FOREIGN RELATIONS, 19 5 0, VOLUME I


   I am going to London next week to talk about you know what, ,and
 hope to see both Roger Makins 4 and Gaitskell,5 if it can be done
 informally and if the Embassy agrees, and just tell them the general
 attitude with which we have approached the problem here.
   Sincerely yours,                           WINTHROP G. BROWN

   'Sir Roger Makins was a Deputy Under Secretary of State, Foreign Office.
   Hugh T. N. Gaitskell, British Chancellor of the Exchequer.

 394.31/11-3050: Telegram
   The Charge in the United Kingdom    (Holmes) to the Secretary
                              of State

 SECRET                        LONDON, November 30, 1950-8 p. m.
   3193. For Perkins, Labouisse. No copies, no distribution. We and
 Batt 1 considered it advisable for Winthrop Brown see Chancellor of
 Exchequer while in London. Brown, Baldwin visited Gaitskell
 yesterday.
 Following Brown's report of outcome Torquay consultations re
 sterling area dollar import restrictions Gaitskell expressed apprecia-
 tion for position of US Government in matter and Brown's handling
 of situation. He expressed hope he could talk frankly informally
 about a matter which he considered highly important. He then in-
 dignantly criticized what he termed "attack on sterling area"
singling
 out for particular criticism  IMF ,action in matter which he called
 another example of many difficulties which British had experienced
 as Fund member. When reminded that US did not request drastic
 changes in sterling area restrictions but only such selective relaxation
 as appeared warranted, Gaitskell said that any weakening of "com-
 mon criterion" sterling area principle threatened continuance stability
 sterling area. He asked how any member sterling area which might
 possess dollar surplus could materially increase dollar purchases with-
 out affecting sterling area dollar pool and thus adversely affecting
 less fortunate members. He said unless decisions affecting sterling
 area were made on collective basis effective management of area and
 dollar pool would be impossible and area would dissolve. He said
 British believed maintenance sterling 'area essential and if "other
 countries" had contrary views they should say so frankly. Said criti-
cism of sterling area "by theoreticians who often were ill-informed
about operations of area" made more difficult position of British who
were primarily responsible for operating area and for maintaining
economic stability.

  William L. Batt, Chief of ECA Mission, London.


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