Foreign Relations of the United States, 1949, National Security Affairs, Foreign Economic Policy, Volume I

848A.5151/5–2749: Telegram

The Ambassador in the United Kingdom (Douglas) to the Secretary of State

secret

London, May 27, 1949—7 p. m.

2092. Embassy representative met with Strong, UK treasury group, regarding talks with South African experts. British assert neither Section 7 (Capital Transactions) nor Section 8 (Purchase of Specified Non-essentials) of gold loan agreement¹ discussed.

In response our questioning British representative stated UK in these discussions did not threaten South Africa with economic warfare. However, both sides well aware that UK requires South African gold and British representative indicated that discussion did cover the possibility of British measures to adjust the trade pattern to produce some gold. British denied that legislation curtailing capital flow to South Africa in readiness. Some study of this problem middle of last year, but no thought of review in recent months.

Discussed question of whether or not legislation necessary under Exchange Control Act 1947 and after some debate among themselves British concluded new legislation would be necessary. In response to specific inquiry also expressed view that the alternative, expulsion of South Africa from scheduled territories, would not be carried out without Parliamentary sanction.

In reply to question re lumping continental currencies with dollars, officials stated South Africa had outlined plans to UK in strict confidence. Prior to disclosure Annecy, UK did not feel free to discuss details. Agreed Article 6 gold loan agreement operates to lump continental currencies with dollars, and stated no revision this article discussed. Pointed out article would lapse when loan repaid. Embassy representative discussed alternatives suggested last paragraph our 2068, repeated Annecy 7, May 27, but British indicated no such questions arose and both sides assumed loan would be fully repaid this year judging by present trends. No other South African financial agreements appear relevant your paragraph 6 (separate treatment South African-Swiss transactions 1948 Anglo-Swiss agreement not characteristic most recent Anglo-Swiss agreements.)

Your paragraph 5a, British state data not available but extremely doubtful balance gold loan already committed for South African imports.

Sent Department 2092, repeated Annecy 8 for USDel GATT.

Douglas

1. Apparently a reference to an agreement between the United Kingdom and South Africa in October 1947; see Department’s telegram 145, to Annecy, May 27, p. 691.