BS: At last the UK pays up double.

Subject: RE: BS: At last the UK pays up double.
From: Uncle_DaveO
Date: 02 Jan 07 - 08:30 AM

Sorry, Pam, only when they pay off the WW-I debt.

Dave Oesterreich

Subject: RE: BS: At last the UK pays up double.
From: Paul from Hull
Date: 01 Jan 07 - 02:41 PM

Hush Wld....now weve squared away this debt I'm hoping we might get a little more respect from the US Govt. etc...

....or at least be able to tell them where to get off when they try & treat the UK like we're the 'hired help'...

Subject: RE: BS: At last the UK pays up double.
From: Big Al Whittle
Date: 01 Jan 07 - 03:34 AM

Great! now we can afford another one. come on, you know we're good for it.....

Subject: RE: BS: At last the UK pays up double.
From: JohnInKansas
Date: 31 Dec 06 - 10:40 PM

If the news reports were correct, as of this morning it's paid.

We thank you.

We hope it's not a hot check.

One of the reasons why, at the time, a loan was the only way the US could provide funds to the UK was the "bad credit rating" of the UK.

Repeating myself: at 29 Dec 06 - 05:34 PM there's a link to an article (from BBC) that gives a very concise summary of the loan, it's origins, and some additional info on "UK credit." That link is to an html page. The same article is available as pdf (56KB) at What's a little debt between friends? pdf.

During WWI, the US made loans to a number of countries, including the UK, to help with the actual conduct of war operations. Finland is the only country that made any consistent repayments. The world-wide economic situation was so poor that in 1931 President Herbert Hoover declared a one-year moratorium on payments in order to give everyone involved a chance to "work something out."

"In 1934, Britain owed the US $4.4bn of World War I debt (about £866m at 1934 exchange rates). Adjusted by the Retail Price Index,
a typical measure of inflation, £866m would equate to £40bn now, and if adjusted by the growth of GDP, to about £225bn."

As no further payments were ever resumed, it was virtually impossible to get Congressional approval of additional loans - specifically to the UK, so Lend-Lease was set up. The US provided war material at NO COST during the continuation of the conflict.

"And if it seems strange to the non-economist that WWII debts are still knocking around after 60 years, there are debts that predate the Napoleonic wars. Dr Leunig says the government is still paying out on these "consol" bonds, because it is better value for taxpayers to keep paying the 2.5% interest than to buy back the bonds."

"OUTSTANDING WWI LOANS
Britain owed to US in 1934: £866m
Adjusted by RPI to 2006: £40bn
Other nations owed Britain: £2.3bn
Adjusted by RPI to 2006: £104bn"

(Note: no mention of amounts Britain owed to other countries(?).)

"These loans remain in limbo. The UK Government's position is this: "Neither the debt owed to the United States by the UK nor the larger debts owed by other countries to the UK have been serviced since 1934, nor have they been written off.""

(A separate article indicates that the UK is "unable to determine" a complete record of other countries with whom loans were made or taken during the past century or two, "but they know the amounts are pretty big.")

"In a 1945 state department survey on the US public's attitudes to its wartime allies, Britain was one of the least trusted countries - Dr Patricia Clavin"

        It apparently was not a trivial matter to get Congressional approval to make any additional loan to the UK at that time, but the loan was made in the amounts requested by the UK, at a fixed rate about half what the US was paying, on average, on its own postwar debt.

John

Subject: RE: BS: At last the UK pays up double.
From: Big Al Whittle
Date: 31 Dec 06 - 06:48 PM

well I think we should pay it. If theres another war and we need to go on the cadge again, they might say - I remember you, you didn't pay for the last one!

In fact we might be on a credit blacklist as it is.

Subject: RE: BS: At last the UK pays up double.
From: JohnInKansas
Date: 31 Dec 06 - 02:06 PM

The original loan was for 50 years.

Five years ago it was five years past due. This year, when it is being paid off, it's technically 10 years beyond the term of the original loan.

Payments were suspended for one period of 6 years, at UK request, and the additional small amount of interest accrued in those years might account for some extension in the time required to pay it off, although one must suspect some additional years in which payments were skipped or (common with other kinds of debt) "interest only" payments were made.

At the time when that loan was made there was no other legal method for one nation to provide funds to another, and the loan was on the most favorable terms that could be provided.

War materiel supplied to other friendly forces during the preceding conflict was furnished under the well known (apparently to only a few) "Lend-Lease" program, which gave "legal use" of US materiel to others during the conflict at no cost. The agreement made was that remaining materiel would be returned to the US, or that the users would be allowed to "purchase" any that they wished to keep, at a fixed rate of 10% of original manufacturing cost at the end of the conflict.

