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d£T*EE* THE BOVfciNiLSTS Jt TiiE U M T L D
b Tilt UUlfED KINSWtf
It is hereby agreed between the Government of the
United States of America and the Government of the
United Kingdom of Great Britain and Northern Ireland as
follows:
1.

Effective date of the Agreement.

The effective

date of this Agreement shall be the date on which the
Government of the United States notifies the Government
of the United Kinraom that the Congress of the United
States has mace available the funds necessary to extend
to the Government of the United Kin^aom the line of credit
in accordance with the provisions of this Agreement.
2*

Line of credit.

The Government of the United

States will extend to the Government ol tne United r a n d
a line of credit of

V3,750,00J,JJ0

which may be drawn

upon at any time between tne effective date of tnis Agreement
and December 31, 1951, inclusive.
3.

Purpose of the line of credit. The purpose of

the line of credit is to facilitate purchases by the
United Kingdom of eoods and services in the United States,
to assist the United Klngdoia to r.»eet transitional postwar
deficits in its current balance of payments, to help the
United Xin^io- to maintain aaequ- te reserves of ^oid and



dollars, a-.i to assist the Government of the United Kingdom

to assurae the obligations of nultilateral trade, as defined in this and other agreements.
4. Amortization and interest,
(i) The amount of the line jf credit drawn by
December 31, I J O I , shall be repaid In 50 annual installments beginning on December 31, 1951, with interest at
the rate of 2 percent per annun. Interest for the year
1951 shall be computed on the amount outstanding on
Decenber 31, 1951, and for each year thereafter, interest
shall be computed on the amount outstanding on January 1
of each such year.
Forty-nine annual installments of principal repayments and interest shall oe equal, calculated at the rate
of $31,823,JOO for each J1,000,000,0JO of the line of
credit drawn by December 31, 1951, and the fiftieth annual
installment shall be at the rate of £31,"340,736.65 for
each such $1,000,000,000. Each installment shall consist
of the fall amount of the interest due and the remainder
of the installment shall be the principal to be repaid
in that year. Payments required by this section are
subject to the provisions of section 5.
(ii) The Government of the United Kingdom may
accelerate repayment of the amount drawn under this line
of credit.



5. waiver of interest payments. In any year in
which the government of the United Kingdom requests the
Government oi" tne United States to waive the amount of
the interest aue in the installment of that year, the
Government oi' the United States will tyrant tne waiver
if:
(a) the rroverrunent of the United Kingdoa
finds that a waiver is necessary in view of the
present and prospective conditions of international exchange and tne level oi its rold and
foreign exchange reserves and
(b) the International Monetary rund certifies
that the income of the United Kingdom from homeproduced exports plus its net income from invisible
current transactions in its balance of payments
was on the average over the five preceding calendar
years less taan the averse annual amount of United
Kingdom imports daring 1936-8, fixea at fe8^ million,
as such figure may ue adjusted for changes in the
price level of these imports, Any amount in excess
of t43,750,0J0 released or paid in any year on
account of sterling balances accumulated to the
creiit of overseas governments, monetary authorities and banks before the effective aate of this
Agreement shall be regarded as a caoital transaction



and therefore shall not be included in the above

calculation of tr.e net income from Invisible cur:*er.t transactions for that year.

If waiver is

requested for an i n t e r e s t payment

>rior to t h a t

iue iu I'Jbb, t^e average income si.all ^e computed
fop ~.e c a l c . i t r

vt^rs

i'r^::. 1*50 through' tne year

'.rece^i;.^ t:.:.t i:. A:.1C*4 t:*e re Quest is ;.aacLe.
G.
t i o n s.
(i)

. t l o r . ol' t : . i s l i r . e J l ' c r e d i t

to j t . . ^

I t i s understood t h a t any amounts r e q u i r e d to

discharge J b l i ^ s t i o n s oi' ti.e United iwin uc. to t h i r d cou:.t r i e c o u t s t a n d i n g OP. the e f f e c t i v e

date J I ' t h i s ^ r e e m e n t

w i l l be found fro;n r e s o u r c e s otr.fr than t h i s line of c r e d i t
(ii)

Dhe jovemmer.t jf ti*e United Kin;*don w i l l not

arrange any lont*-ter; loans fro.ii

r

overn .e-.ts within tiie

d r i t i s h Coimonwealth a f t e r December r", Ly-«O| and befjre
the erAd of 1 V J51 on terras uore icvort-uie to the lender
than the tem.s oi t:.is line af c r e d i t .
(iiij

