Aide Memoire CANBERRA, 29 January 1947

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The High Commissioner has been asked to refer to the Secretary of
State's telegram to the Prime Minister D. No. 71 of 28th January
containing a general appreciation of the economic situation now
confronting the United Kingdom on oversea account. In it,
particular reference has been made to the disquieting weakening of
the United Kingdom dollar position and an indication is given of
the sort of steps [1] which the United Kingdom authorities for
their part will have to take in order to adjust the balance.

Unless they are successful in achieving that balance their means
of payment in the Western Hemisphere will be restricted and their
liability to furnish dollars as required by the rest of the
sterling area will be curtailed.

2. The United Kingdom authorities are grateful for the readiness
which the Australian authorities have consistently shown in
helping to conserve dollars. They feel sure therefore that the
Commonwealth authorities will appreciate the significance to the
sterling area as a whole of the critical nature of the United
Kingdom dollar position and that they will be ready to take such
steps as they can to ensure that maximum conservation of dollar
resources which in present circumstances is essential to all
sterling countries. In particular they hope that the Commonwealth
authorities will feel able, with due regard to the limits imposed
by United States susceptibilities and until the picture is changed
by a general international acceptance of an obligation not to
discriminate in import controls, to maintain the differential
treatment that the United Kingdom and other sterling area imports
enjoy under their import control; and that they will continue to
reinforce the dollar savings which will accrue in this way by such
economies in direct dollar expenditure as are practicable without
weakening their economic efficiency even at the expense of a
temporary postponement of relaxations in consumption. In this
connection the High Commissioner has been asked to take this
opportunity of expressing the warm appreciation of the United
Kingdom Government of the exceedingly helpful action by the
Commonwealth Government in the recent relaxation of restrictions
on imports from the United Kingdom.

3. The United Kingdom authorities would welcome the closest
possible consultation with them on the general issues involved and
they will endeavour to keep the Commonwealth authorities as fully
informed as possible of any particular measures the United Kingdom
may propose to take. [2]