10 McFarlane to Chifley
Cablegram 413 WASHINGTON, 2 April 1948, 6.28 p.m.
Further to my cable 402 , I would not interpret Chancellor's
request as preliminary to a change of policy under which Australia
and other sterling area countries should rely for dollars solely
on respective earnings and drawings from Fund. Such a policy would
force redirection of exports and harm all concerned.
2. It may possibly take six months before Marshall Aid results in
any substantial benefit to the United Kingdom (the organisation
still has to be built up) and as United Kingdom's drawing quota
from Fund to September has been practically exhausted and the
drain on reserves will continue in meantime, Chancellor is
probably looking to other available means to reduce that drain.
3. The Fund will necessarily adopt a more conservative policy to
future requests from Marshall Aid countries. However, no
consideration has yet been given to the question whether any
further drawings by United Kingdom should exclude any provision
for other members of the sterling area and that such members
should look direct to the Fund. If it does arise I feel sure
United Kingdom would object. Whilst United Kingdom cannot rely
with certainty on future drawings, I think it might be reasonable
to assume that some limited drawings would be permitted in
exceptional circumstances which may include some provision for
Dominion sterling countries.
4. Cable 61 says it is 'most unlikely Marshall Aid will cover
dollar deficit of sterling Dominions' also drain on reserves will
be substantial in first year and stresses need to intensity dollar
savings. This together with background above and my previous cable
explains more fully reasons actuating request for Australia to
5. I can understand some hesitation on your part to make drawings
because of our indirect benefits to United Kingdom. Australia
cannot accept any change of policy under which we would have to
rely for dollars on own earnings plus drawings from the Fund or
alternatively a fixed ration from United Kingdom pool. In the
circumstances, however, I think Cripps's request not unreasonable
provided United Kingdom still recognises a continuing obligation
to make dollars available within reason. You might, therefore,
think it desirable to get an understanding on this latter point
before you make definite decision.
6. Have discussed with Wilson who agrees.
[AA: 1838/283, TS706/1/1]