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18 Wheeler to Nimmo

Letter (extract) CANBERRA, 10 May 1948


I see I must go back to your letter of 10th March, to pick up the
thread of comment, so I shall confine myself to selecting some of
the more important subjects, rather than dealing with each letter
in turn.

2. S.A.S.C. is proving useful as a listening post, and the
information which has been handed out at meetings has been
valuable. I notice that your proposal that the Dominions should
contribute more to the meetings has been discussed, and some
results may come to your efforts to promote fuller exchanges of
information among members. Such statements as appear now to be
contemplated should put Australia's efforts in a favourable light,
but I doubt whether information supplied for the use of members of
the sterling area other than the U.K. will be detailed enough for
worthwhile comparisons. I have in mind the fact that New Zealand's
reply to C.R.O.'s request for details of dollar cuts for use in
the India, Pakistan negotiations was much less informative than
ours. In any case you must be careful not to push the matter too
far. As you know we have, as a matter of high policy, always
avoided any attempt as between governments to assess relative
economy or sacrifice. This policy still stands. What we want is
information which will enable us to form a hunch (it can be no
more than that) as to whether or not we are being too tough (or
not tough enough) on dollars. But we do not want any inter-
governmental discussions at any level on this question.

3. Of the subjects dealt with at recent meetings, the address by
Clarke was clearly the most vital to us. [1] It is difficult to
assess from the written reports how much significance to attach to
his statements. Cripps, in his interview with the High
Commissioner, showed an appreciation of Australia's position when
he said that 'as long as there was a sterling area dollar reserve,
Australia would be entitled to draw reasonable requirements' and
when he said that the last thing U.K. wanted was to pay dollars
for Australian foodstuffs. Nevertheless, it is disturbing if, as
Grant gave you to understand, there is a school of thought in the
United Kingdom Treasury which believes that each sterling area
country should be required to live within its current dollar
income. This formula is, of course, not a new one. Eady [2] put it
to McFarlane when he was in London and it was also put to Haslam.

If it is merely one way of exerting pressure for economies it is
not so bad although still dangerous. If it is a reflection of a
belief that the sterling area is a liability to the U.K. and
should be jettisoned then it is more dangerous and, I think,
fundamentally unsound. In other words it is comparable to the
recent American newspaper comment about the sterling area
endangering E.R.P. and U.K. having to give up its role as banker
to the sterling area. I am surprised at your reports that this
idea should gain ground in Whitehall itself and would be glad to
have whatever information you can obtain on their thoughts. But be

leadership by Britain is fundamental to a successful Western
Union. However, the position of Australia in the pattern of world
trade is inadequately understood in the United States and on the
Continent. Australia supplies Europe with food and raw materials
necessary to Europe's recovery, or, by supplying Asia, relieves
the pressure on other sources. To continue playing this part,
Australia must have essential imports, many of which can be
obtained only from dollar sources. We have been thinking that it
might be worthwhile to get out some well documented statement on
Australia's contribution to European recovery. Points which could
be made are that Australia has an export surplus with Europe and
an import surplus with North America-the exports to Europe
represent goods essential to Europe's recovery-the imports from
North America represent goods necessary to maintain Australia's
capacity to produce goods f[or] Europe-Australia receives payment
for her European surplus in inconvertible currencies-already
dollar restrictions are hampering Australia's capacity to produce
a relatively small additional supply of dollar imports would
enable Australia to provide a much larger volume of exports to
Europe, and thus ease the burden of E.R.P. on U.S.A. Such a
statement might do a good deal towards getting Australia's
position better understood. [3]

[AA: 2910, 453/7/1, vii]

1 R.W.B. Clarke, Under-Secretary at the UK Treasury, had
emphasised the need for further dollar savings and suggested that
some sterling area countries might consider making adjustments in
the direction of trade with a view to assisting their own dollar
2 Sir Wilfrid Eady, Joint Second Secretary, UK Treasury.

3 In a letter to Wheeler dated 20 May 1948, Bury commented that
the statement would be especially effective if supported by
factual evidence to show that a small increase in dollar imports
would lead to an income in the volume of food exports to Europe.

[4.] I can appreciate Britain's dilemma. It is clear that active
Last Updated: 11 September 2013
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