<«aiver uf i n t e r e b t w i l l not oe re cues tea ~r

alloweu under s e c t i o n 5 i.\ anj year i r . . ^ :

tiie * ; ; r t • te

of ti.e reler-ses ^r payments in i : . ' t year jf s t e r l i n g balances accumulated to cue cr« l i t *f ov ;• • L -jvernnier.ts f
monetary a u t h o r i t i e s ana barnts ^except in t;.e case .1"
c o l o n i a l dependencies J before

trie e f f e c t i v e

Agreement i s rec ,o.d p r o p o r t i o n a t e l y f

date jf t:.^c

arid m i e s s

payments due in t h a t year o:\ loans rei"err< 1 t



above are waived.

The p r o o o r t i c n a t e r e ; metier.

interest

ir. ( i i >
:' v.t

payment! oi sterling balances shall be calculated in relation to the aggregate released and paid
in the

ost recer.t year in wiuch waiver of interest was

not requested.
(ivj

Fhe application of the principles set forth

in t;»is section s;.ail oe tue suoject of fall consultation
between t .e two governments as occasion may arise.
1^^ area exchange arrangements.
Trie Government ol' the United Kingdom will complete
arrangement* as early as practicable ana in any case not
lster than one year after ti;e effective aate of this
n,'ree.T.ent, unless in exceptional cases a later date is
'± *ree « up^n al'ter consultation, under which immediately
alter the co:.,:letion of such arrangements tne sterling
receipts from current transactions of nil sterling area
countries (apart from tuy receipts arising out of military
expenditure by the Government of uie Jnited Kingdom prior
to December 31, 1^45, to the exte.it to which taey are
treateo Dy &rree.nent vith the countries concerned on tne
z-\ ^e basis us tne balances ac^o.nalated during the w*-r)
will be freely availaole for current transactions in any
currency ;-rea without discrimination; with the result
that any discrimination arising from the so-called sterling
ares dollar pool will be entirely re.noved and that each
i -L* ? of the sterling area will have its current sterling
and iollar receipts at its free aisoosition for current




transactions anywhere.

3.
(i)

Other exchange arrangements.
The Soverrment of the United Kingdom agrees

that a l t e r the el'i'ective date of this A^ree.ier.t it will
not apply exchange controls in sjch a manner as to r e s t r i c t
[aj payments .:• tra-.sfers in respect of prodjcts of tne
United oi'.tes permitted to be i:nportee into the United
Kingdom or other current transactions between the two
countries ^r [a) the use of sterling balances to t;.e
credit of residents of t\e United states arising j j t of
c^rrer.t transactions.

Nothing in this para-raph ( i ) Shall

affect t,*e provisions ^i" a r t i c l e VII ot tne a r t i c l e s of
A.-'reement of tr.e International monetary tuna when those
articles nave ccae into Torje.
(ii y

i'ne jovernaients of tne United States and the

United Kin^doij a,^ree that not xater then one j'ear after
the effective aate of this n..-ree:r.ent, unless in exceptional
c?ses a later iate is agreed d-pov. alter consultation 9 they
will i:mose r.o restrictions on payments a:id transfers i"«r
Cerent t;':...^ r vctl;..s.
v

il*e jbll • t'ior.s jf this oara^raph

11 y c a l l rut -k : 1^ :
[aj

to balances ji third coontries and

ti.eir nationals ace-La-la ted Defore this parajrapL
( i i ) .ccoi.es effective; ^r

(b) to restrictions Laposed in conformity
with the articles of Agreement of t:Ae international




Monetary rani, proYiaea th t tue jovernaents of
the United Kingdom ana t^e United at: tes will
not continue t^ invoke c e provisions of article
XIV, Section C Df those articles alter trus
paragraph (iij ueco.nes effective, unless in
exceptional cases after constitution they e^ree
otherwise; or
(c) to restrictiohS i:.po;>ed in connection
with neas^res designed to ancover and dispose of
assets of jermany ana Japan.
(iii) This section and section J, which are in anticipation of . - o e comprehensive arrangements by multilateral
..r
agreement, shall operate until December 31, 1951.
9.

