Delicate Discussions

To U.S. Senator Claude Pepper, postwar economics were as simple as WPA. He blew into Moscow, had a 45-minute talk with Stalin, then called in the press.

"Boys," said he, "I can't tell you what Stalin talked about. Before I left Washington I learned Russia would like a $6-billion credit from the United States. Now I understand Russia is prepared to become a good customer of the United States. Now, I believe Russia wants that credit to help reconstruct war damage and build up the living standard of the Russian people, and not for the purpose of further development of military power. Everything I've seen and everything that's been said to me strengthens that impression. Boys, I'm in favor of the United States furnishing Russia with the credit."

Without Charity. From Washington, the whole question of U.S. postwar loans looked considerably more complex.

The British position in the Washington loan negotiations was delicate; for a people less self-assured it would have been impossible. The British knew that they could not recover without a U.S. loan; that they could not pay normal interest. (A default would compromise the essential U.S.British political alliance.) On the other hand, Britain would never ask for charity.

What Britain sought, as a matter of right, was credit on charitably generous terms.

The Case. To establish the right, British negotiators in Washington produced figures on Britain's contribution to the war. Making ample allowances for the difference in U.S. and British resources and population, the British claimed that, proportionately, their losses in killed and missing were 3 1/2 times those of the U.S.; wartime deterioration of their capital plant was two or three times as great; their sales of foreign securities (to pay for war imports) were 35 times greater than those of the U.S.

Knowing that some Americans would find these comparisons beside the point, British Ambassador Lord Halifax took another line. He said that Britain's 47 million people could not live unless they exported to pay for imports and they could not export in prewar quantities unless the U.S. lent them money for ships and machines. Without a loan, Britain would struggle along as best she could, trading within her own sterling area. Result: U.S. and world trade would suffer.

U.S. Administration opinion tended to favor the sort of loan Britain needed. But Britain's famed economist, Lord Keynes, and his fellow negotiators had many a hurdle to jump. One danger was that the British would antagonize U.S. public and Congressional opinion, as they had in the war-debts discussions of the 19203, by overselling a basically sound case.

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