Canadian Exports for British Pounds

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Canada converts surplus with UK to buy American Exports

“It is for all of us on this continentto do our part to save its privileged position by helpingothers.”

• December 1939- BCATP

““Limited Liability War”Limited Liability War”

•Canadian government hoped to use this to stimulateCanadian economy•1 division of Infantry and spending most of effort on air

• France had a six million man army, but the Nazi lightening war quickly crippled them starting May 10, 1940

• Took only 10 days for Nazi troops to reach Paris (May 20)

• British troops had scrambled to cross the English Channel to help France, but were forced to retreat because of the Nazi blitzkrieg

Dunkirk! • Thousands of British vessels (row boats, barges, ferries, fishing boats, warships) rushed to Dunkirk on the French coast to evacuate 300 000 British troops across the Channel

• Took five days, and all the French troops were left to surrender to the Nazis

• Britain was now the only power in Europe standing against the Axis

Battle of Britain•Hitler decided to bomb Britain into submission so a ground invasion would be easier•The BCATP had helped train competent air personnel, so the Luftwaffe were outmatched•Many were concerned about the fate of Britain

“If Britain and France go down…”

Possible German Victory?

Summer of 1940, few believed Britain could survive muchlonger.

Canada needed to ensure her security and with the UK nearcollapse, the only option left was the United States

“The old fear that cooperation with the United States wouldtend to weaken Canada’s ties with Great Britain has almostentirely disappeared. Instead, Canada believes that suchcooperation would tend to bring Britain and the UnitedStates closer together, rather than to force Britain and Canada apart.”1

[1] Pierrepont Moffat to Sumner Welles, Ottawa, August 14 1940, Foreign Relations of the United States (FRUS)., 1940, 3: 144

PJBD-PJBD- Permanent Joint Board of Defence Summer 1940

Defence PactDefence Pact

• King recognized Canada’s dependence on the U.S for its defence

• President Roosevelt feared Canada’s combatant role in the conflict made the whole North American Continent vulnerable to attack

“I am deeply interested in thearrangements you are makingfor Canada and America’s mutualdefence. Here again there maybe two opinions on some of the points mentioned. Supposing Mr.Hitler cannot invade us and hisAir Force begins to blench underthe strain all these transactionswill be judged in a mood different to that prevailing while the issue still hangs in the balance.”

•Churchill feels that Canada has abandoned Britain in her time of need by “fleeing” to the USA for protection•Canada thought they would be in a better position to help Great Britain with American military help

*Balance of Balance of PaymentsPayments

*Canada in financial peril!*Since the UK had made the pound inconvertible

Canada had a room full of British money that they couldn’t spend!

*Moreover, Canada continued to make purchases in the U.S to finance its war time obligations to Great Britain, using up all of its U.S. Dollar reserve

*Bottom Line: Canada was going bankrupt to make war time materials for Great Britain

*In 1941, the U.S. Congress empowered the President to order the manufacture of defense material for friendly governments

*In March 1941, a Lend Lease agreement was concluded between the United States and Great Britain

* Initially the $7 billion made available for the purchase of equipment and supplies in the United States excluded Canada

*Why would Great Britain make purchases in Canada when they could get the goods from the U.S without paying?

“Why not buy from Canada as muchas Canada is buying from the US-just balance the accounts?”

“In so far as Canadian defence purchases in the UnitedStates consist of component parts to be used inequipment and munitions which Canada is producingfor Great Britain, it was also agreed that Great Britainwill obtain these parts under the Lend-Lease Act andforward them to Canada for inclusion in the finishedarticles.”

In English please?In English please?

• The Americans would increase purchases in Canada and would charge many of the components bought by Canada in the United States to the British account, thereby easing the balance of payment difficulties

“Hyde Park declaration will have a permanent significance in the relations between Canada and theUnited States. It involves nothingless than a common plan for the economic defence of the Westernhemisphere.”

*Historical Historical Significance?Significance?

*Valuable wartime arrangements as they were, Ogdensburg (PJBD) and Hyde Park symbolized an intimate Canadian-American relationship that was becoming a dominant fact of life for Canada in peacetime as well.

End of War Totals:End of War Totals:

1. Billion Dollar Gift in 1942

2. $2,043 billion in Mutual Aid

3. Forgiveness of $425 million from BCATP

“Canada has entered the war as an autonomousdominion but is government had still acted in a semi-colonial fashion. By the end of the war thenation had begun to transform itself into a middlepower and the leader defining just what the termwould come to mean. The test would be to convert this new status into a proper place in the United Nations andin the postwar world.”

Granatstein & Hillmer