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]