Today the Ministers discussed separately the short term problem
and longer term policies. Officials had preparatory discussion on
longer-term policies.

2. The United Kingdom officials gave more detailed account than
hitherto of Cripps-Snyder and Abbott discussions. They confirmed
that the Americans had adopted a listening role. There is no
indication of what the United States might do in 1949/50.

3. Australia questioned the adequacy of the United Kingdom 6
points (para 8 of our No.1) [1] and emphasised the necessity to
take up with the Americans in September the following additional
issues
(a) Necessity for building pattern of self-balancing trade over
wider area than sterling dollar area alone and to include Eastern
Europe. International political policies may have to be adjusted
for this purpose.

(b) Review of international machinery for investment.

(c) Need for changes in the structure of United States industry,
particularly high cost agriculture, to accord with present status
of United States in world economy.

4. New Zealand mentioned problems of German and Japanese trade and
Asian
Dominions stressed development needs on familiar lines. There will
be further discussion of 6 points and of draft agreed conclusion
which United Kingdom has circulated (see separate telegram).

5. On procedure, Cripps welcomed continuing consultations (details
yet to be worked out) on approach to be made to Americans in
September.

6. In first ministerial discussions of the immediate problem,
Cripps underlined the necessity for action. He reported the latest
figure for reserves as down to 385m.

7. I pointed out Australia's position with regard to difficulties
of immediate reduction of dollar imports in view of licensing
procedure, etc., but indicated that, subject to further
examination by my Government, it was possible that a reduction of
A10m. might be made in the level of licences issued during
1949/[5]0.

8. Other Commonwealth Ministers had indicated similar difficulties
in making immediate cuts. India understood the necessity for
adequate pooling of sterling resources of dollar supplies had to
be dispensed with. There was more emphasis in the discussion on
the problem of United Kingdom high costs. Cripps reasserted the
United Kingdom intention to take remedial measures. He declined 1
or 2 opportunities to comment on devaluation. The discussion was
adjourned without conclusions being reached.

9. One feature of the discussion was a comment by Abbott that
Canada saw no prospect of making credits available under the
present balance of payments position, primarily because of the
United States dollar loss through United States commitments in
many Canadian markets. In response to a question from Nash, Cripps
expressed the opinion that because of the inclusion of R.S.A. [2]
deficit in E.R.P. no United States dollar loans would be available
for sterling area countries. We propose to follow up this point
further.

10. Discussion on all aspects will continue tomorrow among both
Ministers and Officials, and Officials will meet on Sunday to
prepare for final plenary meeting on Monday.