Britain entered the war with roughly $4.5 billion in gold, dollar balances, and investments, then raised about another $2 billion through sales, gold exports, and other sources. By December 1940 it had spent about $6 billion, leaving only $500 million uncommitted after existing orders. Cash-and-carry therefore forced Britain to slow new purchasing even while its military needs grew. Conventional loans risked repeating the damaging First World War debt settlement and its postwar political consequences. Roosevelt's fire-hose analogy instead presented Lend-Lease as temporary use of American equipment for the defense of the United States, with return or compensation handled later.
Chapter · 16:02-18:29
Britain's dollar crisis drives a new aid system
Britain's rapid exhaustion of dollar reserves made cash-and-carry untenable and revived fears of another postwar debt crisis.