Following is the text of the confidential agreed Minute:

1. The Meeting of the Commonwealth Finance Ministers welcomes the
discussions which have taken place between the United Kingdom,
Canadian and United States Ministers, and agrees that the aim must
be the achievement of a pattern of world trade in which the dollar
and non-dollar countries can operate together within one single
multilateral system. The meeting notes with satisfaction that
further discussions are being arranged to take place in Washington
early in September to consider action required to carry out this
aim for the mutual benefit of dollar and sterling countries.

2. The meeting considers that the achievement of this aim will
require action by all countries concerned which may involve
important modifications in policy. The objective conditions in
which a single multilateral system of world trade and payments is
practicable do not at present exist. To establish them will
require action by all countries both in concert and individually.

The responsibility falls both on surplus and on deficit countries.

3. Accordingly the policy of all countries should be directed
towards-
(a) Implementing their obligations under international agreements
to take steps to promote full and productive employment without
which a high level of international trade cannot be sustained.

(b) Facilitating the establishment of a world-wide pattern of
production and international trade such as to make possible a
system of international payments which is self-balancing.

(c) Developing the agricultural and industrial resources of under-
developed countries in order to increase their levels of
production and consumption and to enable them to play their full
part in building the system of multilateral trade and so
contribute to full employment.

(d) Exploring further the conditions and the machinery for the
organisation of an adequate flow of international investment for
all forms of productive development.

(e) Restoring international monetary Reserves generally to the
levels which can accommodate reasonable fluctuations in
international balances of payment.

(f) Collaborating in arrangements designed to ensure reasonable
and stable prices for primary products.

4. A major aspect of the present disequilibrium in world trade is
the lack of balance between the dollar countries and countries of
the sterling area. In the past few years substantial financial aid
from the United States and Canada has been necessary in order to
balance the sterling area's dollar accounts. The object of the
policy is to achieve balance without this extraordinary aid on the
basis of a higher level of transactions and normal working of the
multilateral pattern of trade.

5. The achievement of a more reasonable balance between dollar and
sterling area countries can be facilitated by the development of
trade between these two areas and other countries. Nevertheless
any such development will not of itself relieve sterling area
countries of the necessity to take direct measures to secure such
balance.

6. This balance in the sterling area's dollar account at a high
level of trade therefore requires a large expansion in dollar
earnings of the sterling area countries and the development of
production at competitive prices in the sterling area which will
reduce the need for abnormally large imports from dollar
countries.

7. This suggests the following course of action by sterling area
countries
(a) To increase the supply of manufactured goods and primary
products competitive in price and quality:

(1) to dollar markets;

(2) to appropriate sterling area and other markets at present
abnormally dependent upon supplies from dollar countries.

(b) To increase the supply of dollar earning services including
tourist services.

(c) To promote such adjustments in the pattern of production as
are necessary to achieve (a) and (b).

(d) To promote reasonable conditions designed to facilitate
investment by surplus countries.

8. In order to sell at competitive prices sterling area countries
should where necessary take measures to reduce their costs of
production and should-
(a) Bring any remaining inflationary elements in their countries
under control.

(b) Bring claims upon their productive reserves both for
investment and for consumption into line with the resources
currently available to them, including external borrowing.

(c) Encourage action designed to increase efficiency in
production.

9. Action by sterling area countries alone cannot create
conditions necessary to

establish a multilateral trading system. This requires that all
countries should carry out the policies in paragraph 3 above, and
all deficit countries should carry out policies on lines indicated
in paragraphs 7 and 8 above. Moreover surplus countries should
make their full contribution to the building of a multilateral
system by-
(a) Maintaining a high level of employment income and demand.

(b) Assisting and encouraging the purchase of goods and services
from other countries.

(c) Encouraging international investment by their nationals and
through national and international institutions, particularly
under conditions which do not impose limitations on the area
within which funds can be spent.

(d) Promoting the gradual transfer of resources within their
territories from forms of production in which their costs are
relatively high compared with those of other countries.

10. Emergency measures to stem the current drain on the sterling
area's Reserves are perforce negative and unconstructive. It is
therefore all the more necessary to take in the immediate future
any positive and practical steps that will lead towards agreed
long term objectives. In this connection care should be taken to
concentrate upon measures which would fit into the permanent
pattern of world trade.

11. The Meeting considered that these steps should include-
(I) The speediest possible increase in efficient and economic
production within the sterling area of those commodities which can
earn dollars or which the sterling area would otherwise have to
purchase for dollars.

(II) Co-operation to secure the most effective use of resources
available to the sterling area in the interests of the area as a
whole, even where this involves some measure of sacrifice on the
part of individual countries, such as doing without sterling area
goods that in common interest should be sold for dollars.

(III) Expansion of sales of sterling area goods in dollar markets
with special attention to prices, selling methods and market
requirements.

(IV) An intensive effort to increase the sterling area's dollar
earnings from the provision of services of all kinds, including
tourism. The Meeting decided to set on foot immediately a detailed
examination of application of the policy outlined above.

12. There was a full discussion of developments which had led to
the recent serious drain on central reserves of the sterling area
and the gravity of the position was recognised by all
representatives present. With the Reserves standing at 30th June,
1949, at a figure of approximately 400,000,000, it is clear that
if they continue to fall at the present rate they would be
completely exhausted within about a year. This would mean the
collapse of the sterling area with incalculable consequences to
all countries concerned. The sterling area members of the
Commonwealth agreed that in the first instance they must check
this decline in reserves by every practicable means, and that
immediate action to this end was vital to the very existence of
the sterling area. With the foregoing considerations in front of
them they examined the immediate prospects of the sterling area in
full detail.

13. The sterling area representatives present reached agreement on
the probable level of dollar earnings of the sterling area
(excluding South Africa) in 1949/50 and examined the additional
gold and dollar resources likely to be available from grants and
loans to the United Kingdom and from receipts by the United
Kingdom of newly mined gold. They agreed that the amount which
could be made available from all these resources for their
aggregate expenditure on dollar imports in 1949/50 could not
exceed $2,000 million.

14. In the light of these circumstances they agreed to recommend
to their Governments that each should reduce their demands in
respect of dollar imports on the abovementioned resources in
1949/50 by a proportion equal to that announced by the United
Kingdom. To the extent that it has not already been done, the
representatives present agreed to recommend that their Governments
should achieve this objective by immediate action comparable with
that already taken by the United Kingdom by way of standstill
measures, by re-programming of imports, [and] where appropriate by
other means. The Ministers agreed to inform each other within one
month of the measures which their Governments had resolved to take
in the light of these recommendations. They also agreed that the
situation should be kept under constant review so that further
consultations could take place immediately developments appeared
to make necessary any adjustment in the measures contemplated
above. They further agreed that the re-building of the sterling
area reserves as quickly as possible was of paramount importance,
and that they should all make the maximum practicable contribution
to this end. It is important that there should be arrangements for
continuing consultation between the Governments concerned to
ensure that the most effective measures are taken at each stage to
secure the objective in view. It is suggested that the existing
machinery should be used to study the problems which arise from
recommendations of this Meeting and that officials at present in
London should continue discussions during this week. [1]