To understand correct history of India's independence and partition, it is necessary to know Britain's economic position after WW II. Churchill had said, "We are not fighting this war (and spending money) to lose our Empire". Till the war end British politicians did not understand that though empire was necessary for the British, they had no power left to rule it. Colonial secretary, Cranebourne (the grandson of Lord Salisbury), in 1942 believed that "British Empire is not dead, it is not dying, it is not even going into decline." On April 4, 1945 at the meeting of Commonwealth conference, he scoffed at the idea of end of British Empire. By 1945 end, the picture changed dramatically. Atlee was to tell Chief Minister Dr. Roy, that the British were in a hurry to quit as they had found that the Indian army was no more loyal to the British.

It is also necessary to know American foreign policy, as they wanted world hegemony replacing colonial empires of Europeans and Japanese. In 1920, writer Ludwell Denby wrote, "The US was Britain's colony once. Now, Britain would be a colony of the US. What chance Britain has got against America? Or what chance has the world?" Even till War end, British did not understand the full economic and military weakness of Britain and wanted their Empire to continue. It took 20 years for Britain to understand its weakness to have an empire.

Britain's gold and dollar reserves, which had exceeded $4 billion in 1938, had fallen to $1 billion by September 1940. By nationalizing the private overseas investment holdings of its citizens and offering these for sale abroad, England created $4.5 billion for war. It spent $3.6 billion to purchase arms from the U.S.A. during the following two years. Even these were insufficient to meet its war needs. When the U.S. Congress signed the Lend-lease Act into law on March 11, 1941, England was left with only $12 million in uncommitted reserves. The Act covered a period of two years. The Act had clauses of elimination of all forms of discriminatory treatment in international commerce and reduction of tariff and other trade barriers. England began to get supplies for its war needs under Lend Lease. Due to repayment clause brought in by the U.S. Congress in 1943 at the time of renewal, Lend-Lease was to become a means by which the U.S. might gain control of the British Empire's most economically productive assets, its raw material resources.

The U.S. deliberately kept the wartime reserves of Britain at lower level. For, the lower the level at which British war time reserves were kept, the greater would be British dependence on American post-war assistance. The greater that dependence, the greater would be the chances of gaining acceptance of American views on multilateral trade.
After Japanese surrender, Britain owed $20 billion to the U.S. on account of Lend-Lease and $180 million for Lend-Lease in the pipeline. British foreign investment of $4.5 billion were gone; on the other hand Britain owed $14 billion worth blocked sterling balances in London. These debts represented the sterling area's receipts from the export to England of raw materials and foodstuffs. They also represented the British troops support costs of armies in Egypt and India, and the cost of financing Indian Army in its campaign on foreign soil. England had become a war debtor.

England's financial position was precarious at war end. She stood at the doorstep of financial insolvency. Her exports had fallen to less than one third from pre-war level. Half of her merchant shipping was sunk. Her gold reserves were down to mere $12 million in 1945. Britain was financially exhausted and on the verge of a violent revolution by the working class suffering under privations.

Prime Minister Atlee had to run to Washington for help. A financial agreement was signed on December 6, 1945. Under the terms of the agreement the U.S. extended a loan of $4.4 billion. England was compelled, under the Lend-Lease agreements and the December post-war agreement to fracture imperial preference and to open all markets to U.S. competition. The post war agreement required Britain not to increase imperial preference and, in some cases, even to eliminate them.

In December 1946, Wavell went to England. On December 5, Wavell and Cabinet discussed the effect on worldwide British Empire's position in Middle East of Britain's withdrawal from India. They found that Pakistan (which would be under British influence) was necessary. On December 25, Wavell met Bevin and Alexander and made a note in his diary, "Labor Cabinet members were also imperialists and hated the idea of leaving India."
It is an interesting question as to what would have happened, if the British did not quit as wanted by Churchill. The answer requires knowledge of two basic facts. (No. 1) After the war, nationalism emerged as the strongest force in the world. This was not anticipated by American and European leaders e.g. Churchill, Roosevelt, Stalin. The second strongest force was communism, which was sweeping over Europe and Asia. (No. 2) 87% of capital of companies operating in India was British.

Had the British refused to quit, there would have been armed revolt, and extensive damage to property and loss of lives - both British and Indian - would have resulted. England was already financially bankrupt and on the verge of revolution, like other countries of Europe. The added demands of money and blood required from working class would have definitely created a revolt. Both India and England would have become communist. The result would have been the same, had those opposed to partition in India prevailed. In a telegram to Commonwealth Prime Ministers, Atlee said that it was urgent to hand over power, because reassertion of British authority by force "would, even if it is practicable ... result in spread of revolutionary extremism, probably in a communist form." Patel's acceptance of compromise of partition in December 1946 resulted in benefits to both sides. Big British investments were saved by poor Britain. All Britons in India remained safe. Indians got 80% of India free - free to develop his starving country to remove the curse of poverty. Wise and brave (?) people, who criticize Patel, should note this. Their misconception is due to false assumption that Labor Party and Atlee were good and wanted to give India independence and that Jinnah outmaneuvered Congress and got Pakistan. Jinnah was a minor actor in this drama and had little effect on final result. He became a British stooge. If not he, some other Muslim leader would have become a stooge of British and done their bidding.

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