Debt Of Honour

Britain is about to pay off the last of its loans from the United States for World War II, according to the BBC:

On 31 December, the UK will make a payment of about $83m (£45.5m) to the US and so discharge the last of its loans from World War II from its transatlantic ally.

It is hard from a modern viewpoint to appreciate the astronomical costs and economic damage caused by this conflict. In 1945, Britain badly needed money to pay for reconstruction and also to import food for a nation worn down after years of rationing.

"In a nutshell, everything we got from America in World War II was free," says economic historian Professor Mark Harrison, of Warwick University.

"The loan was really to help Britain through the consequences of post-war adjustment, rather than the war itself. This position was different from World War I, where money was lent for the war effort itself."

The loan was part-driven by the Americans' termination of the Lend-Lease scheme. Under the programme, the US had effectively donated equipment for the war effort, but anything left over in Britain at the end of hostilities and still needed would have to be paid for.

But the price would please a bargain hunter - the US only wanted one-tenth of the production cost of the equipment and would lend the money to pay for it.

As a result, the UK took a loan for $586m (about £145m at 1945 exchange rates), and a further $3,750m line of credit (about £930m at 1945 exchange rates). The loan was to be paid off in 50 annual repayments starting in 1950, although there were six years when payment was deferred because of economic or political crises.

National debts can be paid off. Eventually. If Alberta and Britain can do it, so can Canada.