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DOCUMENT PROPERTY OF HIS BRITANNIC MAJE 452 VERNMENT )
ECRET
P. (49) 179
TH AUGUST. 1949
1
COPY NO.
25
219
CABINET
STERLING BALANCES OF THE STERLING AREA
Note by the President of the Board of Trade
I circulate, for consideration by my colleagues, a memorandum prepared in the Treasury on the problem of the sterlin balances of the sterling area. This question is certain to be raised in the forthcoming Washington talks, and I recommend my colleagues to endorse the policy put forward by the Treasury.
ard of Trade, S. W. 1.
24TH AUGUST, 1949.
H. W.
STERLING BALANCES OF THE STERLING AREA
Memorandum by the Treasury
Under Section 10 of the Anglo-American Financial
Agreement of December, 1945, the text of which is reproduced as Annex 'A' to this memorandum, we undertook to seek settlements on certain lines with holders of sterling balances, and in particular with the sterling area countries, so as to provide some adjustment of those balances, i.e. partial cancellation. We may expect that this general subject will be raised in the forthcoming Washington discussions. Our general reply must be that Section 10 bound us to attempt to make every endeavour to secure settlements by agreement. While we have failed to reach such agreement with anybody (except that Australia and New Zealand have made gifts to us), we have not given up our right to reopen the question in future. The various agreements which have been made are interim in character without prejudice to this particular issue. While, therefore, we cannot be accused of being in default under Section 10, we certainly cannot claim, that we have achieved the objects set out in it. Aboye all, we should not say that we have abandoned all hope.
2.
Recent conversations with H. M. Ambassador in Washington suggest that it is not impossible that these talks might lead to constructive suggestions for the future in which the United States, the holders of the sterling balances and ourselves might reach an overall settlement which would make a substantial con- tribution to the success of the talks, which would be very greatly helped by a step which would remove one of the great burdens to the security of the future stability of sterling. The following paragraphs therefore deal with certain suggestions which pays been ganvassed from time to
thato
59 the United States feg
be persuaded in suitable conditions take over a liability to meet part of the sterling balances in dollars against a cancellation of a further part by the present holders.
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