Foreign Relations of the United States, 1952–1954, Western Europe and Canada, Volume VI, Part 1

841.10/1–1854: Telegram

No. 427
The Ambassador in Australia (Peaselee) to the Department of State

secret

Canberra, January 18, 1954—5 p.m.

150. Eyes only Secretary for his distribution to officials informed of UK “plan” for convertibility (including Secretary Treasury and Director FOA).

1. UK Chancellor Butler, January 9, requested hours consultation with me at conclusion Commonwealth Finance Conference,¹ also indicating intention to report separately to French Ambassador here. My consultation held January 16 at UK HICOM’s residence. Holmes attending. Chief point, aside from observation that no immediate implementation conclusions of communiqué² contemplated, was that UK has abandoned idea of separate stabilization fund as proposed in “Plan” discussed Washington last March.³ As substitute, contemplates reliance on IMF as support for “convertibility” which Butler said Southard, US representative on IMF, was known to favor. Butler spoke of UK’s “favorable position” in relation to IMF and intimated possible expansion fund though disclaimed contemplating anything necessitating Congressional approval.

2. Other Butler comments:

a. Improved confidence in sterling most significant feature of conference.

b. “Convertibility” would be restricted to earnings not capital.

c. Randall report might affect future decisions.⁴

d. UK would welcome US investments sterling area Commonwealth countries, recognizing London resources inadequate.

3. Avoided discussions of questions which personally occurred to me arising out of lack of reciprocal access to gold between dollar and sterling currency holders and question whether present sterling bloc thinking contemplates additional indirect access to gold by having other Commonwealth sterling countries trade their currencies too for dollars through IMF and through present US Treasury policies regarding accessibility to our gold for monetary purposes by foreign governments and central banks holding dollars.

4. Butler sent particular greetings to Humphrey who he said had agreed to sign face not back of check.

5. Australian Government also exerted itself to keep me as representative of US Government informed. Menzies returning from conference called at residence enroute from airport to leave communiqué and stated he also wanted private conference as yet not consummated. Menzies included me in stag dinner Prime Minister’s lodge January 17 to honor Butler. Other guests being Fadden, Holmes, Spender, Mohammad Ali, Pakistan High Commissioner Rahman and three Australian officials.

6. Additional report being airpouched.

Peaslee

1. The Commonwealth Finance Ministers Conference was held at Sydney, Jan. 8–15, 1954.
2. Not printed; a copy of the communiqué was transmitted as an enclosure to despatch 2455 from London, Jan. 18. (841.10/1–1854)
3. For documentation on the Eden–Butler talks, held at Washington, Mar. 4–7, 1953, see Documents 375 ff.
4. For documentation on the work of the Commission on Foreign Economic Policy, chaired by Clarence B. Randall, see vol. i, Part 1, pp. 45 ff.