The American loan forced sterling convertibility that Britain had to suspend within weeks.

Evidence

And underlying all these problems was the fact that the clock was ticking on the American loan negotiated by Keynes, which had provided Britain with the dollars to continue its international trade following the abrupt cessation of Lend Lease one week after Japan surrendered. Parliament accepted the terms of the fifty-year loan in December 1946, obliging the British government to return sterling to convertibility within two years. This was duly done on July 15, 1947, and then suspended once more on August 21, 1947 because most of the loan had by that time been expended defending sterling’s parity. — Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pèlerin, 410

Categorization

• XREF: The Keynes loan and 1947 convertibility crisis is the canonical backdrop for why British Keynesians lost credibility and liberals argued for freeing trade as an alternative.