Evening star., 1949-09-13


countries has been accustomed to
hold either all or a part of their
foreign exchange reserves in the
form of sterling. The existence
and availability of such holdings
is an integral feature of the wide
spread multilateral use of sterling
for the purpose of financing inter-
national trade. One of the prob
Iems of the postwar period has
oeen the existence of exceptional
~ large accumulations of sterling
which we're built up, mainly dur
lngthe war. as the result of pay
ments by the United Kingdom for
goods and services purchased
overseas in furtherance of the
common war effort. In June, 1945,
these balances amounted to $l3,-
500, 100000. Since then there
have been considerable f1uctua-
tions both in the total and in the
holdings of individual countries,
though the amount outstanding
at the end of 1948 was approx
imately the same as at June. 1945.
(B). In principle the whole OF
these balances represents a charge
on United Kingdom production OF
goods and services. In practice,
however, a substantial proportion
will continue to be held as reserves
by the countries concerned. To
the extent that the balances are
some proportion OF
United Kingdom production of
goods and services is used to dis
charge this liability instead of to
pay for current imports OF goods
and services.
tC). This whole problem in its
various aspects, including the
necessity to provide capital goods
for development, was discussed in
a preliminary way on the basis OF
prior technical examination by
the experts of the three govern
ments. 1t was agreed that this
was one of the subjects which
concerned other countries and
would require further study.
Special Problems Discussed.
IA. Investigation of the ways in
which the sterling area could
move toward a position in which
it could earn its own way led
to the discussion of other special
problems, including petroleum and
important elements
in the sterling area balance of
payments picture. The United
representatives set forth
the facts of the very large dollar
deficit which the sterling area
presently incurs because of oil
and their desire to
reduce this deficit to the minimum
possible level. It was mutually
recognized that the question of oil
and refining, and geo.
distribution raised prob
lens of extreme complexity
involving the protection of legiti-
mate interests of the major pro-
ducing countries and companies.
The ministers recognized that
these two questions of petroleum
and shipping could not be re-
solved in the short time available
to them, and that further study
would be required. In the case
Of petroleum they agreed to ap-
point representatives to analyze
the facts and to provide the basis
for subsequent discussions.
8 is. There has been agreement
on the objective toward which
policies should be directed and
agreement on certain immediate
steps which will be taken to bring
that objective nearer. There are,
however, as has been emphasized
a number of questions requiring
closer examination than this short
has allowed. 1t is
proposed, therefore, to continue
the examinations, initiated during
the conference, of questions on
which it is hoped that useful un-
derstanding can be reached under
the direction Of the present min
isterial group. These arrange
ments for continuing consultation
.supplementing the usual chan
nels of communication between
governments-wil1 be used to keep
under review the effectiveness OF
actions already agreed upon and
to prepare, for governmental con-
measures which could
carry further those adjustments
which are considered to be nee
essary. In establishing these
arrangements for continuing con-
sultation, the three governments
wish to emphasize that these
arrangements underline rather
than diminish their interest in the
development of economic COOP
Grafton within the entire COM
munity of Western nations. The
tripartite arrangements will not
in any way encroach upon, OF
detract from, the area of COM
petence Of the OEEC and other
existing organs of international
economic collaboration. On the
contrary, these arrangements fol
continuing consultation, by con-
tributing materially to the solu-
ton of problems which today ad-
versely affect the working OF the
entire OEEC group and yet are
not susceptible of solution within
that group. will facilitate the
progress of economic collabora-
ton in the wider field.
16. In summary the Ministers oi
the three countries concerned are
satisfied that a real contribution
to the solution Of the sterling
dollar difficulties has been made
by the conclusions recorded above
They are confident that. with sus-
tanned efforts on all sides and with
the seizure of every opportunity
by sterling area exporters to enter
into and remain in dollar markets
which are open to them, there Is
the prospect Of reaching a salts
factory equilibrium between the
sterling and dollar areas by the
tiroa axcentional dollar aid comes