I recognise of course that the amounts of sterling
at stake were marginal in relation to your total
holdings. But, correspondingly, the modified basis
of settlement that has been described (and to which
I will revert below) was not designed to differ more
than marginally from the basis that would apply if the
declaration had been 100 per cent fulfilled throughout.
We would of course have queried your interpretation
earlier had we been aware of it. But I really do not
find any clue to this in Blye's letter of 11 February.
At an earlier stage, we certainly took para. 2 of your
telno 1316 of 27 November (which refers to topping up
at the end of November to maintain your position at 313)
to be entirely consistent with the relevant provisions.
All this being said, however, there are two points in
our recent telegrams which I now think should be put
differently. First, for the purpose of determining
eligible balances on the modified basis of settlement
that we have described, I think it would be more appropriate (and consistent with what we do for the September 24th position) for the end-February holdings
to be valued at end-February prices and for your
subsequent topping-up purchases in respect of the
end-February shortfall to be valued at cost, rather than
for the sum of these (together with interest accruals)
to be valued at end-March prices.
2