The Deluge: The Great War, America and the Remaking of the Global Order, 1916-1931

by Adam Tooze

McAdoo proposed that no funds from congressionally approved Liberty Loans should be used to support either sterling or the franc. Nor should London be permitted to use such funds to repay overdrafts that it had contracted with J. P. Morgan during Wilson’s credit freeze over the winter of 1916–17. This put London under terrible pressure. First at the end of June, and then again at the end of July 1917, Britain came within hours of default.36 The near panic this caused in London and on Wall Street was enough to convince the Wilson administration that even if the dollar was to replace sterling in the long run, in the short term defending sterling was the cheapest way to prop up the Entente war effort.