I explained that I did not believe that FEA was impelled to take
action yet, since no recommendation has been made by the sub-cabinet
committee to the President’s dollar position committee, but that I
did recognize their problem. I suggested that Mr. Crowley and you
talk this matter over with the President and recommend to him that
the proposed instructions to Mr. Morgenthau be sent, which would put
FEA’s position in the matter beyond criticism and at the same time
would not damage our relations with the British. The FEA
representatives agreed.
[Enclosure]
Memorandum by the Assistant Secretary of
State (Acheson) to the Under
Secretary of State (Stettinius)
[Washington,] October 21,
1943.
Mr. Stettinius: On January 1, 1943,
the Interdepartmental Committee on the gold and dollar balances
of lend-lease countries submitted a report to the President
(subsequently approved by him) recommending, “in the light of present
circumstances, that the United Kingdom’s gold and
dollar balances should not be permitted to be less than about
$600 million nor above about $1 billion”. It is clear from the
underlined words that it was not the intention of the Committee,
or the President, to fix at that time an arbitrary figure which
would under all circumstances limit British foreign exchange
assets. Any such policy, which would leave out of consideration
the growth of liabilities against those assets, would be
manifestly unrealistic and unfair.
In recognition of this fact, the British were requested in May,
1943,54 to submit for the
use of the Interdepartmental Committee a report on their
overseas financial problems. On September 14, 1943, the British
Treasury submitted a memorandum indicating that:
- 1)
- The total quick liabilities of the United Kingdom have
increased from approximately $2 billion on January 1,
1940, to over $7 billion on June 30, 1943.
- 2)
- Their quick assets in the form of gold and dollar
balances decreased from $2.1 billions on January 1,
1940, to practically nothing in the Spring of 1941, and
had risen by June 30, 1943, to only $1.1 billions (as of
the present, they stand at roughly $1.2
billions).
- 3)
- Their quick liabilities are currently increasing at a
rate of over $2.5 billions per year; their gold and
dollar assets at a rate of only $.6 to $.7 billion per
year.
No reply has been made by the United States Government to this
memorandum, nor has the Interdepartmental Committee met to
consider it, although it has been under study in the different
departments and agencies concerned. Secretary Morgenthau will be
in London before the end of the month, and Sir David Waley has
stated that the Chancellor of the Exchequer intends to discuss
this matter with him at that time.
The policy of the United States Government has been, and
presumably still is, so to conduct its relations with the United
Kingdom as, at the very least, not to weaken British
participation in the war
[Page 96]
and in subsequent efforts to establish an enduring peace.
Arbitrary, unilateral action upon a matter so essential to
British stability, taken without consultation with the British,
could not but endanger the success of this policy.
I agree with Mr. Achilles that a comprehensive statement of the
types of goods now supplied to the United Kingdom under
lend-lease should be prepared at this time, in order to make
sure that all are indeed properly lend-leaseable in terms of
their contribution to the war effort.55 But I feel very strongly that
no requisitions should be transferred to cash reimbursable
without full consultation with the British.
I suggest further that you recommend to the President that he
send instructions, along the lines of the attached draft, to
Secretary Morgenthau to guide him in his forthcoming
conversations with the Chancellor of the Exchequer.
