883.5151/40: Telegram
The Minister in Egypt (Kirk) to the Secretary of State
[Received September 10—6:01 a.m.]
1311. My 1306, September 8, 8 p.m. According to a British Embassy source, the proclamation under reference is the result of informal representations recently made by the British Embassy in conformity with instructions from London with the immediate view to having the Egyptian Government ascertain the exact amount of dollar funds held abroad by persons residing in Egypt. This source states that at the time the representations were made, it was suggested that an endeavor should be made also to ascertain the amount of all non-sterling holdings abroad but that the proclamation was prepared and issued without further consultation with the Embassy and before it was expected.
The same source has stated that the ultimate aim of the proclamation possibly is to oblige persons here holding dollar funds abroad to exchange them for Egyptian or possibly British securities and that such action is necessitated owing to the fact that the greatly increased demand for dollars in Egypt for the purchase of American goods is causing a considerable drain upon the British exchequer especially since Egypt now sells practically no goods to the United States. He states further that although the Bank of England is endeavoring in various ways to curtail dollar expenditures in Egypt and although the British desire that the Egyptian Government establish an import licensing system, they are somewhat reluctant for political reasons to insist thereon lest they should be further criticized for interfering in internal affairs in Egypt. Nevertheless, he added, such a system may prove necessary in the near future, particularly in view of the large dollar expenditures now in Egypt for the purchase in the United States of nonessential goods such as beer, toilet articles, and certain clothing as silk stockings which can be sold at highly speculative prices and accordingly have greatly increased the pressure for dollar credits on the part of local merchants.
In discussing this matter with the British Embassy it was pointed out that the fact that the proclamation singles United States dollars [Page 337] out alone for declaration gives it the appearance at least of a discriminatory measure.