To view this film, you will require Adobe Flash 9
Duration 1min 3sec
Release Date 1949
Sponsor Central Office of Information for HM Treasury
Synopsis A stark warning to holiday makers not to take more than £5 in notes abroad
Text version of this film
The ‘Balance of Payments’ crisis
This film short is trying to relay the message that only five pounds in notes could be taken abroad in the late 1940s. Although the message offers little or no explanation for the restrictions it is almost certainly to avoid a 'balance of payments' crisis.
Before war broke out in 1939 Britain was saddled with debts totalling £496million, which by 1945 debt had risen to £3.5billion. Britain was in effect, an economic dependant of the United States.
With industry run down or converted to the war effort, and traditional world markets disrupted, Britain was near bankruptcy during the Second World War. In March 1941 the United States offered much needed economic support for the British to continue the fight against the Axis Powers through the Lend-Lease agreement.
Britain 'borrowed' over £5 billion worth of goods through Lend-Lease. But the extent to which the British economy had become dependent upon the American support became clear after the war.
American Lend-Lease abruptly ended within days of the unconditional surrender of Japan on 15 August 1945. The post-war negotiated loan repayments left Britain near to economic collapse less than two years later.
In the summer of 1947 Britain faced a huge balance of payments deficit. More money was flowing out of the country than flowing in. The crisis was exacerbated by a fuel shortage the previous winter that led to a 25 per cent loss of exports. Also the conditions of repayment for the wartime loans imposed by America placed further pressure on the balance of payments and the value of sterling.
The crisis proved to be a major setback for Attlee's administration, denting public confidence and forcing reductions in public spending. It also demonstrated the fragility of post-war economies throughout Europe. The subsequent introduction by the United States of Marshall Aid in 1948 assisted the rebuilding of European nations ravaged by the war with American dollars. Britain was the largest beneficiary.
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