Britain repays transatlantic Allies

The final act of the Second World War "Anglo-American Alliance" is about to take place, with the last installment of Britain's war debt being paid to Canada and the United States before the year is out. The original loans about to be retired seem small ($4.3 billion from the U.S., $1.2 billion from Canada), but by the standards of the day, the credit extended to Britain was in fact quite massive.

In the case of Canada, that amounted to 10% of our total GNP of $11 billion back in 1945. Think about that for a minute. We lent 10% of our country's total economic output to Great Britain following the war in return for an inflationary interest rate of 2%. In present value terms, given our $1.2 trillion economy, that would be the equivalent of lending a single country $120 billion! Put another way, that's roughly Ontario's current total provincial debt, or an amount that represents about $3,000 for every man, woman and child living in the country today. Who in their right mind would do such a thing?

Well, let's not pretend it was an outright gift, even though it was exceedingly generous. It was in our own economic interest to do so because we didn't want to see the UK go bankrupt, not after all the manufactured goods and basic staples of life the British were purchasing from us back then. It was a large reason why our economy was flourishing in the first part, along with meeting the huge demand for our own domestic war needs. Lord Keynes went so far as to say that the loan was a means used by America to subjugate Britain after the war. This is going too far, given the outright size of the financial assistance. Can you imagine the United States giving up hundreds of billions of its tax dollars to another country out of the goodness of their hearts. Charging 2% is hardly subjugation. Subjugation would be letting His Britannic Majesty go bankrupt, rendering him unable to feed His Majesty's subjects.