Financial History Issue 112 (Winter 2015) | Page 28
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of money there.” The same day, Roosevelt
told the US ambassador in London, Joe
Kennedy, the same. “I’ve gone over their
financial position and they’re all right for
quite a while,” he said. “They’ve got plenty
in the [sic] South [Africa] and holdings all
over the world.”
Three days later, Sir Frederick Phillips, a British Treasury official, returned
to Washington to resume negotiations
that had been going on with Morgenthau
for some months to establish “a factual
basis of British financial resources and
war supply expenditures.” Phillips was
working to a brief written by the British
economics genius John Maynard Keynes,
who had instructed Phillips that Britain
would not “accept the dishonor and the
reproaches of default whilst allowing to
the US all the consequent conveniences
to their trade.” If Britain were deliberately
beggared, Keynes foresaw “revolutionary changes in the commercial relations”
between the two countries that would
involve the closure of British and Empire
markets to American exporters as soon as
the war was won. “America must not be
allowed to pick out the eyes of the British
Empire,” Keynes wrote.
It soon became clear in London that
it would have been better if the silvertongued Keynes, rather than the lackluster
Phillips, had argued the British case. Morgenthau put pressure on Phillips to immediately liquidate valuable national assets,
such as British ownership of South American railroads, and tin mines and rubber
plantations in Malaya. At one point Roosevelt asked Phillips straight out, “How
about selling some of those securities you
have in Argentina?”
Morgenthau wanted to get American
hands on important British-owned companies in America, such as Shell Oil, Lever
Brothers and Brown & Williams Tobacco.
At the insistence of Morgenthau, Courtaulds, the giant plastics and chemicals
company, was sold in 1941 to American
buyers at a fraction of what it was worth.
Britain had had its pockets picked.
That was not all. Roosevelt and Morgenthau pressed their advantage, insisting
that a US warship be sent to Cape Town
to pick up $50 billion ($848 billion in 2014
dollars) in British gold holdings. Picking
over their financial bones was humiliating
to the British, and one government minister complained “that the Americans’ love
of doing good business may lead them to
President Franklin D. Roosevelt (supported by his son, James) and British Prime Minister
Winston Churchill at the Atlantic Conference in August 1941, where they delineated the common
goals of America and Britain in seeking a lasting peace that would end conflict in Europe.
denude us of all our realizable resources
before they show any inclination to be
the Good Samaritan.” Churchill drafted
an anguished letter to Roosevelt saying
the American gold grab “would wear the
aspect of a sheriff collecting the last assets
of a helpless debtor.” For fear of offending
the President, the note was never sent.
This mercenary approach by America
to its lone anti-fascist ally was kept a secret
at the time and has only rarely been articulated and enumerated by post-war historians. For Churchill, it was shaming that
Britain should be reduced to a supplicant,
and it was a personal disappointment to
26 FINANCIAL HISTORY | Winter 2015 | www.MoAF.org
him that Roosevelt should press his financial advantage at a time when the British
stood alone against a wicked ideology
intent on world domination; for Roosevelt
it, too, was something of an embarrassment, but one he was prepared to endure
if he was to place America at the top of the
new post-war world order.
As 1941 progressed, Roosevelt ran out
of British assets to take. And from that
moment the President came face to face
for the first time with the burdens of
empire. In a memorandum to Secretary of
State Cordell Hull, FDR explored whether
America should dema