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12. There was a full discussion of the developments which had led to the recent serious drain on the central reserves of the sterling area, and the gravity of the position was recognised by all the representatives present. With the reserves standing at 30th June, 1949, at a figure of approximately £400 million, it is clear that if they continue to fall at the present rate they would be completely exhausted within about a year. This would mean the collapse of the sterling area with incalculable consequences to all countries concerned. The sterling area members of the Commonwealth agreed that, in the first instance, they must check this decline in the reserves by every practicable means and that immediate action to this end was vital to the very existence of the sterling area. With the foregoing considerations in front of them they examined the immediate prospects of the sterling area in full detail.
13. The sterling area representatives present reached agreement on the probable level of dollar earnings of the sterling area (excluding South Africa) in 1949-50, and examined the additional gold and dollar resources likely to be available from grants and loans to the United Kingdom and from receipts by the United Kingdom of newly-mined gold. They agreed that the amount which could be made available from all these resources for their aggregate expenditure on dollar imports in 1949-50 could not exceed $2,000 million.
14. In the light of these circumstances they agreed to recommend to their Governments that each should reduce their demands in respect of dollar imports on the above-mentioned resources in 1949-50 by a proportion equal to that already announced by the United Kingdom. To the extent that it has not already been done the representatives present agreed to recommend that their Governments should achieve this objective by immediate action comparable with that already taken by the United Kingdom, by way of stand-still measures, by reprogramming of imports, and, where appropriate, by other means. Ministers agreed to inform each other within one month of the measures which their Governments had resolved to take in the light of these recommendations. They also agreed that the situation should be kept under constant review so that further consultations could take place immediately developments appeared to make necessary any adjustment in the measures contemplated above. They further agreed that the rebuilding of the sterling area reserves as quickly as possible was of paramount importance, and that they should all make the maximum practicable contribution to this end.
IV
15. It is important that there should be arrangements for continuing con- sultation between the Governments concerned to ensure that the most effective measures are taken at each stage to secure the objective in view. It is suggested that existing machinery should be used to study the problems which arise from the recommendations of this meeting and that officials at present in London should continue discussions during this week [i.e., the week beginning 18th July, 1949].
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