BRITAIN JIBS AT MORE DOLLAR LOAN BURDENS

Gisborne Herald, Volume LXXV, Issue 22654, 3 June 1948, Page 5

BRITAIN JIBS AT MORE DOLLAR LOAN BURDENS

i .N l\.\ (0 a.m.) WASHINGTON, June 2. Britain has informed the Economic Co-operation Administration that it cannot accept dollars in the form of loans unless they are intended for self-repaying projects and not for the consumption of goods.

The result of this decision will be that the 100,000.000 dollars tentatively allocated to Britain by '.he Economic Co-operation Administration in loans for the quarter ending June 30 may lie idle for some time while British officials and Administration experts work out details of projects mutually satisfactory to both sides.

British officials have been considerable exercised about the advisability of accepting more dollars loan burdens. They were disturbed over the fact that of Britain’s current quarter allocation of 400,000,000 dollars in grants and loans under the Marshall Plan 23 per cent was specifically labelled as being available on a loan basis only. It is understood that, these loans will carry a heavier interest rate than the original post-war American loan to Britain thereby adding to the considerable annual dollar repayment obligation that Britain must assure, starting in 1952.

The decision, therefore, is that no current consumption goods, such as wheat, cotton, tobacco, food and petroleum will be paid for in doliar loans.

The question that remains, however, is whether Britain, if she continues to get 25 per cent of her Marshall Plan allocations in the form of loans, can utilise them adequately on the purchase of capital equipment for export production for the dollar area without assuming burdensome repayment obligations. It appears to be a question on which neither side has yet made up its mind.