Foreign Relations of the United States, Diplomatic Papers, 1945, The British Commonwealth, The Far East, Volume VI

611.4131/11–545: Telegram

The Secretary of State to the Ambassador in the United Kingdom (Winant)

Washington, November 5, 1945—8 p.m.

9725. Personal for Ambassador and Mr. Dunn.⁹⁵ Following is summary of progress report on US–UK economic negotiations sent to the President on Oct 26.

1. Finance. On overall financial aid our present suggestion is 5 years with no interest or amortization followed by equal annual payments of $31.8 million per billion dollars of credit for 50 years. This is equivalent to interest at 2% over 50 year period or 1.63% if the 5 years of grace are taken into account. British continue to insist on a lower rate of interest. We are agreeable to waive interest and postpone amortization in any year in which British exports and visible receipts fall below an agreed amount. On amount of overall financial aid British negotiators have indicated that they would recommend to London $4.5 billion⁹⁶ instead of $5 billion originally requested. Altho we could probably settle for $4 billion we have suggested $3.5 billion.⁹⁷ Except for possible restrictions on capital movements British have offered to put sterling on convertible basis by end of 1946 thus going on full Bretton Wood basis and eliminating sterling area dollar pool. We do not expect any serious British opposition to our request that this changeover date be advanced to not later than middle of 1946. We shall probably accept British offer to settle or reduce blocked sterling obligations to about ½ face amount and fund balance at no interest with amortization over 50 years.

2. Lend-Lease and Surplus Property. We have yet to reach agreement on pricing principle on inventories and have yet to suggest lump sum for settlement of surplus war property durable goods and remaining installations. We must still work out details of certain intangible benefits which we wish. Difficulty in reaching agreement with British on most of these points is not anticipated. Agreement already reached on handling of pipeline and other post V–J Day items.

3. Aviation. British have so far failed to send qualified representatives to discuss aviation problems.⁹⁸

4. Telecommunications. We are endeavoring to obtain immediate acceptance by British of general principles involved in main questions at issue in telecommunications field before Bermuda Conference on Nov. 19.⁹⁹ No formal reply yet received. Embassy is familiar with latest developments on radio telegraph circuit between U.S. and Saudi Arabia.¹

5. Commercial Policy. Discussions on this subject are nearing completion. On all vital issues substantial agreement has been achieved or is in sight. Key points on which agreement has been reached may be summarized as follows:

A. Procedure. Principal steps which we have proposed and the British accepted in negotiating and bringing into force proposed multilateral arrangements on commercial policy² are as follows: (a) Commercial policy proposals will be published by Dept as a plan prepared by American experts for consideration by an international conference on employment and trade; (b) The US will invite 13 or 14 other countries (including USSR, France, China and British Empire countries) shortly after publication of plan to attend a meeting in Mar 1946, chief purpose of meeting to be to negotiate a multilateral trade agreement embodying trade barrier parts of “plan.” We would put this into effect under Trade Agreements Act. Countries meeting in Mar would also endeavor to reach substantial agreement on rest of the plan including machinery for international trade organization, measures to maintain employment, cartel policy and commodity policy; (c) About Dec of 1945 we would urge UNO to call an international conference on trade and employment to meet following June. We hope that results of Mar meeting among principal trading countries can be submitted to June conference for general adoption by United Nations and such other countries as may be invited by UNO to conference.

B. Substance. On substance matters British have raised questions regarding preferences, export taxes, subsidies, state trading, cartels and exchange controls. On export taxes, state trading and on subsidies agreement has been reached and for each of the others a basis for agreement has been worked out. In a few days we hope all outstanding questions will be cleared up.

Byrnes

95. Assistant Secretary of State James C. Dunn had served as Deputy to Secretary of State Byrnes at the first session of the Council of Foreign Ministers, September 11–October 2, 1945, at London, and remained in London after the session had terminated in order to make arrangements for future meetings. For documentation on the first session, see vol. ii, pp. 99 ff.
96. At the fourth meeting of the U.S. Financial Committee, October 17, Mr. Clayton had reported on two informal talks held with the British since the meeting of October 11. Mr. Clayton stated that the British officials had received instructions from London to request $5 billion which sum would include a credit of approximately 500 million for lend-lease settlement; hence the figure $4% billion. The Americans did not include the lend-lease sum in talking of the total amount of the credit, while the British often did (611.4131/5–146, Folder 2).
97. This tentative figure had been agreed on at the fourth meeting of the U.S. Financial Committee, October 17 (611.4131/5–146, Folder 2).
98. For documentation relating to civil aviation, see pp. 224 ff.
99. The Conference opened on November 21; see p. 245.
1. For documentation concerning representations to Saudi Arabia and the United Kingdom regarding proposed establishment of a direct radio telegraph circuit between the United States and Saudi Arabia, see vol. viii, pp. 1009 ff.
2. See footnote 8, p. 160.