the undisputed leader, proprietor, protector, and policeman of the non-Communist world. The huge expansion of military bases and power was accompanied by an equally sensational expansion in trade and capital overseas. By stopping the Germans in two wars, by cutting its allies meanly down to size, American economic and political expansion was unparalleled. France and Britain especially had been reduced to second-rate powers by the treachery and self-interest of their American ‛ally’. America had developed, in the words of Senator J. William Fulbright, “an arrogance of power” and attitude of “do it our way or else”.
To get Britain back on her feet after World War I many ploys were tried all of which failed. Mr Winston Churchill, Chancellor of the Exchequer in 1925, believed in hard money and a balanced budget and restored the parity of the pound with the dollar. It was futile for the pound could not keep pace with the dollar and British exports became overpriced and international trade declined. In addition, Britain believed firmly in free-trade whereas America practiced protectionism in a big way as it always has. To try to save the day, home consumption in Britain was screwed down. Subsidies to the coal and steel industries were pruned. Wages and public expenditures were cut back in a wave of austerity. Demand slumped, unemployment rose. All this gave rise to the General Strike of 1926. Britain was sinking fast and Americans viewed us with hardly disguised if courteous contempt.
On the 29th October 1929 the Stock Market on Wall Street took a nosedive and collapsed. Banks called in loans and overdrafts and so America slipped into her deepest recession ever. Although it seems doubtful, we are often assured that the 1930s slump cannot repeat itself as today there are more sophisticated techniques to pre-empt a similar collapse. Nevertheless, America is in a far more precarious position today than she ever was in her history. Great Britain follows in her wake.
Politicians do not want to tell you this, but the UK national debt at the time of writing has reached almost £1.5 trillion and still rising. This amounts to £23,093 for every man, woman and child in the country and more than £51,673 for every person in employment. It means that every household in the UK will pay £1,870 this year and that just to cover the interest payments. In the United States the situation is worse. National debt currently stands at over $18 trillion (£11.4 trillion) and is expected to reach $22 trillion (£14 trillion) by the end of this financial year. Every man, woman and child in the United States currently owes $59,747 (£38,000) for their share of the U.S. public debt. Such debts were never accrued before on this scale in human history. The possibility of them ever being paid is slight.
Between the wars and as a direct result of the slump, free trade was set aside. In the early 1900s, something called Imperial Preference was considered as a method of preserving unity within the British Empire and preserving Britain's position as a global power against the rising protectionism of Germany and also the United States. In Ottawa in 1932, representatives from Britain, the Dominions and Colonies held the Commonwealth Conference. They granted each other preferential tariffs on manufactured goods and virtual tax-free entry for foods and raw materials. Many would like to have closed down this economic bloc completely. The arrangements were not entirely successful due to confusion, not the least within government where many supported free trade.
Although the Americans resented the very idea of this preferential treatment when faced with depression everywhere, there was very little they could do about it. They were determined to maintain their own tariff protections, but were vehemently opposed to anyone else enjoying preferences denied to them. The Smoot-Hawley Tariff signed into American law in 1930 put Imperial Preference into the shade, raising US tariffs on over 20,000 imported goods to record levels. Many economists believe that the US tariffs only served to lengthen and deepen the depression.
Once more in 1939 Britain voluntarily ran to the aid of an invaded ally, again without being directly threatened herself. This provided the USA with the opportunity she had sought to break up what was left of Imperial Preference, which is exactly what she proceeded to do. After the fall of France in 1940, England found herself in a perilous position. She was heavily dependent on America for munitions, materials and foodstuffs. Whilst Roosevelt can hardly be called pro-British, he knew only too well that, as in World War I, America's future interests lay with a successful outcome of the war for Britain. However, there were those in America at the time who felt that England's war would do nothing for them and the interests of the USA would be best served by keeping out of the conflict. It was Europe’s war and of no concern to them. They would lose nothing if England were to be beaten. Of this view were Lindbergh and also Joseph Kennedy, American Ambassador in London at the time and father of the later President, John F. Kennedy. They were a minority, but noisy and influential, and their propaganda was not something the Roosevelt administration could ignore completely.
