Foreign Relations of the United States, 1947, The British Commonwealth; Europe, Volume III

841.51/8–1947

Minutes of the Combined United States–United Kingdom Technical Committee, Anglo-American Financial Discussions, August 19, 1947, Washington, D.C.

Washington, August 19, 1947

secret

Participants:	u.k. members:
	Sir John Magowan, U.K. Embassy, Washington
	Mr. Edgar Jones, Treasury Delegation, Washington
	Mr. H. J. Lintott, Board of Trade
	Mr. P. S. Beale, Bank of England
	Mr. L. P. Thompson-McCausland, Bank of England
	Mr. Marcus Fleming, Cabinet Offices
	Miss G. M. Jennings, U.K. Treasury
	Mr. G. Parker, Board of Trade
	u.s. members:
	Mr. Harold Glasser, Treasury Department [Chairman]
	Mr. Paul H. Nitze, State Department
	Mr. Emilio G. Collado, State Department
	Mr. J. J. Stenger, State Department
	Mr. Clarence I. Blau, Commerce Department
	Mr. John M. Cassels, Commerce Department
	Mr. J. Burke Knapp, Board of Governors, Federal Reserve System
	Mr. Frank M. Tamagna, Board of Governors, Federal Reserve System
	Mr. Charles R. Harley, Board of Governors, Federal Reserve System
	Mr. Hal Lary, Export-Import Bank
	Mr. Orvis A. Schmidt, Treasury Department
	Mr. John S. Richards, Treasury Department
	Mr. John Gunter, Treasury Department
	Mr. George H. Willis, Treasury Department
	Mr. Joseph B. Friedman, Treasury Department
	Mr. Charles R. McNeill, Treasury Department
	Mr. Fred B. Smith, Treasury Department
	Mr. Philip P. Schaffner, Treasury Department

Résumé of Combined Top Committee Meeting¹

Prior to the arrival of the British delegation at the meeting, Mr. Knapp gave a résumé of the combined U.S.–U.K. Top Committee meeting of August 18. Sir Wilfrid Eady had pointed out that the relatively favorable appearance of the 1946 U.K. balance of payments on current account was superficial. Exports were made in a sellers market and imports were supplemented by the drawing down of stocks. He had also stated that the required minimum level of imports for the U.K. was 85 percent of the prewar volume. The domestic situation during 1946 demonstrated a straining of the U.K. economy resulting from (a) inadequate stocks of materials, (b) accumulated under-maintenance of equipment and (c) excessive demands on production facilities for reconstruction, increase of living standards and exports. Due to the inadequacy of stocks, the fuel and transportation crisis cost the British an estimated $800 million of exports.

Sir Wilfrid had also stated that convertibility and non-discrimination formed the underlying basis of the Financial Agreement and had emphasized that sterling had to be an international currency or nothing. The basic assumptions of the Financial Agreement, however, had been nullified by subsequent events—mainly the world scarcity of dollars. This situation had increased the burden of convertibility since many countries were unwilling to accumulate sterling balances. He had not mentioned the subject of additional U.S. financial aid but implied that certain terms of the Financial Agreement should be waived. He had described the difficult task of recruiting labor for coal production and said the situation in textiles was weak.

Mr. Knapp concluded his résumé by suggesting that the British be asked to furnish a statement of sterling balances by countries, at semiannual intervals beginning with June 30, 1945.

Working Group and Agendas

The setting up of working groups and agendas was discussed. It was agreed that a Commercial Policy Group and a Financial Group should be established and that a small combined group should work on the statistics required by the Financial Group. Mr. Jones pointed out the difficulties of preparing estimates for 1948 and 1949 in the absence of agreed-upon assumptions concerning such factors as convertibility and the Marshall Plan. He added that the British delegation planned to return to London on Monday, August 25.

It was agreed that the possibilities for relaxation of Section 9 of the Financial Agreement should constitute the agenda of the Commercial Policy Group. In this connection, a British representative mentioned the difficulties of forecasting the benefits that might result to the U.K. from a relaxation of Section 9.

It was agreed that the Financial Group should concern itself with the convertibility problem. The Chairman asked if the U.S. side could be furnished estimates of the U.K. dollar drain in 1948 and 1949 on the assumption that there would be no modification of convertibility. The British representatives indicated that no precise estimates of the drain could be given. They promised, however, to elaborate the statistical data for the period since June 30, 1947, particularly with reference to changes in the U.K. monetary reserves and the uses to which dollars had been put.

The Chairman inquired about the form in which the Committee’s conclusions should be presented. The head of the British delegation expressed the hope that a substantial degree of agreement could be reached by the Committee before presenting conclusions for consideration by the National Advisory Council. He thought, however, that a few matters, such as the German problem, would have to be presented to the Council directly.

The Committee then divided into the Commercial Policy and Financial Groups for further discussion.²

1. No other record of this meeting found in Department of State files.
2. Minutes of these meetings are in Department of State file 841.51/8–1947.