Circular cablegram D109 LONDON, 24 February 1943, 4.25 p.m.
SECRET
My telegram D. No. 383, 26/8/42 [1] and connected telegrams. [2] Following on exploratory discussions here with Dominion experts last autumn, revised version of Clearing Union plan in form communicated to Dominion Delegates before their departure was given informally by Sir F. Phillips to United States Authorities.
[3]
Latter asked for elucidation on certain points and their reactions have since been awaited. We have now taken steps to communicate the plan also to Soviet and Chinese Governments and are proposing similarly to give text confidentially to European Governments in London with a view to informal discussion on a study circle basis, in which we hope that the representatives of Dominion High Commissioners here will take part. [4] 2. Meanwhile the Americans have unexpectedly sent to us, the Soviet Government and Chinese Government a draft proposal for an International Stabilisation Fund. Covering memorandum states that this fund is only one of the appropriate agencies to deal with monetary and economic problems.
[5]
Memorandum anticipates that a draft proposal for an International Agency for capital reconstruction and development will be submitted (presumably by United States). It also discloses that United States are against a single agency for dealing with monetary stabilisation, relief, capital development, prices of primary products and other economic problems.
They believe that each Agency should be kept free of the extraneous duties for which it was not devised and is unsuited.
3. It is difficult to summarise United States draft proposal, but though draft has been sent to us without apparent relation to Clearing Union draft, the United States objections would appear, in general, to have much in common with our own, though method of approach is different and on certain points important issues of principle arise.
At first sight resemblances cover several important features which we had feared that United States might find difficult, owing to political reasons, e.g. acceptance of Exchange control for capital movements and provision for fixing exchange rates. On the other hand limitation of the liabilities of creditor nations is not well handled. We are sending you copies of United States draft immediately by air mail together with an analysis of the main points which we have prepared for convenience in comparing their draft with our own. [6]
4. Question arises whether United States draft could not be conveniently collated with Clearing Union draft into a single agreed document but preliminary examination suggests that this possibility could only be considered after several obscure points have been cleared up and several issues of substantial importance have been settled.
Our view is that it is not desirable to attempt this collation at present stage, before differences of substance have been thoroughly debated, and that best course would be for experts from United Nations concerned to be invited to Washington as soon as possible to discuss many points of difference between the two drafts. We have asked Phillips to put this suggestion to United States Authorities in discussing with them their ideas as to future procedure and will telegraph as soon as their reactions are known. [7]
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1 FA:A3195, 1942, 1.34188.
2 See Document 54, cablegram 604, 619 and 632 of 19 September, and 8 and 22 October 1942 (on file AA:A989, 43/735/56/1) and circular cablegram D259 of 22 October 1942 (FA:A3195, 1942, 1.20170/77, 1.20185/95).
3 See attachment A to Wilson’s letter of 18 January on file AA:A989, 43/735/56/1. The discussions with Dominion delegates were held between 23 October and 9 November 1942. See also Document 98, note 2 and Document 104.
4 The Clearing Union plan was communicated to a meeting of Finance Ministers of European Allies on 26 February, at which representatives of the United States, Canada, the Soviet Union and the Dominions were also present. See Bruce’s cablegram 45[A] of 2 March and Attlee’s circular cablegram D121 of 3 March (both on file AA:A989, 43/735/56/3) and External Affairs Dept cablegram 219 of 4 March on file FA:A3831, packet outwards 1943 Secret, 0.423 to 0.1158.
5 Copies of this draft proposal and of Berle’s covering letter of 1 February are on file AA:A989, 43/735/56/2. See also Document 98, note 3. The covering memorandum appears to be ‘A Stabilization Fund of the United and Associated Nations’, on the file cited above in this note.
6 See the paper entitled ‘Comparative Analysis of the United Kingdom Treasury of the Stabilization Fund and Clearing Union Proposals’ on the file cited in note 5.
7 See circular cablegrams D121, D149, D183, D289 and D290 (dispatched between 3 March and 15 May) on file AA:A989, 43/735/56/3.
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[AA:A989, 43/735/56/3]