GRANTS TO BRITAIN

Grey River Argus, 1 February 1946, Page 2

GRANTS TO BRITAIN

4400 MILLION DOLLARS Truman’s Request to Congress SENATE DOUBTFUL ABOUT IT WASHINGTON, Jan. 30 ■ President Truman in a message to Congress urged that there should be made promptly a grant to Britain o£ three thousand seven hundred million dollars. He also urged an early grant to Britain of a Further additional credit of 650,000,000 dollars for the settling of lend-lease obligations. Mr. Truman said: “The loan will permit the United States and Britain to move side by side towards expanded world trade. The United Kingdom must continue for a iong period many of its emergency wartime financial controls, unless it obtains additional working capital. It is apparent that as the principal member of the International Monetary Fund we can ill-afford to wait for lhe period permitted by the Brett on Woods agreements for the removal of hindrances to financial and commercial relationships between nations. “Now is the time to establish postwar monetary’ and financial policies for the United Nations and to, take action to enable the United Kingdom to move with the United States towards the prompt abolition of these restrictions. It is not too much to say the agreement now transmitted will set the course of British-Ameri-can economic relations for many years to come. Those who represented the United States in these discussions, and those who represented lhe United Kingdom, were fuily ware of the fundamental nature ot the problems before them. After long and careful consideration they agreed upon arrangements which, in my opinion, will provide a solid foundation for the successful conduct of economic relations with each other and with the world. “The financial agreement will by its terms come into operation omy after Congress has made available funds necessary to extend to the United Kingdom a credit of £3,750,000,000 dollars. Britain needs this credit now. It will assist her to meet an expected deficit in her balance oi payments during the next six years. It will enable her to buy from the world supplies of food and raw materials essential to the life and work of the British people. At the same time it will keep open the market for those United States surpluses which are customarily exported to the United Kingdom. These are important short-term purposes, but Ine financial agreement is much more than credit. Its most important purpose from our point of view is to cause the removal of emergency controls exercised by the United Kingdom over its international transactions far more speedily than is required by the Bretton Woods, agreement. The* credit which will extend to the United Kingdom under the agreement may be drawn upon until the end of 1951, when the United Kingdom will be obliged to begin repayment of the principal with interest, and those payments will continue over a period of 50 years. These terms are neither unusual nor difficult to understand. There is one new concept, however, embodied in the terms of credit. We recognised conditons may exist temporarily during such a long period which would make payment of interest on such a large amount difficult if not impossible. Accordingly, provision has been made for a waiver of interest by the United States

after certification by the International Monetary Fund as to the facts. Regarding the balance of payments and the position of the United Kingdom, it is not to our advantage to press for payment of interest when payment is impossible, and thus force default and crumbling of international economic relations. The financial assistance which the United Kingdom would receive under the agreement, made it possible for the two Governments to agree on a specific course of action, which in a short period, will result in the removal of emergency controls over foreign exchange and the discriminatory import restrictions, and the restablishment of peace-time practices designed to promote the recovery of world trade. Britain has agreed to abolish the so-called ‘sterling dollar pool,’

and she has agreed to give up most of her rights during the transition period provided for in the International Monetary Fund Agreement, and thus abandon controls over foreign exchange which she would otherwise be permitted by the terms of that agreement to continue for a considerable time. Additionally, to the direct benefits which will flow from this stimulus to British-Ameri-can trade, there will be added the benfits derived from the ability oi other nations to relax their restrictions, once the United Kingdom leads the way. Another troublesome financial problem which has been fully discussed by the two nations is that of ihc

sterling liabilities of Great Britain, which resulted from her large expenditure abroad during the war. The British Government has undertaken to adjust and settle these obligations from resources other than Ihe American credit, and has outlined its intentions respecting their settlement. Our concern in this connection is twofold. Firstly, we want other countries in a position to do so to grant assistance to the United Kingdom within their means. Those which hold large sterling balances can do so by scaling them down. Secondly, we want to be certain the liquidation of these balances will not discriminate against American trade. The financial agreement contains a specific undertaking by the United Kingdom that no such discrimination shall result from these settlements. The financial agreement also makes it possible for the United Kingdom to give wholehearted support to proposals for expansion of woi'd trade and employment, which the United States recently put forward as a basis for international discussions. ’ In a joint statement on commercial policy, published at the same time. as the

financial agreement, the United Kingdom has undertaken to support these proposals, and use its best endeavours, in co-operation with the United States, to bring to a successful conclusion the international discussions based thereon. We are all aware of the dangers inherent in unchecked economic rivalry and economic warfare. These dangers can be eliminated by the firm resolution of tins nation and the United Kingdom to carry forward the work which has been so well begun. The financial agreement is transmitted with this means instead of an emonomic controversy between two countries. The wise rules of the Bretton Woods agreements wil be fully effective much sooner than we believed possible when Congress enacted the Bretton Woods Agreements Act.” Shortly after Mr. Truman’s niesage reached the House, the Chairman of the House Banking Committee, Mr. Spence, introduced legislation calling for the loan’s approval. He said the committee would hold full and fair hearings to bring out all the facts.

U.S. SENATE MAY “BUCK” IT WASHINGTON, Jan. 30 In the Senate, when the Democratic Party Leader, Senator Barkley sought to introduce legislation to approve the proposed grants to Britain, he was baulked. In ,t lie Senate unanimous consent is necessary before new legislation can be introduced. Senator Langer (Republican, North Dakota), without stating his reasons, objected, and the legislation will have to wait. The Associated Press, commenting, says there are unmistakable indications that the loan faces trouble in the Senate. It is said that many Senators will demand to be shown: Firstly, that the loan can and will be repaid; secondly, that it really is in American national interest that it be made; and thirdly, that the United States can afford to lend money abroad.

PERSIAN RAILWAYS HANDED OVER. BY SOVIET TEHERAN, Jan. 30 In what the friends of Premier Sultaneh considered to be Russia's first friendly move,- Soviet military authorities last night, handed over to the Persian Central Government, control of the railways in the northern. provinces of Azerbaijan, Mazanderan and Kazvin.