'Note of Discussion at Treasury - 18th June, 1948'

Mr. McElligott and Mr. Hogan interviewed Mr. Rowe-Dutton at the Treasury at 4.30 p.m. on Friday 18th June. Mr. Grant of the Treasury was also present during part of the interview.

Mr. McElligott referred to the surprise and alarm with which he had heard the Chancellor's statement at the plenary session that morning, to the effect that Ireland could expect to receive no dollars from the Pool after 30th instant. He recalled the circumstance in which the arrangement had been made covering Ireland's drawings from the Pool during the nine months ending on the 30th instant and said there had never been any suggestion that Ireland's normal relations with the Pool would not continue after expiration of that period. In fact, we had more than fulfilled our agreement because the net drawings from the Pool over the nine months were not expected to exceed £9 mill. The notice of termination of the normal arrangements was much too short, in any event, and moreover there appeared to be selective or discriminatory treatment against Ireland. He pointed out that it appeared most inconsistent with the general sterling area arrangements that one country could be 'divorced' from the Pool by the British and it might well be viewed as a matter touching the interests of the sterling area as a whole.

Mr. Rowe-Dutton said that the Chancellor's attitude was motivated by the serious position of the reserves and by the fact that Ireland was a participant under ERP and thus might be expected to meet our dollar expenditure without recourse to the Pool.

Mr. Hogan referred to the correspondence that had passed between himself and Mr. Clarke of the Treasury,¹ producing the letters in question, and pointing out that while it was agreed that Ireland would look for the best possible terms under ERP it was, at the same time, agreed by the Treasury that should she fail to receive adequate assistance from U.S. sources it would still be open to her to have recourse to the Pool for essential dollar expenditure that could not otherwise be met. It now appeared that the Chancellor's statement in the morning amounted to a breach of that understanding.

Mr. Rowe-Dutton inquired whether Ireland intended taking up the ERP loan for the current quarter and whether she intended joining the I.M.F. and taking advantage of whatever facilities for dollar drawings might be available from the Fund. Mr. McElligott explained the attitude of the Irish Government towards the question of the loan offered for the current quarter and he also informed Mr. Rowe-Dutton of the position regarding next quarter in respect of which the aid would be all loan and might not be more than $10 mill. As regards the I.M.F. there does not seem to be any clear advantage in joining in view of the prospect that a member country which was also an ERP participant could not draw dollars from the Fund. Mr. Rowe-Dutton said it would, undoubtedly, be the wish of the Treasury that Ireland should draw all loan accommodation available and that the Pool would advance dollars pending receipt of the loan disbursements.

Mr. McElligott said that it was likely that the Irish Government would reconsider their attitude towards the loan question and possibly also towards the I.M.F. in the light of the Chancellor's statement, but we did not like the I.M.F. idea, particularly in present circumstances.

A discussion ensued regarding the current rate of expenditure, by Ireland, of dollars and other hard currencies and on her likely future requirements. Mr. McElligott gave Mr. Rowe-Dutton the following provisional particulars regarding Irish estimated requirements of dollars for the coming twelve months.

Mr. Hogan pointed out that the figure of £20 mill. included about £9 mill. for wheat and maize which it might be possible to procure from non-dollar sources; but these grain requirements had been included in ERP programmes for the first two quarters and are considered as dollar outlay. As regards the hard currency areas the following table of current and future expenditure was handed to the Treasury representatives; it was pointed out that these forecasts were very provisional and that in the case of Belgium, to which the Treasury attached special importance on account of the gold transfers, a favourable balance might be secured if Belgian requirements of Irish cattle were met. Mr. Rowe-Dutton said that he quite recognised that the question of cattle supplies to Belgium and other continental countries was a matter at issue in the present negotiations regarding Irish cattle supplies to the U.K. and that the Treasury could not expect it to have it both ways.

• Gross payments and receipts are shown in brackets.
• these figures will require revision in the light of the cattle export programme.