England went bankrupt in 1940, the US paid for WW2

Discussions on the economic history of the nations taking part in WW2, from the recovery after the depression until the economy at war.
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Y Ddraig Goch
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Post by Y Ddraig Goch » 24 Dec 2005 00:35

Yes that right. I am greatful that you clarified my errors in my previous post.

Would you agree that the USA shrewdly orchestrated such business transactions, with post war competition between the two nations in mind?

The war was costly for all participating nations, capital was needed to purchase material needed to ensure the successful continuation of the war. What alternative capital could Britain have used to pay for the purchased material instead of dissolving her already insignificant share of US stock?

Rodsmi
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Re: England went bankrupt in 1940, the US paid for WW2

Post by Rodsmi » 07 Mar 2009 23:10

I need some educating on the activity in 1941 when English companies were sold in America as part of the funding for war support. It might look like a dumb question, but if a company in England sold an American subsidiary to another American buyer, did the proceeds not go back to the former owners in England? How would that have helped England's obligation to the American government? Or were the proceeds required to go straight to the American government and the English owners received nothing? A fairly harsh reality for the English owners I guess, but a practical contribution to the war effort. As a related matter - is there anywhere a list of the English companies that were sold in this way, who were the buyers, and what was the price? Many thanks.

South
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Re: England went bankrupt in 1940, the US paid for WW2

Post by South » 09 Mar 2009 09:04

Good morning Rodsmi,

Welcome to the forum.

Partial answer for question 1; Not necessarily and it depends.

If a UK based British company sold a US based subsidiary, the proceeds from the sale might not return to the UK. The proceeds could be kept in the British company's US bank account - or perhaps deposited in the British company's Canadian bank account in Toronto, etc. The variables are numerous. It depends on the British company's business plan adjusted for the war years.

If a British company, eg British Petroleum ("BP") had to sell a subsidiary, eg its concession in Kuwait, it is realistic enough to say the US government would be subordinated to the US oil companies that would want the Kuwait concession - and the US oil companies would lobby for it. To leave the theoretical possibilities of the numerous possible arrangements, we must return to WWII economic history. FDR had appointed Harold Ickes as his Secretary of the Interior (Ickes was previously Petroleum Administrator for War). When Truman took over after FDR died, he appointed an oilman ,Edwin Pauley, Under Secretary of the Navy. Ickes resigned in protest. Thus ,my point is regardless of pro forma documents for public viewing, the US Government need not be the recipient of the transaction's proceeds, whether cash or stock (shares).

Re the last question;

I don't know about a list. The buyers could be nominees, ie "fronts" for the real beneficial buyers. The price? ; .....more secret than documents on desks at Downing Street and Pennsylvania Avenue. (Someone once asked me for my history records of United Fruit Company. They were wasting their time no less than me doing the history research. For those with excesive free time, thay can do some WWII war years of research on Lloyds of London. At least they's have a valid reason to heavily drink the single malt beverages to dull the frustration.)

There are some good economic history books that address the principles and famous examples of all this but it would be more appropriate to develop the references on a seperate thread.

Warm regards,

Bob

South
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Re: England went bankrupt in 1940, the US paid for WW2

Post by South » 09 Mar 2009 09:20

Good morning Y Ddraig Goch,

You're 100% correct. The WWII US companies' business transactions forused on post war elimination of competition.

One example: the "Bermuda Accords", the bilateral civil aviation agreements. These treaties were set up for the benefit of the US airlines. Recall the related "5 Freedoms" of civil aviation. These freedoms gave the US companies the post war advantage.

(Recall BOAC once meant "Bring Over American Cash".)

Warm regards,

Bob

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Bronsky
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Re: England went bankrupt in 1940, the US paid for WW2

Post by Bronsky » 10 Mar 2009 18:33

IIRC Britain had a system whereby private holdings were also mobilized for the war effort. So a subsidiary earning dollars might be forced to convert at least a certain portion of the proceeds into sterlings, with the dollar amount going to the British Treasury to be used for national defence purposes.

Sales of British companies proceeded along the same lines IIRC i.e. the British government bought the company from its owners (in £) and sold it on the US market (for $). These being crash sales, and US buyers having no special reasons not to milk the desperate British sellers for all they were worth, the assets were liquidated at a fraction of what they would otherwise have been. It's always difficult to assess the net worth of a company (depends on how many years' revenue you want to include), but I suppose it's a safe bet that their regular British owners wouldn't have sold them for these conditions.

War is hell.

