London, 8 May 1950
2034. SECRET
From External. Your telegram 1950.1 Consultative Committee.
Nimmo and Hey don have discussed your telegram 106 to Commonwealth Relations Office2 with senior officials who hope to get Ministers’ decisions on 8th May. Their present intention is to telegraph these to their Delegation for full discussion with you rather than to reply in Governmental telegram.
2. United Kingdom officials doubt the wisdom of any reference in final recommendations to the assumption that international financial assistance will be forthcoming. They would still appear to favour delaying approach to United States until a comprehensive long term plan has been evolved.
3. Officials have reiterated the Chancellor’s3 current insistence on avoiding commitments which would swell the rate of release of sterling balances and the flow of unrequited exports.4 They claim moreover that South and South East Asian countries (especially India and Pakistan) are not short of sterling. There may, therefore, be Treasury resistance to increased financial provision for technical assistance and emergency relief unless it may be demonstrated that goods and services are urgently needed by South and South East Asian countries are available and are being held back by the lack of finance.
4. On the other hand we have argued that the existence of a common fund would—
(A) Act as a compelling factor to hasten the establishment of necessary administrative machinery and flow of assistance;
(B) Demonstrate immediately to the United States that Commonwealth countries are prepared to make sacrifices to assist the area, and
(C) Promote self help.
5. Incidentally the ‘Economist’ of 6th August contains an interesting article making the following main points—
(A) The main aim of the Sydney Conference is to assess the broad economic needs of the area, to examine the resources of capital and trained manpower to meet needs and then to match needs against means. This should not be a comprehensive plan on the Marshall scale. The problem is to choose jobs that can be done quickly and effectively.
(B) Vital task is to select a limited number o f given projects to establish machinery of co-operation and administration, to secure the financial assistance and to get to work with all speed;
(C) Vital task is to select a limited number o f given projects to establish machinery of co-operation and administration, to secure the financial assistance and to get to work with all speed; of shortages of all forms of capital equipments, drafts of possible investment programmes and development schemes and estimates of the resources not available locally;
(D) A plea is made that even if figures contained in E.C.A.F.E. reports are not reliable the effort in collecting them should not be duplicated;
(E) Most serious economic obstacle to Asian recovery is the lack of food. Emphasis should be placed upon a quick expansion o f rice growing in Siam and improvement of productivity in India;
(F) A considered policy for raising the Asian rice production in the next two years would in itself demand a complete strategy of economic aid. This would involve the setting up of a Commonwealth administrative agency, the engaging of experts and arranging of necessary finance;
(G) If development on a rapid and ambitious scale is to be achieved the United States is the only source of new finance;
(H) The success of the Sydney conference will depend upon sense of momentum that it manages to create.
[NAA: A1838, 708/9/2 part 2]
1 The telegram explained that the DEA was ‘most anxious that Sydney Conference should be able to announce firm decision’ and directed the High Commissioner to follow up the question raised in telegram 106 (Document 58) with United Kingdom authorities and report fully.
2 Document 58.
3 i.e. the UK Chancellor of the Exchequer, Sir Stafford Cripps.
4 i.e. exports from the United Kingdom to overseas sterling area countries not reciprocated by imports from those countries.