About a third, by one estimate, of the loan in question was for "purchase" of war materiel that the UK chose to keep after the war ended.

Not long after this loan was made, the Marshall Plan did give very substantial outright "gifts" to a number of countries, including the UK, nominally for reconstruction but with few real restrictions on what the money and materiel was actually used for.

The loan in question has continued to be a very good deal for the UK, since the fixed rate was far below what they've had to pay for other "loans." It would have been foolish for them to try to pay it off sooner than necessary, but some feel that when you make a contract you should make good on the contract.

Neither the UK nor the US has a perfect record in that respect.

John

Subject: RE: BS: At last the UK pays up double.
From: Paul from Hull
Date: 31 Dec 06 - 06:39 AM

I dont know about the Daily Mirror 5 years ago, but I remember discussing this with a friend of mine about 2 or 3 months back, as we had both caught a little snippet about it on the news a few days before. He was surprised, as he said he had previously thought it had been paid off as something of a lump sum in the 70's (not that a large repayment in the 70's seemed that likely to me).

Subject: RE: BS: At last the UK pays up double.
From: Big Al Whittle
Date: 31 Dec 06 - 05:47 AM

Well Rupert Murdoch newspapers have a fine reputation for always telling the truth.

Subject: RE: BS: At last the UK pays up double.
From: GUEST,Bruce Michael Baillie
Date: 30 Dec 06 - 08:13 PM

...I'm a little puzzled because I read an article in the Daily Mirror about 5 years ago saying that the British Government was about to make the final payment on these loans THEN!!! who is right?

Subject: RE: BS: At last the UK pays up double.
From: McGrath of Harlow
Date: 30 Dec 06 - 06:54 PM

the myth that the US, as a nation, is rich is just that...a myth

And like some other significant myths, it happens to be true. The USA is a very rich nation indeed, but with the wealth divided in a way that means that there is some pretty terrible poverty, and in a lot of aspects it matches Kenneth Galbraith's phrase "Private wealth and public squalor".

Subject: RE: BS: At last the UK pays up double.
From: Uncle_DaveO
Date: 30 Dec 06 - 04:49 PM

When you consider that it's a loan over sixty years, doubling the principal in total repayment makes a very low interest rate, even if it were in constant pounds/dollars.

And when you consider the shrinkage in buying power of the pounds/dollars involved, Britain got very substantial discount!

Dave Oesterreich

Subject: RE: BS: At last the UK pays up double.
From: artbrooks
Date: 30 Dec 06 - 04:30 PM

While Americans (sic) now enjoy a fairly high standard of living...about midway on most scales compared to European nations, the myth that the US, as a nation, is rich is just that...a myth. The Federal government and most state and local governments almost always have deficit budgets, and only come out even by selling bonds; i.e., by borrowing. Our health care, aging adult care, educational and general infrastructure support systems are a joke - not because there is some kind of overriding philosophical objection to paying for such things (although there certainly is some of that), but because we simply don't have the money to do what the Scandinavian nations or the UK does.

Yes, the US certainly could have written off the debt owed by the UK for post-war reconstruction. The UK could also have abrogated the debt, as have some South American nations. However, IMHO, just as honest people repay money they have borrowed, so do honest nations. Thanks, UK.

Subject: RE: BS: At last the UK pays up double.
From: Paul from Hull
Date: 30 Dec 06 - 03:59 PM

Actually, wld, there are debts from WW1 still unpaid....they sort of 'went into abeyance' in the 1930's, neither waived, nor enforced, or anything. Though apparently Britain is owed more from WW1 than it owes.

Subject: RE: BS: At last the UK pays up double.
From: Big Al Whittle
Date: 30 Dec 06 - 03:55 PM

I wasn't. we only paid off for the Ist world war when I was a kid.

Goes with the territory of being a big country - the economics and politics are incomprehensible. Much too clever to bother our pretty little heads about.

the Yanks are stand up guys - usually there when you need them. suez being the exception.

can't expect them to work for free though.

Subject: RE: BS: At last the UK pays up double.
From: ard mhacha
Date: 30 Dec 06 - 03:47 PM

I might add, this is another, " not many people know this", I was surprised when I read about the debt on BBC Ceefax.

Subject: RE: BS: At last the UK pays up double.
From: ard mhacha
Date: 30 Dec 06 - 03:44 PM

Heric, see Keith`s explanation, I agree with him,the US should have written off the debts, they could afford to, I see this the reason for, tarnishing the special relationship.

