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To:

Chairman Eccles

October 22, 1945

From: Mr. Knapp

Governor Towers of the Bank of Canada, in the course of a
conversation today, gave the following information concerning Canada1 s
foreign lending during
He stated that the general anticipation was that such lending would
have to be undertaken to an amount of some Can. |900 million (say U* S. #800
million). He said that in the current Canadian war loan drive this figure
was being given to the official canvassers and workers as a measure of the
extent to which the proceeds of the loan would be used to finance foreign
countries. He emphasized, however, that the figure had no firm basis. No
such sum has been promised up to this time to foreign governments nor has
the Government secured authority from Parliament to extend credits in such
an amount.
Governor Towers offered the following remarks concerning the particular credits which might be offered:
1. The United Kingdom would require extensive assistance from
Canada during 1946, but Governor Towers named no specific figure
and insisted that no discussions concerning a figure or concerning credit terms had so far taken place with the British. He
said that Lord Keynes, in his visit to Canada before the opening
of negotiations here, had simply brought up-to-date information
concerning the British position and had deferred any negotiations
with Canada pending the outcome of those with this country. It
was clear, however, that Governor Towers expected Britain to
account for the bulk of the United States $800 million*
2. Relatively small loans were being made to a number of liberated countries including France, Belgium, The Netherlands,
Norway, Czechoslovakia, and the Netherlands East Indies* These
loans were specifically for the purchase of Canadian exports.
3ยป Tentative loan negotiations with Russia had fallen completely
flat. It appears that the Russians came in with a proposal for
a "very large11 loan to be amortised over a long period at a very
low rate of interest, and as a condition of the loan asked that
25 per cent be knocked off the price of all Canadian exports to
be financed by the loan. Governor Towers obviously took a "dim11
view of this proposal and said that the Russians were politely
but firmly told that their offer did not constitute a reasonable
basis for negotiation.

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