This meant that, even though in desperate need of help, England would not be given an easy ride. Americans needed to be convinced that they were not being dragged into war once more by helping Britain. The policy therefore had to be stiff. The British when asking for help in Washington faced tough bargaining. The Americans demanded cash up front or assets. Without the cash England was forced to divest itself of many investments and securities around the world. In return for help the British were to be stripped bare - hardly the actions of a friendly ally. Americans were in no mood to be charitable to the British. On just one single occasion, the US cruiser Louisville docked at Simonstown, South Africa, and took on board 149 million dollars worth of gold. In 1941 most of Britain’s industry was geared to the war effort. Of the remaining exports, now fifty percent down on what they were pre-war, most went to the USA to pay directly for American contracts.
After squeezing out of us what they could, the American administration introduced Lend-Lease. This began in March 1941 after England had stood alone against Germany and Italy for nine months and mortgaged most of her possessions in the western hemisphere. After winning the presidential election, Roosevelt no longer feared punishment at the polls for assisting Britain and knew full well that sooner or later America would join the war. Denying Japan vital raw materials, including oil, was in itself a provocative move. Lend-Lease, although less onerous than the earlier bargaining, only served to push payment out into the future. Ultimately, under Lend-Lease Britain received £5,000 million-worth of war supplies.
There was always the pound of flesh. The terms of the first consignment involved a small fleet of World War I destroyers that had seen better days. In return the USA was granted a ninety-nine year lease in various parts of the West Indies to build naval bases. It was a very lopsided bargain. Whilst they were useful against U-boats, many in Britain felt they had been given a very raw deal: old warships for real estate was hardly a fair exchange. Churchill's assessment was that they were ‛cheap and nasty’. It was a comment overheard by an American officer, to which Churchill added, “Of course, cheap for us; nasty for the enemy. The damage was done and it set the tone for Anglo-US relations during the war and for a long time afterwards. It soured the British view of America in a whole generation.
After Pearl Harbour it became increasingly clear who was the stronger partner and who had the upper hand. America had three times the population and was thirty times larger than England. No one was bombing the USA and although her industrial might was being fully used, there was still plenty of slack. Against this, Britain was the most fully mobilised nation of all the combatants, more even than Nazi Germany. There was no slack, there were no spare resources. America was building factories in wartime, British factories were being bombed to oblivion by the Luftwaffe. There were still ten million unemployed in the USA who could be put into the production system. Consequently, most of the big bomber production went to the USA as did the building of transport planes. The British nuclear team who had been working on the project for two years also went across the Atlantic. Most of these activities, the production of large aircraft and welded ships, along with nuclear power all had a very profitable civil applications later in peacetime. This increased US economic superiority after the war.
During the period 1940-45 real wealth in Britain declined by £7,000 million, a decline of about thirty percent. America’s wealth in the same period increased by a similar proportion. Three in every ten houses in Britain were destroyed or damaged. For the average Briton, the standard of living fell by sixteen percent, but this was felt most severely by the middle classes. The stock of houses during the war in the USA increased and the standard of living for the average American went up again by about sixteen percent, even more for the previously unemployed. England had to deal with the loss of sixty thousand civilian lives and four times that number wounded. During the whole war only six American civilians lost their lives and that because they picked up a Japanese balloon bomb that had floated across to the west coast of Oregon. Britain’s gold reserves were virtually emptied, with only £3 million left. America on the other hand acquired gold, 29,000 million dollars worth. This amounted to seventy-seven percent of the world’s known reserves. Britain had lost millions in private securities in the USA, all to the benefit of the Americans. For years after the war, the British people still experienced stringent food rationing, whereas the only consumer shortage in America was a popular brand of cigarettes. Who won the war we may ask? It was certainly not Britain, we just got screwed by our ‛friends’.
