CLC(48)7th meeting, LONDON, 10 August 1948
CONFIDENTIAL
EUROPEAN RECOVERY PROGRAMME COMMONWEALTH LIAISON COMMITTEE MINUTES of a Meeting held in Conference Room ‘C’, Cabinet Office, Great George Street, S.W.1., on TUESDAY, 10TH AUGUST, 1948, at 11 a.m.
[matter omitted]
2. INTRA-EUROPEAN PAYMENTS SCHEME The Committee had before them a Note by the Joint Secretaries (C.L.C.(48) 8).
MR. RICKETT[1] said that the disequilibrium in Europe could not be solved permanently by a purely payments scheme. It would be necessary ultimately to re-group trade but in the meantime a temporary solution of the payments difficulties had to be found. The method of giving credits had been taken as far as it could go without some fresh incentive to creditors. The only practicable incentive to countries to put up further credits was the provision of dollars but, for this purpose, it was clear that no dollars outside E.R.P. aid could be made available. It was the intention, therefore, that E.R.P. dollars should be made to work twice over. This could be done by off-shore purchases but the effect would be to benefit the creditors too much at the expense of the debtors. The present scheme had therefore been devised whereby the E.R.P. aid was to be given to countries, partly unconditionally on the basis of the overall deficit minus the European surplus and partly conditionally equivalent to the European surplus. The condition for allocating the second part of the aid would be that countries would put up an equivalent amount of local currency for a scheme of European payment … It was necessary to ensure that the contributions of countries which would receive only very limited grant dollar aid (e.g. Belgium) would be adequate for this scheme and provision had therefore been made for countries to supplement their grants to the scheme by further credits. There would be no compulsion on countries to make such advances but it was clear that the scheme would not work unless Belgium in particular were prepared to do so.
_[1] D.H.F. Rickett, Under-Secretary, UK Treasury.
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[AA : A3318, L48/3/21, II]