It Pays to Delay

Even though the US gave away billions of dollars to the British Government during the Second World War under the Lend-Lease programme, Number 11 was still in a bad way as the war ended in 1945. This time the US forked out a $4.33 billion loan to help keep HM Treasury afloat.

The terms were pretty favourable. The interest rate was only 2% and the Brits had 50 years to repay, starting in 1950. So you’re thinking this debt should have been settled in 2000. Unfortunately, the Exchequer couldn’t pay up in 1956, 1957, 1964, 1965, 1968 and 1976. Times were just a little too tight. However, under the ever-so-scrupulous Gordon Brown, the debts will have been paid by midnight tonight because today is the last business day of the year. Gordon wants it off the books in 2006.

It’s not just the US Treasury that will see money appear in the credit column on a computer screen somewhere. The year after the Americans ponied up for their friend in need, the Canadians loaned another $1.19 billion at the same 2% interest rate.
Gordon is paying that on off as well. The US will get $83.25 million and the Canadians $22.7 million. The Canadians will be paid in US dollars, I’m sure their glad to know. At today’s rate of exchange, they are getting CD$26.44777 million.

And sometime it pays to take a debt over time. The UK will have paid the US a total of $7.5 billion. There are a number of ways to compare old money to new. One of the most common is the Consumer Price Index. The $4.33 billion loaned in 1945 would be the equivalent of $48.248 billion today.

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2 Responses to It Pays to Delay

  1. Margi says:

    No idea why they should have paid anything back on Lend-Lease at all. Did Germany? After all, the US wasn’t purely altruistic in WWII (the American guys who signed up and died notwithstanding) because free Europe was a market. I’ll never forget Churchill beseeching Roosevelt to bomb the rail lines to the gas chambers and Roosevelt refusing. Yes, I’m awfully grateful to the US that I didn’t grow up speaking German but… why the *F* Britain should pay back what was given freely to the Germans who were, let’s face it, merely cowed Nazis, is beyond me. They, and the AnZacs, and the Poles, and the Greeks risked more for freedom than a zillion comfy Yanks ever did. And, as I said, I am not unmindful of the American contribution to my growing up Anglo-Russian instead of pseudo-German or Soviet.

  2. Dave says:

    They didn’t pay anything back on Lend-Lease. The loans were after the end of the war. The reason they should pay back the loans is because they were loans.

    If I were a rich man and I decided to give someone a million pounds and then someone else asked me for a loan and I loaned money to them, I’m still entitled to have the loan repaid, regardless of how rich I am or whatever else I’ve chosen to do with my money.

    Standing amongst the rows and rows of graves at Colleville-sur-Mer, I hate to think of all those men and boys, including those shot up beyond recognition and “Known Only To God” died to assure access to a European market. After all, if Americans had stayed home, a triumphant Third Reich would have also provided a significant market for American goods.

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