Cablegram 402 WASHINGTON, 31 March 1948, 6.05 p.m.
IMMEDIATE SECRET
1. Your cable of 31st March. [1] Presume reference referred to are those contained in paragraph 2 of first annexure to cable 61 of 26th February. [2]
2. Annual Drawing Rights of United Kingdom are 81,000,000 of which 75,000,000 drawn, therefore only 6,000,000 available to the end of September. When Marshall Aid commences Monetary Fund will necessarily have regard to aid given European countries and it is contemplated that drawings of U.S. dollars from the Fund by those countries should only take place in exceptional circumstances and that other countries who will benefit indirectly from Marshall Aid will also have regard to these benefits. The idea is that resources of the Fund should be conserved as far as practicable to take up running when aid ends. United Kingdom therefore cannot count now on further dollar drawings although she will make application if Marshall Aid is inadequate.
3. Reference to ‘how far the other sterling countries will be willing and able’ to draw is just a cautious statement which has in mind that each country must submit a reasonable case for drawings. Prospects of repayment later are also taken into consideration. The recent drawing by India was largely related to wheat purchases and no difficulty was experienced although I gather the United Kingdom Authorities thought there might be.
4. I assume the request to Beasley was influenced by the United Kingdom position and the desirability in the light of cable 61 of reducing drain on reserves, even by small amount, of Australia’s quota.
5. I feel that the request is not unreasonable and if a drawing is to be sought it would not be wise to delay too long because of the possibility of a more conservative Fund policy when Marshall Aid actually begins. Moreover, the date of the first drawing determines commencement of the drawing year.
6. Australia’s drawing quota is 50,000,000 dollars in the period of 12 months commencing from the date of first purchase. If you decide to submit application it will be necessary to consider whether it can be related to the ‘present needs for dollars’ which is the requirement of Article V. or to deficit of recent months because United Kingdom provided dollars. It may also be advisable to make initial application for part only, say half, but indicate balance will be required later. Subject to further advice of your desires, I could take up both points informally with the Chairman before formal application is submitted. So far I have only mentioned the matter to the United Kingdom Director.
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1 Cablegram 304 in which Chifley enquired about the IMF drawing rights of the United Kingdom and Australia.
2 Cablegram 61 from Noel-Baker, dispatched 25 February 1948, and an associated memorandum and annex dispatched in cablegram Saving 5 on 9 March, set out the United Kingdom’s dollar position for 1948 and the measures to be taken to counteract the situation
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[AA: A1838/283, TS706/1/1]