It was Gloom Week in Britain. The Labor Government got around to telling the people some of the hard facts of their economic life. On the eve of Parliament's reassembly it issued a White Paper, chocked with black news. Britain's position was "extremely serious." The U.S. and Canadian loans "only give us a short breathing space." The country was "still running into debt Abroad." In 1946 its imports exceeded exports by $1,312,000,000. Its manpower shortage was grave: 500,000 to 700,000 more workers were needed in export industries if the trade balance was to be attained.
What would save Britain from the threats of inflation and bankruptcy? The White Paper offered one familiar generality: increased production. But there was a new note in the White Paper's theme. Increased production would have to be achieved without increasing costs, i.e., wages.
Down: Meat & Beer. All week long Britons were bombarded by bad news, dark predictions and more austerity. The Government served notice of a cut in fresh meat rations, and warned that bread and bacon rations might be cut. Mrs. Rose Wood of Arrington, Cheshire, sent Food Minister John Strachey two ounces of bacon and an ounce of cooking fat with a sizzling note suggesting that he "take this back and export it with the other things."
Added Mrs. Wood: "Why don't you export yourself with it?" The pubs got word of a cut in beer deliveries, perhaps by as much as 50%, because breweries were hard hit by conservation cuts in coal allocations. So were thousands of homes, Stores, offices, factories. (There was one chirpy note. London's Tribune whistled: "Now let's be reasonable. This wide-eyed enthusiasm for bad news can be overdone".)
Neither the White Paper nor any other British announcement reported the gloomiest fact of all: the rate at which Britain is using up her medicine, the U.S. and Canadian loans. The $3,750,000,000 U.S. loan is being spent at the rate of $120,000,000 a month; at that pace it will not last beyond 1948. The $1,250,000,000 Canadian credit is being spent at the rate of $50,000,000 a month; at that pace it will be exhausted by March 1948. (The rate of expenditure was not specified in the loan agreements, but, unofficially, British spokesmen said a year ago that the U.S. loan might last until 1951.) Lord Woolton, chairman of the Conservative Party, bluntly told a London audience that he could now see "no chance" of Britain's repaying the U.S. loan.
Have the dollars been wisely spent? British insiders sadly recalled the wrath of Lord Keynes when he returned from negotiating the Washington loan and learned of commitments Britain had made. These included exchange arrangements with France, Belgium and Denmark, credits to Greece, help for the British zone in Germany. Keynes stormed that these were "Foreign Office frivolities," which would fritter away too many dollars. He scolded: "The Foreign Office must learn that we have become a poor nation and must cut our foreign policy accordingly. It is useless to have grandiose ideas that we cannot afford to put into operation . . . and our first duty to ourselves and to the world is to safeguard our solvency." They were his last words of advice; he died soon after.