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United States Department of State / Foreign relations of the United States, 1947. The British Commonwealth; Europe

The British Commonwealth of Nations,   pp. 1-195 PDF (70.7 MB)

Page 14

tion but that I would appreciate it if he would submit for my con-
fidential information the Treasury estimate. This he agreed to do.
  As to the settlement of the sterling balances, particularly Egypt
and India, he asked for my informal opinion as to the application
of the following principle; namely, that the difference between the
sterling balances as they stood on V-J Day and as they stand now
should represent the amount that should be recognized as a liability.
Informally, I replied that in principle this might appear to be a valid
approach but that before expressing a view it would be necessary to
see the figures.
   Yesterday I received a personal note from him in which he stated
that at the present rate of drawing the dollar line of credit would be
exhausted in the early part of next year but that he did not intend to
refrain from taking every possible step to make the line of credit last
for a much longer period. I suggested that Gunter discuss with the
appropriate UK Treasury officials their estimates, together with ours to
determine wherein the discrepancies lay, solely for the purpose of
determining the facts and without discussing policy. This he thought
a good idea. Clayton,' with whom I talked on the telephone, approves
the suggestion. Accordingly, Gunter will review the facts with Sir
Wilfrid Eady.2 This is of interest to our Treasury Department and
the Department of Commerce and possibly others.
  'William L. Clayton, Under Secretary of State for Economic Affairs.
  2 Second Secretary of the British Treasury.
841.51/5-2047: Telegram
The Ambassador in the United Kingdom, (Douglas) to the Secretary
                             of State
SECREr                              LONDON, May 20, 1947-6 p. m.
  2834. For State and Treasury. In general discussion of British finan-
cial position with Sir Wilfrid Eady and R.W.B. Clarke at British
Treasury the following statements were made:
  1. British position has deteriorated beyond the estimates given by
Dalton in his budget speech. UK deficit on current account for 1947
may reach pounds 600 million.
  2. Britain not stock-piling dollars as result of recent heavy draw-
ings on credits. In fact, Treasury dollar balance was recently insuffi-
cient to take care of purchase of ships negotiated by another Ministry
without due notice to Treasury. No figure volunteered for present
gold and dollar holdings.

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