He says that British investment was "savagely cut" in 1949, yet he only has to consult Feinstein's standard work National Income, Expenditure and Output of the UK, Table 5 to see that investment rose continuously under the Attlee government, in total rising by 45 per cent in real terms between 1946 and 1951.
Marshall Aid helped sustain this rapid pace of expansion by providing dollars. Of course, not all dollars could be spent on imported capital goods; Britain's whole industrial development had been based on specialising in producing manufactured goods, and therefore relying on imports for food and raw materials. These goods had to be continued to be imported on a large scale, if output was to be maintained and the people not to starve. But as Alec Cairncross has stressed in his standard work on this period, Years of Recovery, the striking feature of this period is the extent to which resources went into exports and investment at the expense of a very slow rise in consumption.
The fact that the tender for Marshall Aid put emphasis on the need to bolster Britain's reserves does not carry the significance Mr Barnett suggests: as Cripps told the Cabinet in October 1948, he thought this was a good negotiating tactic for prising dollars out of the Americans, as it would show Britain was "putting its own house in order".
Finally, anyone who believes that the allocation of so-called counterpart funds was economically significant should read the Economist for 2 February 1952, where it is pointed out that the fund in Britain "was never more than a technical accounting device", and that it could not and did not make an iota of difference to Britain's investment level. Marshall Aid dollars could not be spent twice.
Department of Economics