The United States and Canada granted Britain credits to settle outstanding Lend-Lease claims. The Labour Government hoped that these credits would see Britain through until more normal trading patterns were restored, but there were strings attached. By the Anglo-American financial agreement of 1945 Britain had to make sterling convertible for current transactions a year after Congress had ratified the agreement. The British Government was also required to recommend to Parliament a policy of adherence to the Bretton Woods agreement of 1944, which was to maintain stable exchange rates.
             It was not clear how the sterling-dollar rate could be maintained once sterling was convertible, unless world trade was such that demand for dollars did not lead to a greater conversion of sterling into dollars that Britain's meagre gold and dollar reserves could withstand. Article 9 of the Anglo-American financial agreement prevented Britain from reducing demand for dollars by using tariffs or quotas to discriminate against American imports. A reduction in dollar expenditure, therefore, would require a reduction in all imports. (Van Dormael 1978, ch.20) Wartime controls over imports were retained but, beyond a certain point, public opinion would not accept a reduction in living standards.
             Postwar inflation in the United States reduced the real value of the American credit by about a quarter by the time Britain was due to make sterling available in July 1947. Moreover the terms of trade turned against Britain, that is the price of its imports rose more rapidly than the price of its exports. Since the Government was reluctant to reduce imports, the dollar credits were used up more quickly than expected. Convertibility gave other countries a chance to exchange sterling for scarce dollars, and had quickly to be abandoned. The dollar crisis of 1947 forced the Government to cut imports, including food, to the minimum believed to be consistent...