1 Beasley to Chifley

Cablegram 3 LONDON, 8 January 1948, 5.45 p.m.

IMPORTANT SECRET

In view of the dollar position I was most concerned to realise after reading C.R.O. [1] telegram D.8 of 5th January, that we have been consulted at no stage during the financial negotiations with Egypt. I immediately spoke sharply to the United Kingdom authorities yesterday and Gordon Walker, Acting Secretary of State for Commonwealth Relations, called on me yesterday afternoon to express his profound regret and to assure me that he has taken special steps to prevent a recurrence of this sort of thing.

2. The Australian press asked questions after publication of the agreement and I was obliged to reply that we had not been consulted.

3. Nimmo will be able to follow this type of question closely and in any event I will get him to go into implications of the agreement with Egypt. I quite realise and have been careful to say that if consulted we may have had no objection to it.

4. In this case it seems to me that fault lies not with the Commonwealth Relations Office but with the Treasury whose thinking on relations between members of British Commonwealth is still well out of date despite spirit for which Dalton [2] and Cripps have appealed among members of British Commonwealth in dollar problem.

[3]

1 Commonwealth Relations Office.

2 Hugh Dalton, predecessor to Cripps as Chancellor of the Exchequer.

3 Subsequently the Secretary of State for Commonwealth Relations cabled the Australian Government to explain the background to the negotiations. The UK Government had believed Egypt would take certain steps if an agreement satisfactory to Egypt had not been reached: a) Egypt would demand that the United Kingdom pay for local currency, required for military expenses, in gold or dollars; b) Egypt might demand dollars for its exports to the United Kingdom; c) Egypt could demand payment of Suez Canal dues in Egyptian pounds which it might refuse to supply except for gold or dollars.

[AA: A1838, 708/13/8/1]