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BOARD OF GOVERNORS

SECRET

OF THE

FEDERAL RESERVE SYSTEM

Office Correspondence
To_

Chairman Secies

Date July 22, 1947
Subject: Outcome of negotiations with the
British concerning the resumption of
for sterling*

I should like to give you a brief report upon the outcome of the
negotiations with the British concerning the resumption of convertibility
for sterling on current transactions •
(1) The net result is that as of July 15, the British appear to
have accepted their full obligations under the Anglo-American Financial
Agreement, except that they were given two months1 extension of time to
complete technical arrangements for making sterling convertible in current
transactions with the following list of countries:
Western Europe:
France and Denmark
Eastern Europe;
Austria, Bulgaria, Greece, Hungary, Polaai,
Bumania, Turkey, Yugoslavia, and the USSR
Far last:
China and Siam
ftouth America:
Paraguay
In granting the two-month postponement on these countries,, the U.S. Government
stipulated that the technical arrangements to be made with these countries should
provide retroactively for the free use of the sterling which they earn between
July 15 and the date the arrangements are agreed to*
(2) The British did not originally ask for postponement in the case
of France and Denmark, but we objected to certain technical features of the
arrangements which the British planned to enter into with these two countries.
A brief extension therefore had to be granted in order to provide %±m for revision of those arrangements.
(3) The British had asked for an indefinite extension in the case
of China on the ground that it was not feasible to carry out the terns of the
Financial Agreement in this case. "When we replied that while it m i ^ t not be
altogether feasible, the British should nonetheless use their best efforts to
Comply with the teris of the Agreement, they requested a ^ o n t h f>*f J
to attempt to make the necessaiy arrangements. Secretary S^yderjmt thxs down
to two months, however, and added his "hope that you /the British may be able




To: Chairman Eccles

-2-

to complete the necessary arrangements within that period of time,*
(4) The British had warned us that it might be necessary to request an extension in the case of Switzerland, but we disagreed with the
grounds on which they said they would base such a request. In the end, we
were simply infonaed by the British that they were happy to say that the
Swiss problem had been settled to their satisfaction and that full convertibility of Swiss sterling would take effect as of July 15• The British also
made last minute arrangements with a number of other countries which avoided
the necessity of further requests for extension of time*
(5) In a letter of July 10 to Mr. Dalton dealing with a number of
the above matters, Secretary Sayder stated that:
"lour letter does not clarify for me, as I had hoped
it would, the arrangements vhich you expect to make -with regard
to the unsettled sterling balances held by sterling area and
other countries, nor is it clear to me in what manner certain
sterling area countries will be ensured of having their sterling
and dollar receipts at their free disposition after July 15• I
hope that you will provide us with detailed information on these
matters.11
Mo reply has yet been received to this request for information, but one has
been promised.