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was adamant that whatever needed to be spent on national defence would be, despite the repeated warnings of his chancellors of the exchequer Sir Kingsley Wood (up to his death in office in September 1943) and Sir John Anderson thereafter. Income tax rose from 7 shillings and 6 pence in the pound to 10 shillings, that is from 37.5 per cent to 50 per cent, and many people bought National Saving Certificates at patriotically low rates of return. Total employment in all the productive sectors of the British economy (that is, other than the armed services, health, education and so on) fell by 1.6 million during the war.56 With more than half of Britain’s industrial production devoted to arms, exports collapsed to the point where there was a negative balance of trade of £1.04 billion in 1945, against one of a manageable £387 million before the war. Although some in Whitehall recognized that a strong British economy was a powerful war weapon in itself, the sheer expense of keeping so much of the population out of productive employment and in uniform, as well as the cost of buying or producing war matériel, at a time of falling personal and corporate tax revenue, meant that Britain had to liquidate most of her financial reserves and sell almost all her foreign assets between 1939 and 1945.

By the end of the war Britain’s foreign debt had quintupled to £3.35 billion, making her the world’s most indebted nation, and had the economist John Maynard Keynes – who had predicted ‘a financial Dunkirk’ – not negotiated a $3.75 billion loan from the United States in December 1945, there was a real chance that Britain would have become technically insolvent. ‘Without the loan,’ considered the then financial editor of the Guardian Richard Fry, ‘there could have been real starvation and long delays in reconstruction (housing, power stations, railways, etc) and the political considerations might have been revolutionary.’57 Yet the Churchill ministry was willing to risk all that in order to keep Britain fighting the war to the best of her abilities. Though largely unsung compared to his other great acts of reckless courage, Churchill’s largesse with the British Treasury was nothing short of heroic.

If Britain had preserved her independence through her own efforts, other countries that had also not been invaded by Germany tried to preserve theirs by declaring their neutrality. These included Turkey (which both the Allies and Axis tried to coax into their camps), Switzerland (which had a large citizen army and easily defensible terrain), Portugal (which was generally, if not always dependably, pro-Allied), the Vatican (which was anti-Nazi, though not undiplomatically so), Eire (which had the English Channel, the RAF and the Royal Navy for protection) and Sweden (which in July 1940 gave Germany the right to move troops over her borders and guaranteed sales of her iron-ore deposits to the German armaments industry). Another was Spain, whose dictator General Francisco Franco owed Hitler much for the military support so recently given in the Spanish Civil War, but who trod a carefully neutral path, waiting to see who would win. Hitler, having met the Caudillo in nine hours of discussions at Hendaye on the Spanish border with France in October 1940 to try to persuade him to declare war against the Allies, later remarked, ‘Rather than go through that again, I would prefer to have three or four teeth taken out.’58

Churchill summed up the neutrals’ position in a radio broadcast of 20 January 1940: ‘Each one hopes that if he feeds the crocodile enough, the crocodile will eat him last. All of them hope that the storm will pass before their time comes to be devoured.’ Several neutrals complained about the characterization, but it was essentially accurate. Switzerland, despite having 450,000 men under arms and a virtually impregnable ‘national redoubt’, had declared her neutrality in March 1938. Yet the Swiss also allowed German and Italian military supply trains to pass through their country, baulking only at the passage of actual troops. They charged well