Britain and the making of the Post-War World
foothold throughout Europe (Sargent did concede that this would require the ‘whole-hearted cooperation’ of the US.) He concluded, somewhat paradoxically, that Britain must not be afraid of having a policy independent of the US and USSR, based on British fundamental traditions, opposed to totalitarianism of Right or Left. It should refuse to be bullied. Sargent’s thesis should not be dismissed as the judgement of a mandarin class living in the past. His assumptions were shared generally in Whitehall by ministers, officials and the military alike. This applied just as much to the Labour government in office from 26 July 1945 as to that led by Churchill since 1940, whether as leader of a coalition or a Conservative administration. Attlee and Bevin, with other Labour ministers, had served in the wartime Cabinet and had been involved in post-hostilities planning since 1943. They were well aware of the geopolitical realities. Their understanding of the importance of remaining close to the US, and suspicion of Soviet intentions in Europe were no less than that of their Conservative former colleagues. They, too, were convinced that Britain remained a great Power (albeit an impoverished one) with the right to influence political developments in areas where it considered itself to have strong and important interests—such as the Middle East. They too believed in the centrality of Britain’s relations with its Dominions and the wider Commonwealth, albeit with a commitment to the transfer of power to India and a willingness to discuss independence for other territories. The Attlee government were, however, well aware of the threats posed to this vision of Britain’s place in the world—not to mention their ambitious domestic reform programme—by bankruptcy, Anglo-American tensions and Soviet intransigence. The financial position at the end of the war in Europe was indeed perilous: in March 1945, the distinguished economist and Treasury adviser Lord Keynes had summarised the situation in a memorandum entitled ‘Overseas Financial Arrangements in Stage III’.4 Keynes 4
According to the arrangements set out in the Lend-Lease Act of 11 March 1941 and Mutual Aid Agreement of 23 February 1942, providing for financial aid to Britain from the US and Canada during the war, Stage III was the period of military and economic demobilisation that would follow the defeat of Japan and the restoration of a peacetime economy. 5