We think that Commonwealth Governments will wish to be aware of
how our thoughts are developing here with regard to certain
aspects of our economic planning for the future. The central
economic planning staff here has been engaged in working on a
programme for the United Kingdom for 1948-52.

2. As the Commonwealth Governments are aware in response to
requests by the United States authorities OEEC [1] countries have
agreed to prepare a programme showing how they intend to attain
viability in 1952-3 i.e. on the termination of aid. United States
authorities emphasised that such a programme is an essential part
of the preparation of the case for the second appropriation on the
outcome of which it may have a very great influence. They have
asked that the submission by OEEC of the completed programme
should be made not later than 15th November (so that it may be
available in time for them to prepare their case for the second
year's appropriation which will be considered by Congress in
January): accordingly it has now been decided by OEEC that the
programmes by individual countries should be despatched to Paris
by the 1st October. There would thus be a period of six weeks in
which the programmes of the individual countries could be
correlated and adjusted and the completed programme prepared.

There are obvious difficulties in the preparation of such a
programme especially in so short a time. The United Kingdom
pressed for the date of submission to be put back possibly to the
beginning of 1949. We were told however that this would be too
late for the preparation of the case for Congress and as indicated
above OEEC agreed to the preparation of the programme by 15th
November. On the other hand we are impressed with the advantages
from the point of view both of the important effect on United
States opinion and of the encouragement to other participating
countries to adopt schemes of European co-operation which are of
interest to us.

3. The present position is that the council of OEEC have settled
the broad lines on which the programmes by participating countries
should be drawn up. It is hoped that the instructions may be
received from Paris shortly and the compilation of the necessary
reports and returns by this country will involve us in intensive
study during the next two months. Copies of the instructions will
be forwarded as soon as received. We shall also be communicating
our programme to the Commonwealth Governments as soon as we are in
a position to do so.

4. The basic consideration in the formulation of our long-term
programme will be that we must emerge after the E.R.P. period with
gold and dollar reserves at no lesser amounts than they were at
the beginning and it is in our common interest to resist any
further drawing down of our reserves.

5. Each country will base its programme for submission to Paris on
a tentative
forecast of its balance of payments in 1952. In our own case
certain conclusions which appear to emerge are that
(I) We are likely to be in substantial deficit with the dollar
area for some time to come and shall therefore still have to
continue and indeed to increase our diversion of imports form the
dollar area to other sources, and
(II) Even with considerably increased exports we might have to be
content with a volume of imports lower than in 1938.

6. As regards the other participating countries it is likely that
many of them will expect to be short of sterling in 1952. The
tables provide for non-sterling participating countries to show in
their balance of payments forms a separate column indicating their
balance of payments with the rest of the sterling area.

7. Conditions of production and trade in the world outside the
area of Western Europe will be of great importance in drawing up
the OEEC plan. The secretariat is accordingly making arrangements
to secure the necessary information about other parts of the world
(for example the Economic Commission for Europe is being asked to
provide information about Eastern Europe). The United Kingdom have
been asked by OEEC to furnish information about the general lines
of development in other Commonwealth countries. Our delegate
informed the committee that we could not give any undertaking to
make available information about developments in other
Commonwealth countries but that we would be willing to bring the
proposal to their attention and communicate whatever information
they are able to supply. We shall be communicating with you
separately about this.

8. It will be clear that there are likely to be a number of
matters which will call for close and direct consultation with
Commonwealth Governments. We shall naturally take every
opportunity to keep Commonwealth Government in touch as our
planning develops.

Should propose to do this through ordinary official channels or by
discussion with appropriate officials in London. Whenever this may
be possible. In particular, we are looking forward to an
opportunity of exchanging views with Prime Ministers at the
contemplated meeting in October. In this connection it should be
explained that although the United Kingdom programme will have to
be submitted to OEEC by 1st October, we should propose to make it
clear that this was provisional until this exchange of views has
taken place. The Chancellor of the Exchequer took the opportunity
of mentioning this aspect of the matter to Mr. Hoffman [2] during
their recent discussions in Paris, and the latter said that he
quite appreciated the position. But it must be emphasised that we
must confirm our programme not later than the 15th October.

9. Owing to the closeness of the time-table and in view of the
important issues involved we should greatly welcome the
opportunity of advance discussion of our plans with appropriate
Commonwealth representatives in London. In this connection we have
arranged that Sir Edwin Plowden, head of the Central Economic
Planning staff, should be available with other experts concerned
for consultation with Commonwealth representatives on planning
questions. We hope to keep this arrangement as flexible as
possible, and our intention would be that it would cover the
exchange of information on any planning matters at the initiative
of either party. As the next few months will be of great
importance it is hoped that Commonwealth Governments will feel
able to arrange for qualified officers to be available in London
for this purpose.