CO129-605-4 Government loans 12-7-1946 - 6-1-1948 — Page 61

4.

Suggestion in your telegram No.1152 for

borrowing from Exchange Fund has been very

carefully considered in light of paragraphs 2 and

3 of your telegram. In present circumstances,

however, any recourse to the Exchange Fund, which

could only mean a reduction in the sterling securities

which the Fund would otherwise hold, would have

precisely the same effect on general sterling position

as direct borrowing in the London market. I am

satisfied therefore that it would be undesirable to

pursue this proposal at present.

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