Import L>ritba^einbnts«

If either the 'Joverument

of the United States or tne governnent of tue Uniteu
Kingdom imposes or maintains quantitative import restrictions, such restrictions shall be administered on a basis
which does not discriminate against imports from tne otner
country in respect of any product; provided that this
undertaking shall not apply in cases in which (a) its
application would nave the effect of preventing tne country
imposing such restrictions from utilizing, for tne purchase of needed imports, inconvertiDle currencies atcumulated up to Uecemoer 31, Iy46, or (b) there may be special
necessity for the country imposing such restrictions to



• o assist, cy aeasurtl not involving a substantial aeparl^re fros tne -enerai rule of non-discrimination, a
co uitry whose econoxy has been disrupted by war, or
^c} either -cvernxent imposes quantitative restrictions
havir.r equivblent effect to any exchange restrictions
'Which that government is authorized to impose in conformity with Article VII of txe Articles of Agreement
of tiie International .zonetery rund.

The provisions of

tiis section shall become effective es soon as practicable
but ".ot later than ijecember 21, 1S46.
10.

AccuinulHted sterling oalances.

(i)

Tr.e jOvenuLtnt of tne United Kingdom intends

to nftke a.;ree::.er.ts with the countries concerned, varying
according to tne circumstances of each case, for an early
settlement covering the sterxinp; oalances accumulated by
sterling erea arid other countries prior to such settlement
(together with any future receipts arising out of military
exoendit ire by the jovernnent of the United Kingdom to
the extent to which they are treated on t£e same basis
by agreement with the countries concerned).

The settle-

ments with the st$rlin£ area countries will be on the
basis of dividing these accumulated balances into three
categories (a) balances to be released at once and converticle into any currency lor current transactions,
(b) balances to be similarly released by installments
over a period jf years bejinnir.g in 1^51, and (c) balances




tc be adjusted as a contribution to tne settlement ot%
w r and postwar indectedness i:.i in recognition of the
benefits w:.ic:. t..e countries concerned xi*ht be expected
tc ~air. from such a settlement.

Fhe jovernaent of the

United Kingdom w i l l aake evei\. enceavor to secure the
early completion of these arrangements.
vii;

In consideration ol' tne Tact that an important

purpose of the present line o:' c r e d i t i s to promote tne
development jf multilateral tr^ae ana I ' a c i i i t a t e i t s early
resumption on a non-discriminator) u a s i s , the J^verrrient
of tne 'Jnited Kingdom agrees that any sterling balances
released ^r citheniise avuilaole for current payments w i l l ,
not .ft t e r than one year after tne ei'ie-tive aste of this
Ae^reer.ent unless in special cases a i::ter date is agreed
upen after consultation, be freely available t*jr c ; r r t : i t
trans ctions in any currency ares witLjul

iiscriziinr.tion.

tor the pjrjcses ol this A

(ij

rhe ter::. "current trahocctioas"

aave tne r^eanj ; prescribeo in a r t i c l e AIX ( i )
af the Articles ol k^reesent ^f tne International
Monetary Fun i.
(ii;

rh( ter.n "sterling area" ^eans tLe

' J n i t e d Kin m do.ii and t . . e o t n f . r t e r r i t o r i e s

.ecired

bj tne Defence [Finance) (definition Df Sterlinr




- 10 Area) (No. 1 ) O r . e r , i j i - i ,

to be included in

::.e s t e r l i n g a r c t , namely "the f o l l o w i n g

terri-

t o r i e s excluding Car.aua *nd Newfoundland,

that

i s to ssy —
\h)

any ^j.r.inlon,

(oj

any other p^rt ji' His .v!a^estf. ' s
j o :.i in i o n s i

(?)

any t e r r i t o r y in r e s p e c t Di' which
a mandate zr> Lehslf of the Lea.-ue
of Nations Las been accepted by
n i s uiajestv >j:.a i s oei:.-- e x e r c i s e d
mm

—

by His ...a jetty's }cverrunent in
the United Kinjdon or in any
Dominion,
(a)

any British protectorate or protected
State,

(e)

Egypt, the Anglo-t^yptian i>udan and
Iraq,

(:')
12.

Iceland and the raroe Islands."

Consultation on Agreement.

Either -^overrment

snail ce entitled to approach the other i j r L reconsideration oi any ol' tne provisions of this Agreement, if
in i t s ooinion tue 'jrevailin-- conditions of international



- 11 .
exchange justify such reconsideration, with a view to
agreeing upon modifications for presentation to their
respective legislatures.

Signed in duplicate at Washington, District of
Columbia, this 5th day of December, 1945.

For the WVEhKiOT OF ffiE UNITED STATES JF iUEhlCA:

Secretary oyE the Treasury
of the United states of America

For the WVERXiLNT JF ffiE UM1ED KINSDGM JF GivEAT bhITAIN




His iia4e*t3r*T Ambassador Extraordinary
and Plenipotentiary at Washington