South
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Re: England went bankrupt in 1940, the US paid for WW2

Post by South » 11 Mar 2009 07:56

Bonjour Bronsky,

You're right. The UK had restrictions on private holdings. The US did also.

I sought to address only the hypothetical example of a private UK firm with a sub in the US and not a nationalized (at least for duration of the war) UK firm since the transaction then would be government to government.

In my post I sought to exclude as much as possible so as to only illustrate the point on the private sector sale of a foreign sub. The one exception I made to demonstrate the complexity was mentioning the oil companies. Since the oil companies were "duel-hatted", ie having 2 roles, one as a private business and the other as a non-military element of the war effort,= realpolitik = enters into the scene. I am sure the assessed valuations and foreign exchange translations did not make the companies look like the austere budgeted of Albert Schweitzer Gabon hospitals.

Nothing is new under the Sputnik.


Warm regards,

Bob

Zyzygie
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Re: England went bankrupt in 1940, the US paid for WW2

Post by Zyzygie » 18 Jun 2018 05:13

Hmm... If the US paid for World War 2, then why did the UK National Debt hit 240% of GDP?
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South
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Re: England went bankrupt in 1940, the US paid for WW2

Post by South » 19 Jun 2018 04:50

Good morning Zyzygie,

Welcome to the Forum.

It's noteworthy - at least to me - that the attachment graph has a label "Public" Net Debt.

Again, a warm welcome to AHF.

~ Bob
eastern Virginia, USA

gracie4241
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Re: England went bankrupt in 1940, the US paid for WW2

Post by gracie4241 » 04 Aug 2018 16:04

Agree completely .It's ironic that Churchill is considered a titan(great war leader and orator no doubt) when basically he failed in every regard .He urged war on Germany to "save "Poland from tyranny, and at the end after 16% of its population was killed(the highest % in the world) Poland ended up under a tyranny anyway(under a tyrant with a mustache to boot).He aimed to maintain the British Empire, and in fact the war led to its dissolution. He ,as you point out, left Britain a debtor, rather than a creditor nation.He even proximately led to Britain becoming a Socialist nation when he was kicked out of office even before the war with Japan was over .He didn't save many Jews, but ended up losing Palestine to the new Jewish state( which he opposed) Other than in helping crush Germany, and thereby shifting the balance of power to the USSR( in part because of that absurd Unconditional surrender demand).Note I said Germany, not the Nazis. Good thing he wrote his six volume history of WW2 right away to tell his story(all 6 of which I read one summer when I was a student)

Michael Kenny
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Re: England went bankrupt in 1940, the US paid for WW2

Post by Michael Kenny » 04 Aug 2018 19:00

gracie4241 wrote:
04 Aug 2018 16:04
He even proximately led to Britain becoming a Socialist nation
I think you should note that that phrase does not have the same negative connotation it has in the USA. What some consider the pathway to hell others see as basic human decency.

South
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Re: England went bankrupt in 1940, the US paid for WW2

Post by South » 04 Aug 2018 23:28

Good afternoon Gracie 4241,

Welcome to AHF. Had missed your first posts.

Actually, in most aspects, Churchill was successful.

He led a wartime government to prevent Germany from dominating the central European landmass.

Poland was a buffer state and remained so.

Churchill knew the British empire was evaporating. Note the Statute of Westminster, 1931. India was next.

The British economy never fully recovered from the Great War Part I - coupled to the US eclipsing the UK as the financial capital of the world, less COMECON.

The Palestine Mandate was lost because of superior Soviet diplomatic maneuvers. Israel was the sideshow and the US countered the Soviet diplomacy. It was the Saudi and other nearby oil fields that required the attention of the Allies.

It's debatable whether Germany was crushed. The post war West Germany was partly rearmed to assist in confronting the Warsaw Pact. Recall the Coal and Steel Community, the Common Market and the other economic arrangements having a West German participation. Besides military, NATO also had an economic component.

Again, welcome to the forum.


~ Bob
eastern Virginia, USA

South
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Re: England went bankrupt in 1940, the US paid for WW2

Post by South » 04 Aug 2018 23:36

Good afternoon Michael,

You're absolutely correct in re that term and the American masses.

At least for the record, William O. Douglas of the Supremes, quoted civil rights leader (and believe US Ambassador to UN in Carter admin) Andrew Young, with:

"Social for the rich, free enterprise for the poor". It showed up in one of Douglas' dissenting opinions.


~ Bob
eastern Virginia, USA

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