46 Dedman to Chifley
Cablegram F16 LONDON, 22 July 1949, 8 p.m.
7. I discussed the question of borrowing by Australia with the
Chancellor privately and there have been informal exchanges
between officials. The Chancellor promised his full support should
Cabinet decide on this course. United Kingdom officials have
suggested deferment of any possible Australian approach to the
Fund until the United Kingdom allocation of E.R.P. aid has been
decided (probably about end of August) so as to avoid any
possibility of the Americans reducing the amount included for
R.S.A. deficit, it should also be remembered that the present Fund
policy is to refuse drawings to E.R.P. countries and it is
possible that for this purpose the Fund might regard Australia as
an E.R.P. country because of the inclusion of the R.S.A. deficit
in the E.R.P. allocation to the United Kingdom. However, the
United Kingdom officials feel that the obvious inadequacy of the
E.R.P. during the current year removes the actual basis for the
Fund's previous policy and that in the case of Australia the point
should not prove troublesome.
8. The question has also been discussed with McFarlane who whilst
not underrating the possible difficulties of the American attitude
particularly as regards to R.S.A. deficit and also perhaps the
Southard memo feels that a cogent case could be made and that it
would be hard for the Fund to turn it down. McFarlane will not of
course make any soundings even on an informal basis until
instructed from Canberra.
9. With regard to the long term plans you will have gathered that
at the Cripps, Snyder, Abbott discussions, no concrete proposals
were examined. In this respect the chief result of this week's
conference has been to achieve a valuable broadening of the
framework for the subsequent discussions when concrete proposals
will be examined.
10. We placed great emphasis on the need for a world wide pattern
of self balancing trade and feel that we obtained recognition from
the United Kingdom of the importance of this aspect of the problem
including the importance of alternative sources of supply such as
Eastern Europe and the significance of trade policies for Germany
and Japan as part of the stable pattern of trade. While the United
Kingdom have accepted our argument as logical in terms of
objectives and while United Kingdom officials say they will take
specific action to develop their own trade with Eastern countries,
we do [no]t, however, feel confident that they will make the
policy of other Western countries towards trade with Communist
areas an issue on their subsequent consultations with O.E.E.C.
countries and the Americans,
11. The United Kingdom officials have not yet evolved any concrete
propositions to place before the Americans in September.
[AA: A1838, 708/12/1A]