841.51/9–1047: Telegram
The Secretary of State to the Embassy in the United Kingdom
3944. To Gunter from State and Treas. Postponement of obligation of UK under Financial Agreement granted Jul 14 and 15 with respect to fourteen countries expires Sept 15. The August 20 action relates to modification of transferable account system and apparently not applicable to countries for which postponement granted. In any event it appears desirable to clarify situation by specific extension of postponement for those countries with which the UK has not yet been able to complete arrangements and for which a postponement was previously granted. The following exchange of letters between Dalton and Snyder which has been approved by NAC Staff Committee is suggested as a basis for discussions with the Treas Delegation, other members of the NAC, and the British:
“Dear Mr. Secretary: I refer to your letter of Jul 14, 19471 relating to the postponement of certain obligations of the United Kingdom under the Anglo-American Financial Agreement. In accordance with the request of H.M. Government, the United States Government thereby agreed to the postponement until Sept 15, 1947, if necessary, of the obligations under Sections 8(ii) and 10 of the Financial Agreement in the case of Austria, Bulgaria, China, Denmark, France, Greece, Hungary, Paraguay, Poland, Rumania, Siam, Turkey, the U.S.S.R., and Yugoslavia.
Because of the modification of the system of transferable accounts on Aug. 20, 1947 and the necessity of revising agreements with countries formerly operating under the transferable accounts system, H.M. Government have been unable to complete the necessary arrangements with the countries referred to above. Accordingly, I should be most grateful if the postponement of the obligations of Sections 8 (ii) and 10 of the Financial Agreement with respect to those countries were extended until Nov 15, 1947.
My Dear Chancellor: I have received your letter of Sept 15, 1947, requesting a further postponement of the obligations of the United Kingdom under Sections 8(ii) and 10 of the Anglo-American Financial Agreement.
In accordance with your request the United States Government agrees to the postponement until Nov 15, 1947, if necessary, of the obligations of your Government under the Anglo-American Financial [Page 74] Agreement in the case of Austria, Bulgaria, China, Denmark, France, Greece, Hungary, Paraguay, Poland, Rumania, Siam, Turkey, the U.S.S.R. and Yugoslavia.”
Under the July postponement arrangement the UK agreed to make all sterling accruing after July 15 convertible when the necessary arrangements were completed with the countries for which a postponement was granted. The British may suggest that this retroactive feature be eliminated in connection with further postponement. We see no objection to a waiver to retroactivity if requested as it appears to be of relatively little practical importance. It should be noted however that the Treas press release of Jul 15 stated that Sec Snyder emphasized that the two months postponement does not involve any modification of the obligation of the British Government to permit these countries to dispose freely of sterling accruing between Jul 15 and the date the arrangements are agreed to but involves only the postponement of such disposition.
If it is agreed to dispense with retroactivity, the following paragraph might be added to Mr. Dalton’s letter:
In view of recent developments and the reduced amount of dollars available to the United Kingdom, H.M. Government believe it is no longer appropriate that all sterling accruing to those countries between Jul 15, 1947 and the date of completion of the necessary arrangements be made available for payments on current account. I should appreciate being advised whether you agree with this proposal.
In answer the following paragraph might be added to Mr. Snyder’s letter:
For the reasons advanced in your letter, the United States agrees that all sterling accruing to those countries before completion of arrangements with them need not be made available for current transactions retroactively to Jul 15, 1947.