In December 1945, the members of the House of Lords met for what was an emotional and bitter assembly. Had British politicians not behaved so stupidly and blindly in the 1930s, then war could possibly have been avoided. However, under discussion now by the Lords was the American loan. There were many who felt that the USA let England fight America’s battles for nigh on two years all the time whilst raking in the blood money. It was not that the Lords quarrelled with the terms of the loan. Britain had fifty years to pay £937 million beginning in 1950. In certain circumstances some of it could be waived and the interest rate was not high at 1.6% to be levied only when British exports reached a certain level. The most remarkable speech, which perfectly sums up the tone of the debate, was made by Lord Woolton, chairman of Lewis’s Store group.
“We reduced ourselves to the miserable, poverty stricken position of having a gold reserve of only £3 million in this country. We fought, we ‛paid on the barrel’ for the means to fight ... America came into the war not to save Britain but so that we might together defeat the nations that assailed us. The war has left us poor. It has left us the largest debtor nation in history. America, on the other hand, has been left by the war rich beyond her dreams. I ask the American people whether, in justice and in honour, they ought not to return to us, without conditions, those securities we were compelled to deposit with them in 1940. I do not ask for a loan. I do not ask for a gift. I ask for rightful restitution of the dollars we paid in advance of what became a common cause. For fifty years we are face with the prospect of labouring to pay toll the America for financial transaction in munitions. For fifty years we are going to face the prospect of possible default because our creditors by virtue of their tariff barriers may not allow us to pay our debts with our labours.”
Winston Churchill, not able himself to express such sentiments, is thought to have been behind Woolton’s words. In short, the Americans could and should restore the dollar securities to England they had demanded. Furthermore, US protectionism would make it all but impossible for Britain to earn sufficient dollars to meet its debt obligations. America remained obdurate and unhelpful.
During the debate, Lord Semphill complained that the Americans had pushed down the price of the Viscose Corporation, Courtauld’s US subsidiary, so low that the British government was compelled to compensate shareholders to the tune of £30 million. He rightly called it ‛daylight robbery’. Lord Balfour of Inchrye saw the obvious, that the Americans were out to dismantle the Imperial Preference and reduce Britain to poverty and that is exactly what happened. What America would like to do to Russia today, they achieved with Britain during and after the war.
The Marshall Plan, or the European Recovery Programme, was named after the Secretary of State, George Marshall. It brought $13 billion (around $120 at today’s values) to Europe. The aid was divided among the recipient countries on a per capita basis, but more going to allies than the former enemies or neutral states. Britain was the largest recipient followed by France and West Germany. Overall, eighteen countries benefitted. The Soviets refused help and blacked help going to Eastern Bloc countries such as Poland and East Germany.
The Marshall Plan should not be thought of completely as charity and is unlikely to have been offered at all were there not some advantages accruing to the United States. The Organization for European Economic Cooperation (OEEC) took a leading role in allocating the funds. The American supplier was paid in dollars and the amount credited against the particular European Recovery Programme (ERP) fund. The recipient did not receive the goods as a gift, they had to pay in local funds, generally by borrowing money. This money went into a counterpart fund which would then be used by the government for further investment in various projects. 5% of the money went to the USA to cover the administration of the ERP. Nevertheless, Marshall Plan money was in the form of non-repayable grants.
America’s wealth had more than doubled during the war. Despite this, whilst the extra manufacturing capacity could be given over to supplying the American public there were limits to what could be consumed at home. Overproduction and memories of the slump haunted the US administration. It was therefore a matter of enlightened self-interest to make sure that the European economies recovered as quickly as possible in the first instance to provide a huge new market for American goods, but also as a bulwark the threat of communism moving westward from Eastern Europe. Soon dollars were flowing freely to defeated enemies Germany and Italy building them into formidable competitors. Britain on the other hand was struggling to strengthen her economy and meet her heavy national and international financial obligations. The war had left us crippled and to what end? The Nazis did not humiliate us, the Americans did.
D. William Norris
“I am for peace: but when I speak, they are for war.”
David, the Psalmist