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A ‘blank cheque'? Portuguese Second World War sterling balances, 1940–73

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  • Marcelo Paiva Abreu

Abstract

type="main"> The British effort in the Second World War required massive external financing which depended on Lend-Lease and the accumulation of sterling balances. Indebtedness in sterling balances corresponded to almost 38 per cent of this total at the end of the war. Portuguese sterling balances, although a small share of the total, were important because of pre-emptive purchases, especially of wolfram, and because of the ‘gold clause’ which was to be applied to outstanding balances. Portugal's willingness to finance British purchases contrasts with the requirement of German payments in goods or cash for their purchases in Portugal. The settlement of Portuguese sterling balances in August 1945 was singular as it preceded the Anglo-American settlement of December 1945 which had important consequences for sterling balance holders, as the US insisted that the US$3.75 billion loan should not be used to settle British war debts. Postwar settlement of British debt through a long-term loan from Portugal to Britain contrasts with settlements that involved the sale of British assets. Salazar's concerns about the postwar international position of Portugal, the Portuguese Empire, and the survival of the Portuguese regime are relevant in explaining his pro-British stance during and after the war.

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  • Marcelo Paiva Abreu, 2014. "A ‘blank cheque'? Portuguese Second World War sterling balances, 1940–73," Economic History Review, Economic History Society, vol. 67(2), pages 535-555, May.
    • Handle: RePEc:bla:ehsrev:v:67:y:2014:i:2:p:535-555
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    File URL: http://hdl.handle.net/10.1111/1468-0289.12020
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    References listed on IDEAS

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    1. Marcelo De Paiva Abreu, 1990. "Brazil as a creditor: sterling balances, 1940-1952," Economic History Review, Economic History Society, vol. 43(3), pages 450-469, August.
    2. Caruana, Leonard & Rockoff, Hugh, 2003. "A Wolfram in Sheep's Clothing: Economic Warfare in Spain, 1940–1944," The Journal of Economic History, Cambridge University Press, vol. 63(1), pages 100-126, March.
    3. Giorgio Fodor, 1999. "The nationalisation of the British Railways in Uruguay," Department of Economics Working Papers 9904, Department of Economics, University of Trento, Italia.
    4. Schenk,Catherine R., 2013. "The Decline of Sterling," Cambridge Books, Cambridge University Press, number 9781107612990, October.
    5. Fforde,John, 1992. "The Bank of England and Public Policy, 1941–1958," Cambridge Books, Cambridge University Press, number 9780521391399, October.
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    1. Luciano Amaral, 2018. "A monetary plethora and what to do with it: the Bank of Portugal during the Second World War and the postwar period (1931–60)," Economic History Review, Economic History Society, vol. 71(3), pages 795-822, August.

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