The Ambassador in the United Kingdom ( Douglas ) to the Secretary of State
3552. From Clayton and Ambassador for State and Treasury. Reference urtel 2759, June 26. 1. In paragraph 1(a) of Embtel 3443 we had in mind only cases of sterling owned by particular countries. This based on our interpretation of language of financial agreement. “In exceptional cases” would appear to refer to particular countries in context used. In fact, we have expressed this view to British, stating that broad relief from obligations would involve congressional action. Paragraph 1(b) in our cable 3443 intended to refer to problem of general relief from obligations.
2. British appear quite definite in their intention to meet obligations under financial agreement. As indicated in Embtel 3512, June 26, they will probably request postponement of convertibility obligations in cases of small number of countries to give them additional time to reach agreements.1 No indication of request for general relaxation of any obligations has been given us by British.
3. We consider it desirable, however, for NAC to determine if financial agreement can be interpreted to provide for general relaxation [Page 31] without congressional action in exceptional circumstances applying to Britain’s financial position as whole. In this connection Clayton’s testimony before Congress should be examined. British may find themselves later in such a difficult financial position that only alternative is to request postponement of obligations, and we should be prepared for this possibility. It is not our intention to suggest to British possibility of proceeding along these lines.
4. Please inform us fully of action by NAC. [Clayton and Douglas.]
- In telegram 3512, Ambassador Douglas also noted that “Countries involved will be those with whom negotiations will not have been completed by July 15. Presumably request will be for short extension.” (102.1/6–2647)↩