Transcript Limited Liability War

Canadian Exports for British Pounds
Canada converts surplus with UK to
buy American Exports
“It is for all of us on this continent
to do our part to save its
privileged position by helping
others.”
“Limited Liability War”
•Canadian government hoped
to use this to stimulate
Canadian economy
•1 division of Infantry and
spending most of effort on
air
• December 1939- BCATP
• 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 much
longer.
Canada needed to ensure her security and with the UK near
collapse, the only option left was the United States
“The old fear that cooperation with the United States would
tend to weaken Canada’s ties with Great Britain has almost
entirely disappeared. Instead, Canada believes that such
cooperation would tend to bring Britain and the United
States 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- Permanent Joint Board of Defence Summer 1940
• 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
Defence Pact
“I am deeply interested in the
arrangements you are making
for Canada and America’s mutual
defence. Here again there may
be two opinions on some of the
points mentioned. Supposing Mr.
Hitler cannot invade us and his
Air Force begins to blench under
the strain all these transactions
will 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
*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
*Balance
of Payments
* 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 much
as Canada is buying from the USjust balance the accounts?”
“In so far as Canadian defence purchases in the United
States consist of component parts to be used in
equipment and munitions which Canada is producing
for Great Britain, it was also agreed that Great Britain
will obtain these parts under the Lend-Lease Act and
forward them to Canada for inclusion in the finished
articles.”
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 the
United States. It involves nothing
less than a common plan for the
economic defence of the Western
hemisphere.”
*Historical
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:
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 autonomous
dominion but is government had still acted in a
semi-colonial fashion. By the end of the war the
nation had begun to transform itself into a middle
power and the leader defining just what the term
would come to mean. The test would be to convert this
new status into a proper place in the United Nations and
in the postwar world.”
Granatstein & Hillmer