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Canadian Review of American Studies/Revue amadienne d'ettuks mnerrcai11es Volume 26, Number 1, Winter 1996, pp. 79-110 Justice Denied: The Anglo-American Loan Negotiations of 1945 Hector Mackenzie 79 In the flurry of recent commemorations of the momentous events of fifty years ago, there is one anniversary which may have been overlooked. From September to December 1945, British and American representatives met in Washington to negotiate what was regarded as the crucial financial instrument to reconstruct international trade. Later developments would demonstrate that the unprecedented American loan to Britain would not suffice and that first attempt would be eclipsed by the more comprehensive, more generous, and more imaginative assistance provided under the Marshall Plan. With the advantage of hindsight and the contrast afforded by the later scheme 1 the agreement signed on 6 December 1945, has acquired the taints of inadequacy and even unfairness. Accordingly, the negotiations have been studied from various perspectives, but usually with some sense of assigning blame or explaining failure. Most contemporary commentators, memoirists, biographers, popularists, and scholars have viewed developments through this prism. The need to understand this subject in its historical context has often given way to a form of moral tale, with a predictable plot, an unhappy ending, and a familiar cast of heroes, villains, wizards and fools-though the various authors do not always agree on who played what part. This propensity is most evident in surveys of British and American foreign policy, Anglo-American relations or 80 Canadian Review of Amencan Smd1es Revue canadiemie d'etudes americames international affairs in the early years of the Cold War. But it also affects the more careful and thoughtful examinations of the subject by diplomatic and economic historians. Most of the latter accounts represent attempts to understand postwar British external economic policy, with comparatively less attention to American views. Though the published documentary record of the discussions is now remarkably complete 1 there is still a tendency to employ it and associated sources to confirm or contradict familiar arguments. 1 One question or theme which pervades the documentation and subsequent interpretations is whether Britain was treated ungenerously or, worse still, unjustly by the United States. The application to a financial measure between nations of a standard of moral assessment may not be as unusual now as it would have been in 1945, but even from today's perspective the determination to judge the loan and associated agreements in this way is pronounced. Part of the explanation for that bent may be found in the context in which plans were made: Britain's need for financial help and its attempt to justify munificent treatment by the United States both developed during the Second World War. From its ally in an honourable cause1 which was also its most important creditor, the United Kingdom expected exceptional aid after the war. So many of the pronouncements and schemes for the postwar period employed the language of the high ideals and worthy purposes of noble victors that some echo of that lofty rhetoric may have been unavoidable. What was less inevitable was the extent to which British preparations relied on such a variable and volatile concept as justice. After all1 to depict a favourable outcome for British interests as just would imply that other solutions or analyses were mistaken or unjust. Moreover, it would be difficult to avoid an inference that what the British proposed was a remedial measure to correct a past injustice by the United States. In this study, the emphasis will be on how the distinct interpretations of the legacy of the wartime alliance and the different understandings of 'justice' affected the Anglo-American economic negotiations of 1945. The individual most responsible for the elaboration of Britain's plea for 'justice' had earlier cautioned about the pitfalls of such a strategy. In midDecember 1944, that extraordinary adviser in the British Treasury, Lord Keynes, looked forward, with some trepidation, to difficult negotiations for Hector MackenzieI 81 American assistance in the transition from war to peace-known to wartime planners as 'Stage III' ('Phase III' in American usage). During the Second World War, Britain had abandoned financial caution in the quest for victory. "lam not sure...


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