Background
For more details on this topic, see Lend-Lease.The loan was made primarily to support British overseas expenditure in the immediate post-war years and not to implement the Labour government's welfare reforms. British treasury officials believed they could implement the Labour government's domestic reforms without the loan if Britain withdrew from all major overseas commitments. Additionally, Britain's lend-lease balance was written off for $650 million (US$8,391 million in 2013).
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 e.g. the Destroyers for Bases Agreement, but by 1941 Britain was in a terrible financial state and Lend-Lease was introduced.
Large quantities of goods were in Britain or in transit when Washington suddenly and unexpectedly terminated Lend-Lease on 29 August 1945. The British economy had been heavily geared towards war production (around 55% GDP) and had drastically reduced its exports. The UK therefore relied on Lend-Lease imports to obtain essential consumer commodities such as food while it could no longer afford to pay for these items using export profits. The end of lend-lease thus came as a great economic shock. Britain needed to retain some of this equipment in the immediate post war period. As a result the Anglo-American loan came about. Lend-lease items retained were sold to Britain at the knockdown price of about 10 cents on the dollar giving an initial value of £1,075 million.
Read more about this topic: Anglo-American Loan
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