They knew, all right. On visits to London during the years I spent chiefly in Russia and Germany I would meet friends in the services or the ministries. "We're in a hell of a mess, old chap," they said, "but we'll work out of it somehow." No one seemed to know just how; but no one doubted it would be done. The first problem then--and it is the first problem today--was the balance of payments. Exports had to be increased quickly, for the terms of trade continued to be against the United Kingdom. It was in the years 1946-51 that American aid counted most. Loans from the United States and Canada, it is estimated, paid for about 20 per cent of the imports of the United Kingdom between 1946 and 1950. Simultaneously, the drive to increase exports made headway. The country, and especially the industrial worker, was, in the modern jargon, made "export-conscious." "Export or die"--the slogan may have seemed exaggerated to some, but it was, and is, an accurate statement of Britain's position. British exports had recovered their pre-war volume by 1947, only two years after the end of the war. Three years later they were two-thirds higher than in 1947. Thereafter, as Germany and Japan began their remarkable economic recovery, exports rose more slowly. But they did rise, and by 1954 they were 80 per cent higher than in 1938. The upswing in exports was accompanied by two other processes. The pattern of industrial production for exports began to change. Textiles were no longer a dominant export product. Instead, emphasis shifted to the engineering industries: electric motors, factory machinery, electronic equipment, precision instruments, chemicals, and shipbuilding. At the same time, imports--including importation of some raw materials essential to the export trades--were severely restricted, and consumer rationing at home directed British production to foreign markets. Five years after the war Britain had made great strides toward recovery. There was in that year a surplus of £300,000,000, or $840,000,000, on the balance of payments. But the Korean War, which began in June 1950, was a serious setback for Britain's economy. The country, resolved to play its part, began to rearm. At the same time there was a world-wide rush to stock raw materials, and this forced up the prices of the imports Britain needed for her export trade. The satisfactory balance of payments in 1950 became a deficit of £403,000,000 by 1951. Import prices began to fall after 1951, and in the next three years there was a balance-of-payments surplus. This recovery was accompanied by a steady rise both in industrial production and in the real national product.