3
Page 186 Our gold losses to other countries, particularly Persia, were lower in the second quarter than in the first and even lower than we had expected. But there is no reason to believe that this is more than a temporary respite. In June the Persian loss had again increased to about $10 million.
15. The above facts bring the story of our gold and dollar position as up to date as possible. All the evidence suggests that expenditure both by the United Kingdom and the rest of the sterling area is still on a heavy scale, and that some time must elapse before the measures taken here and those recommended to other Commonwealth Governments as the result of the Finance Ministers' Meeting can begin to take effect. Meanwhile there are few signs of any recovery in our dollar income (apart from a resumption of United States purchases of tin towards the end of June, which is the only favourable development that can be reported). Gold and dollar settlements to non-dollar countries are likely to remain high, at least until the arrangements with Belgium come into operation.
16. The general conclusion, therefore, must be that for some time ahead the current heavy deficit is likely to continue and with it a continued drain on the gold and dollar reserves. It is impossible at this stage to forecast with any assurance what the extent of this drain is likely to be over the next month or two. But it would be over-optimistic to hope that our reserves at the end of the current quarter will stand much above £300 million.
10 Downing Street, S. W.1,
21st July, 1949
APPENDIX
C. R. A.
STERLING AREA GOLD AND DOLLAR DEFICIT FIRST AND SECOND QUARTERS 1949
$
United States—
United Kingdom Purchases
Exports and diamonds
Invisibles, capital, &c.
First Quarter
£ million Second
Quarter
Actual
Actual
Second Quarter Target April 1949
54
69
―
85
18
15
27
13
2
19
United Kingdom deficit with United
States
- 23
D.O.Ts.
16
Independent R.S.A.
-27
39
Sterling area with United States
-34
Sterling area with Canada
-34
****
52
39
3
8
21
88
-52
34
2288
Sterling area with United States
account
Sterling area with Dollar Area
-
...
Switzerland and Belgium
Persia, &c.
Gold purchases
9
-77
- 7 - 12
14
18
16
-
- 140
96
16
13
7
9
7
5
Total Deficit
-82
- 157
- 113
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