Subject: RE: BS: At last the UK pays up double.
From: Big Al Whittle
Date: 30 Dec 06 - 01:19 PM

perhaps you were in a dodgy place Keith, I was born in 1949, and it didn't seem quite that bad. we had free education, health care, a roller skating rink - ballroom dancing if you were a cissie.

school was unpleasant and full of violent degenerates, but apart from the teachers, it was okay.

I saw many of the great thinkers and artists of the day - Peter Brough and Archie Andrews, Hopalong Cassidy, Russ Conway.......we may have been culturally impoverished, but in many ways that a great preparation for all the crap folk music on the Mike Harding Show.

folk music is still tightly rationed on the media in England, but I am saving up my coupons for a Dave Van Ronk DVD.

Subject: RE: BS: At last the UK pays up double.
From: Keith A of Hertford
Date: 30 Dec 06 - 12:57 PM

I was born in 1950.
My childhood was in a grim, austere country beggared by our stand against Hitler.
We looked in wonder at the vision of prosperity in USA shown in film or on our little black and white tellies.
We do not expect thanks, but a little less abuse and scorn would be nice.

Subject: RE: BS: At last the UK pays up double.
From: Big Al Whittle
Date: 30 Dec 06 - 12:43 PM

we were lucky anybody gave us a loan. we didn't have a lot of friends at the time. given the circumstances thank f--k somebody did. we can't all be neutral in circumstances like that.

we were on the ropes: FDR helped us as much as he could, and more than a lot of his fellow countrymen wanted to.

Subject: RE: BS: At last the UK pays up double.
From: heric
Date: 30 Dec 06 - 01:55 AM

>That special relationship is somewhat tarnished. <

Please, Ard. Finish up that thought.

Subject: RE: BS: At last the UK pays up double.
From: JohnInKansas
Date: 30 Dec 06 - 01:33 AM

Using common interest formulae:

In 1945 the UK took a loan of $4,336,000,000 at a fixed annual rate of interest of 2% to be repaid in 50 annual installments.

As a simple "mortgage" the annual payment would have been $90,455,700.23.

The total paid back at the end of the 50 years would have been 4,522,705,012.

The total interest paid would have been $186,705,012.

Payments were formally suspended during at least one 6 year period to assist the UK with some "internal troubles." Because the UK "skipped a few payments" the total paid in interest may have been slightly more than was originally expected; but no forclosure actions were filed.

John

Subject: RE: BS: At last the UK pays up double.
From: artbrooks
Date: 29 Dec 06 - 06:03 PM

Over 50 years, even 2% interest can add up to quite a lot.

Subject: RE: BS: At last the UK pays up double.
From: JohnInKansas
Date: 29 Dec 06 - 05:34 PM

For those who don't wish to dig about to find the details, a reasonably balanced(?) outline of the whole Lend Lease/Marshall Plan/Reconstruction Loan bit is at What's a little debt between friends? .

Now about that 243,000,000,000 still owed from WWI?

John

Subject: RE: BS: At last the UK pays up double.
From: ard mhacha
Date: 29 Dec 06 - 04:01 PM

Kendall for a comprehensive report on this go to Google and type in Britain`s war loans, the BBC site tells all.

Subject: RE: BS: At last the UK pays up double.
From: dianavan
Date: 29 Dec 06 - 03:28 PM

"Germany paid the U.S. back in installments (the last check was handed over in June 1971)."

Question answered. Thanks, Google.

Subject: RE: BS: At last the UK pays up double.
From: dianavan
Date: 29 Dec 06 - 03:14 PM

Thats a good start.

How much does Germany owe?

Subject: RE: BS: At last the UK pays up double.
From: ard mhacha
Date: 29 Dec 06 - 02:59 PM

Kendall my source was the BBC Ceefax News today, I thought it was interesting and informative, the bulletin did not say anything about inflation. I also didn`t realise that the UK Government was still paying those loans.
That special relationship is somewhat tarnished.

Subject: RE: BS: At last the UK pays up double.
From: Epona
Date: 29 Dec 06 - 08:29 AM

Oh, very lovely! And we, in turn, with flush that money away...deeper in debt we go!

E

Subject: RE: BS: At last the UK pays up double.
From: kendall
Date: 29 Dec 06 - 08:17 AM

Double the original loan? What is your source? It it adjusted for inflation?

Subject: BS: At last the UK pays up double.
From: ard mhacha
Date: 29 Dec 06 - 05:20 AM

The UK will settle its World War 2 debts to the US and Canada when it pays two final installments before the close of 2006, "This week we finally honour in full our commitment to the US and Canada for the support they gave us 60 years ago" said British Treasury Minister Ed Balls, [no, he didn`t add bollocks].

The amount paid back is nearly double that loaned in 1945-46, "When you have friends and neighbors you have something money can`t buy".