Sterling Balances

Archive Report

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).1 At the end of 1949, they totaled £3,344 million (equivalent to $9,363 million since last year's devaluation of the pound).2 Approximately one-third of the ...

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