Synopsis B, British Financial Difficulties, July-September, 1949

ajter 3. AND SERVICE" (Page 1) BRITISH FINANCIAL DIFFICULTIES July Sept. 1949 Synopois B -- - Cripps July decision The seriousness of the British financial situation to postpone dollar purchases was made clear on July 6th with a report to House of Commons by Sir Stafford Cripps that the gold and dollar reserves of the sterling area had declined to about $ 1.6 billion, with a loss of almost 9 per cent during preceding three months. Because of this situation, he announced that orders had been given to all British Ministries controlling imports "to postpone new dollar purchases to the maximum extent practicable. " On the 14th he indicated that Britain would have to make a 25 per cent reduction in dollar imports for 1949-50 if a dollar deficit greater than that previously assumed were not to be incurred. He explained these standstill arrangements would last 3 months, until after further high level talks with the US and Canada "which will undoubtedly take some weeks. " He noted that "the problem of the re- lationship between the sterling and the dollar world is not one to which the UK alone can find a remedy. It is a problem in which our friends in the US and the Commonwealth are especially involved We must seek together a long-term remedy for the stubborn problems of the balance of trade between the Western Hemisphere and the rest of the world. " Cripps and Snyder confer Preliminary talks between Cripps, Snyder and Canadian Finance Minister Abbott followed from July 8th to 10th, resulting in a communiqué which noted that "the general approach to existing problems must be based on full recognition of their profound and long-term character. The difficulties of the past few months were no more than an aggra- vation of deep-seated maladjustment: The aim must be the achievement of a pattern of world trade in which the dollar and non-dollar countries can operate together within one single multilateral system " It was also decided that high level discussions of the British financial and monetary problem would take place in Washington early in September. The Commonwealth follows The Commonweal th Finance ministers met in London the UK's lead between July 13th and 18th and, with the exception of Canada and South Africa, decided to follow the UK's lead in cutting imports from dollar areas.