The Secretary of State to the Chairman of the United States Delegation (Willoughby), at Annecy
87. SoAfr (a) gold and US dol and (b) sterling (including balance of 80 million lbs. gold loan to UK, payable in sterling on demand) in millions of dols (rounded) urtel May 7, 5 p. m.
|May 28, 1948||(a) 415||(b) 645|
|Nov 5||(a) 235||(b) 515|
|Nov 30||(a) 200||(b) 495|
|Dec 31||(a) 195||(b) 450|
|Jan 28, 1949||(a) 200||(b) 410|
|Feb 11||(a) 195||(b) 380|
|Apr 14||(a) 175||(b) 275|
Thus, from Nov 30 to Feb 11, gold and dol holdings practically stabilized with new small decline in Apr 14 figures. Nov 30 to Apr 14 sterling decline 44%. Note virtually all remaining sterling reserve Apr 14 represented by unexpended balance gold loan (see Pretoria A-119 sent you Apr 2). Status Eximbank loan: Prelim exam by Eximbank of additional info requested Jan just recd indicates application continues be request for balance-payments credit to maintain hard currency imports. No specific project data included re items of [Page 670]which US interested in increased output, despite Eximbank specific request these data. View NAC Staff Feb 2 was (a) credit shld be preceded or accompanied by effective balance-payment and inflation controls, (b) specific project credit wld induce greater output items US interested in. Eximbank continuing study application and new info. Has agreed consult Dept when ready discuss, e.g., question of further NAC consideration. Position Dept: no polit objection. For strategic, trade, and other considerations is in US interest maintain strengthen friendly relations. Dept emphasizes consideration loan on econ grounds shld be paramount.
Fol 1948 balance payments (millions of lbs): merchandise imports 144 sterling, 210 non-sterling; merchandise exports 76 sterling, 58 non-sterling; gold exports, 163; gold production, 99 (net after domestic gold consumption); net capital inflow, 75 (mostly UK); UK loan, 80; IMF drawing, 2.
Dept feels important adhere strongly to position that restrictions shld not be more severe on hard currency areas than others. If, in spite our info, SoAfr able make convincing case they are in much better position sterling than hard currency, and obtains CP’s consent to new regulations, US Del shld serve notice we intend put strict interpretation on 1 (a) (i) Annex J.
SoAfr Emb here recently issued press release repeating statement by a SoAfr Min that objective SoAfr is to cut its overall imports in coming year by 40%. Said they will cut non-sterling imports by 50%. Treas figures cut in sterling will be 25%, soft currency less than 50%, dollars more than 50%. Compare this with other official statements that 250 million lbs total available for 1949 imports. AmEmb Pretoria feels latter possibly too optimistic; also that greater part used first 6 months.
Dept very much concerned this matter. Suggests might be desirable have Emb London approach Brit if evident UK putting pressure on SoAfr. If concur, suggest Willoughby contact Bliss. London, pls assist all possible respects. Rptd London . Summary to Capetown.