Memorandum by the Assistant Secretary of State (Berle) to the Secretary of State
Mr. Secretary: Mr. Harry White of Treasury34 phoned this noon. He said he wished to inform us of an arrangement which they had been discussing with Sir Frederick Phillips, this time representing the Government of India.
The British had asked the United States Treasury to lend-lease them additional silver for the Indian currency; but in addition to that, they had asked that 100,000,000 ounces of silver be lend-leased them for the purpose of lowering the price of silver in India. The gradual inflation of currency there has led to a point where silver is being hoarded and melted down. The British propose an operation to stabilize the price below the melting point. As in other cases of lend-lease of silver, the British agree to return the silver ounce for ounce.
Mr. White said he and Morgenthau had followed their practice and taken this matter up with the Senate Committee on Banking and Currency which had finally expressed its agreement to it, though Senator McCarran35 had made some slight opposition.
Mr. White said he wished to inform us as a matter of courtesy and likewise ask any views we had. Since the transaction apparently has already been agreed on, there did not seem to be much point in making any comment. I said I would report the transaction. I should doubt whether the Department had any real objection, in view of the fact that we have made other similar arrangements without difficulty.[Page 273]
Mr. White emphasized the need of great secrecy, since a leak might affect the bullion mark. I said we would certainly keep it secret here; but since the matter had been taken up with a Senate Committee we, of course, recognized the possibility of a leak from that quarter.