Financial History Issue 112 (Winter 2015) | Page 27
Library of Congress
By Nicholas Wapshott
Who paid for the war to defeat Hitler
and the Axis powers? The short answer
is the United States. The intervention
of the financial and industrial might of
America after Pearl Harbor in December
1941 ensured that it was only a matter of
time before Nazism, Italian fascism and
the military junta that ruled Japan would
be routed.
But the surprise attack on the US Pacific
fleet came more than two years after World
War II had started, in September 1939.
Until Congress declared war on Japan and
Hitler declared war on the United States
in the dying days of 1941, the war against
the Axis was overwhelmingly paid for by
the European Allies. And after the fall of
France in 1940, Britain (and for a short
time Greece) fought fascism alone — with
minimal help from America.
Until Pearl Harbor, a large proportion
of Americans were isolationist, believing
in the dictum laid down by Presidents
Washington and Jefferson that the US
should “avoid foreign entanglements.”
Wall Street had largely funded World War
I, through loans to Britain, who borrowed
on behalf of France and Italy, and by
the mid-1930s, when Japan invaded Manchuria, Italy invaded Abyssinia (today’s
Ethiopia) and Germany started its long
march through Austria, the Sudetenland,
Czechoslovakia, then Poland, much of the
debt remained unpaid.
The Johnson Act of 1934 forbade sales
of arms to countries who owed money
to the United States and that, along with
a succession of Neutrality Acts intended
to keep America out of European affairs,
made it difficult for President Franklin
Roosevelt to help the western Allies. (Providing military help to the Soviet Union
was an even more difficult problem, even
before the Hitler-Stalin pact that bought
the Russians time to rearm.)
There was a break for Britain when
Congress allowed limited military aid to
be sold on a cash-and-carry basis, so long
as it was collected in British ships. But
otherwise Britain and its empire — which
Wreckage of the USS Arizona in Pearl Harbor,
December 7, 1941.
then included Australia, New Zealand,
Canada, India, South Africa and many
other colonial nations — were left to fend
for themselves. Roosevelt may not have
agreed with the Neutrality Acts and spent
a great deal of political capital trying to
have them rescinded, but he was well
aware that the gradual impoverishment of
Britain suited his larger purposes.
A devotee of Woodrow Wilson’s ambition to have the United States become the
leading nation of the world, a supporter of
the idea of world government through the
League of Nations and a believer in Wilson’s notions of self determination for all
nations, Roosevelt was an anti-imperialist
who wished to bring a swift end to the
British Empire. World War II offered him
that opportunity.
Recent joint biographies of Roosevelt and
the wartime British prime minister Winston Churchill have stressed what the two
men had in common — a love of AngloSaxon culture, a sense of noblesse oblige and
a fondness for alcohol — rather than what
divided them. But FDR was a progressive liberal Democrat and Churchill an unashamed
imperialistic Tory. And no issue illustrated
the sharp difference between them more
than whether the British Empire should
survive into the post-war world. Churchill
saw the Empire as a dignified, patrician and
benevolent institution; Roosevelt thought it
exploitative, unfair and unkind.
Roosevelt felt that once fascism was
defeated, the United States should proudly
assume the responsibilities of the richest,
most powerful nation in the world and
that the Pax Britannica should give way
to a new Pax Americana. The war gave
the President the chance to seal the fate
of the wobbling British Empire, which
held by force of arms much of the Middle
East, Africa and India. The legitimacy
of the Empire was already being tested
by freedom movements, particularly in
India. So long as the isolationists insisted
Britain should not be helped in its fight
against Hitler, Roosevelt was able to press
Churchill for the speedy liquidation of
British assets.
But it was with mixed feelings that
Roosevelt presided over the impoverishment of Britain. If too little financial and
military help were provided to Britain, the
United States would be left to fight the Axis
nations alone. By the end of 1939, British gold and dollar reserves stood at $545
million ($9.2 billion in today’s dollars)
and were diminishing at the rate of $200
million ($3.4 billion) a year. Since Britain
declared war against Germany in September 1939, Britain had spent $4.5 bil [ۂ