Sterling Balances

May 24, 1950

Report Outline
World Problem of British Indebtedness
Sterling Debts and the British Economy
Efforts to Reduce Pressure of Balances
Special Focus

World Problem of British Indebtedness

British suggestions that counterpart reductions of sterling credits held by countries of South and Southeast Asia be tied in with American aid to those countries in resisting Communist aggression have drawn world attention to the stubborn postwar problem of Britain's overseas indebtedness.

Because Great Britain was unable during the war to earn enough from exports to pay for heavy purchases of war materials in foreign countries, sterling balances in London grew rapidly during the war years. On June 30, 1945, six weeks before the end of hostilities, the balances stood at £3,287 million (equivalent to $13,247 million). At the end of 1949, they totaled £3,344 million (equivalent to $9,363 million since last year's devaluation of the pound). Approximately one-third of the outstanding sterling balances are believed to be “blocked” against current use by formal arrangements between Great Britain and creditor nations. An additional third of the balances is held under informal understandings which amount to voluntary blocking of the accounts.

British and American officials deny that any formal proposals for American aid in dealing with the sterling balances have been made to Washington. The London Economist (Apr. 29) characterized the suggestion contained in a memorandum submitted to the State Department in mid-April as merely “another exercise”—“an attempt to relate the problem of the sterling balances to the gradual tapering off of Marshall aid and to President Truman's Point IV programme.”

ISSUE TRACKER for Related Reports
United Kingdom
Nov. 05, 2010  U.S.-British Relations
Jan. 30, 1998  U.S.-British Relations
Mar. 08, 1996  The British Monarchy
Sep. 15, 1995  Northern Ireland Cease-Fire
Nov. 17, 1978  New Prospects for Britain
Apr. 08, 1977  Britain: Debtor Nation
Sep. 26, 1975  Britain in Crisis
Jun. 10, 1970  British Election, 1970
Oct. 30, 1968  British Economy Since Devaluation
Sep. 27, 1967  Britain in the 1960s: Descent from Power
Sep. 10, 1964  British Election, 1964
Jun. 24, 1964  British Commonwealth in the Postwar World
Aug. 09, 1961  Socialized Medicine in Great Britain
Jul. 19, 1961  Britain, the United States and the Common Market
Sep. 16, 1959  British General Election
Mar. 13, 1957  American-British Relations
May 10, 1954  Political Trends in Britain
Sep. 13, 1951  British Social Services
May 24, 1950  Sterling Balances
Feb. 08, 1950  British Election, 1950
Jan. 12, 1949  British National Health Service
Mar. 28, 1946  Sterling Area and the British Loan
Jul. 14, 1945  British Export Trade
Jun. 22, 1945  British Election
Jan. 01, 1943  Food Rationing in Great Britain
Apr. 19, 1941  Convoys for Britain
Jan. 02, 1941  Financing Britain's War Requirements
Aug. 26, 1938  Anglo-American Relations
Apr. 28, 1938  Economic Recovery in Great Britain
May 12, 1937  Britain's Intra-Imperial Relations
Sep. 09, 1931  Unemployment Insurance in Great Britain
Aug. 09, 1930  The Protectionist Movement in Great Britain
Sep. 10, 1929  The British Task in Palestine
May 06, 1929  The British General Election of 1929
Jun. 12, 1926  The British Trade and Financial Situation
May 07, 1926  Background of the British Labor Crisis
Oct. 17, 1924  British Electoral System and Political Issues
Feb. 29, 1924  British and French Finances
Jan. 14, 1924  The British Labour Party
BROWSE RELATED TOPICS:
Currency
International Finance
Regional Political Affairs: Europe