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How American economy flourished and British Majesty humbled.

History is a strange subject. It generally deals with facts but more often steers clear of the whole truth. After all it reflects consensus opinion of one generation about the events of past generation. The assertion that the history is stated to be fable narrated by victor is an exaggeration. This statement ignores the fact that political history, which is study of wars for power, often rewards losers differently and heroes of wars endure what they had not foreseen. The victories in wars become stair to future defeat.
Second world war was no different. While there have been so much written, depicted and imagined in all sort of mediums, one thought has not been explored. What would have happened if Hitler had accepted the peace proposal of Churchill and more so honoured it? And if answer was to be yes, who would have financed the war against Hitler, in that scenario? Would Germany and UK had become two super powers?To begin with, the blackberry does not have spelling of Hitler but it has of Churchill. Would it have been same? Would Blackberry be there? Would this person punching on Blackberry, about this matter would have been there or ethnically cleansed from earth? Who knows?
However as the events turned out Hitler committed a blunder which every Military Science teaches not to do: Opening more fronts than one. Hitler attacked too many countries and gracious success convinced him that he was right but end proved that he had won few battles to lose the war.
Back to original question, America which was reeling under ‘Great Depression’ and whose economy was in chaos before war, became super power after the second world war and Colonial/Imperial Majestic power Britain not only lost its glory but had to disband colonies as well. The Great Britain was reduced to United Kingdom of three ethnic territories only. (Or four, if we count falkland island)
The England was the country which suffered most damage and half of city of London was destroyed in war. This reflects the viciousness of German attack.
Disbanding the colonies was the condition at which American agreed to rescue UK. Another agreement which is not touched by historians was the price of help. The cost of every vessel which was sent to rescue UK was borne by UK and was paid in Gold.
At that time international trade was entirely in Gold. The UK won the war of sovereignty at the price of Gold which took several hundred years of plunder to accumulate. All countries lost gold in war. The USA which had to face just two attacks at the farthest corners of it’s territory, became an industrial giant with capacity to produce war machines at a pace and number, which was unprecedented. Trade in gold was nothing unusual but what happened afterward was unforeseen by the England, inspite of its astute diplomacy and shrewd politics due to obvious stubbornness.
USA had already shifted to Paper Standard in 1930, UK persisted with Gold Standard inspite of warning by its own economist John Maynard Keynes. This helped USA to tackle the effects of war more efficiently than UK, in their domestic economy.
After the war was over, the rules of economics were changed. The Gold Standard which prevailed earlier was replaced with Paper Standard. US Dollar became most popular.
I have skipped some details here but these terms in italics can be searched on Wikipedia. However who paid the price of war and effect of transition from Gold Standard is not mentioned therein.
Now the country holding largest deposit of gold had its currency treated as Gold. US dollar became officially most acceptable currency. While Paper Standard of other currency was a ‘Paper Standard’ due to vast Gold reserves, USA became a de facto Gold Standard. Job creations and industrialisation helped it’s economy further. At the same time UK, a country dependant on imports, had to let go of precious metal in circulation and also it’s slave colonies, thus putting its currency further under pressure.
After the formation of International Monetary Fund (IMF) in 1969, a new currency (though denied to be currency) for international trade was devised which was called ‘Sundry Drawing Rights’ or SDR but the sway of dollar remained unchanged.
This writing is not supposed to be an encyclopedia of events but only a reminder that some important rather crucial facts are marginalised if not entirely omitted from history.
Countries’ true state of finance is something which is never revealed to its citizens until it becomes a public knowledge. But diplomatic gestures made by a country reflect it’s financial position. A Great power of past do not agree to act as minions of a super power of present without economic necessity.
The baton was passed from Britain to USA, who shall be next? China? That part of history is still being written.

© Sandeep Bhalla

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About Sandeep Bhalla

A lawyer, thinker, author, Linux/Ubuntu power user but often an economist or gardener or philosopher or cook or photographer depending upon the current thought and environment. View all posts by Sandeep Bhalla

4 responses to “How American economy flourished and British Majesty humbled.

  • literary lew

    There was no “hurt” in the least. But I do admit that I am not as careful as reader as I should be.

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  • literary lew

    Not exactly the same American history I was taught in the 8th grade. And you failed to give note to what we now call “American Exceptionalism.” Seriously though, it is always interesting to get your perspective on things and especially on my country. When I was growing up and being educated in our public schools, there was no “perspective” issues on American history for the subject was being taught objectively. How naive. And I’m pleased to be escaping that naivity and also to know that most of our schools are teaching our children with a more mature perspective. Thanks.

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    • Sandeep Bhalla

      It is not history, it is economics except the part about Churchill which was shown in a documentary about second word war. In eight grade, the history which is taught is consensus opinion of society. Here, in India the Gold/Paper Standerd is discussed in University only as part of Economics, which I had to study for six years starting from High School. I am surprised if they teach econonomics in 8th grade in USA. We have no economics for 8th grade. It starts in 9th.
      Question is not of perspective for I am prepared to be wrong. Question is of secrecy. Wikipedia page on Gold Standard has nothing between 1935 and 1969 i.e. the transition period of Gold Standered to SDR. All books are silent. Atleast the ones I had access to. I am open to the ideas.

      As regard ‘American Exceptionalism’, all beliefs are beyond argument and you decide about that yourself. I shall tell you about ‘Glorious Hindu Exceptionalism’. When I ask about the slavery and untochability in the name of Hindu caste system, the exceptionalism seeks an exception. There is no perfect society or culture or nation. Every edifice of power is standing on the blood and corpses of innocents. Naive or not so naive both.
      I suggest that you read this article once again when sensation of hurt subsides.

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