894.50/8–2847
Memorandum of Conversation, by the Acting Associate Chief of the Division of Occupied-Area Economic Affairs (Whitman)
| Participants: | Mr. Everson—British Embassy; Mr. Christelow—UK Treasury Delegation; Mr. McDiarmid, OE, for part of discussion; and Mr. Whitman |
1. Use of Japanese-owned gold and silver as revolving fund. Mr. Everson called at my request to discuss the use of Japanese-owned [Page 289] gold and silver as a revolving fund. I asked whether he felt the provisions of Circular no. 9 (recently issued by SCAP establishing the fund)65 were within the terms of the FEC policy decision in FEC–032/26.66 Mr. Everson replied that while the circular might have emphasized maintaining the value of the fund somewhat more, he felt in general it met the requirements of the FEC policy. I then asked whether, in view of SCAP’s responsibility to preserve the value of the fund, SCAP had the authority to pledge these assets to lenders and liquidate them if necessary to meet the pledge. Mr. Everson stated it seemed clear that the purpose of establishing the fund was to finance trade and that trade could not be conducted without risk. Therefore, as long as SCAP was acting in good faith, he thought the fund might be pledged and reduced if necessary to meet losses. I stated this agreed with the U.S. interpretation and we were glad to learn of his concurrence.
I then stated that some banks felt they would be prepared to make loans more readily if the assets were located outside Japan. Mr. Everson suggested that if it was only a matter of differences in rate of interest, it might be better not to move the gold since it would cause a political outcry from the Soviets and since, in any case, fund assets would shortly accumulate outside of Japan which would make the borrowing possibilities simpler. In addition, movement of the gold would affect Japanese confidence.
Mr. Christelow stated he was reasonably sure that credits could be obtained on the basis of the assets in the fund and thought we should try to implement the program as outlined in SCAP’s Circular no. 9.
2. Progress of C2–242 in Committee no. 2. Mr. Everson stated he had discussed the problem of failure of many members of Committee no. 2 to vote on amendments with some of the Dominions and thought some of the representatives were interpreting their instructions too narrowly. He agreed that I should also speak to various members of the committee about expediting progress on committee action on the paper. With regard to the most recent U.S. amendments, Mr. Everson thought he might be able to support some of the U.S. proposals but he was doubtful that his government would agree to increase the petroleum refining figure to more than four and one-half million barrels.