'Note of Discussion at Treasury - 19th June, 1948'

Mr. McElligott and Mr. Hogan interviewed Mr. Rowe-Dutton at the Treasury at 11.45 a.m. on Saturday, 19th June. Mr. Curran of the Treasury, who is Secretary of S.A.S.C., was also present.¹

Mr. McElligott told Mr. Rowe-Dutton that there were several points, which called for examination, arising out of the suggestion that Ireland should not have access to the Pool for dollars after the 30th instant, and that it appeared desirable that the Chancellor should deal with these matters at the further plenary session that had been arranged for Sunday night. The U.K. might be looked upon as a bank or a trustee for the whole of the sterling area and if she was not in a position to meet the demands of her customers for the facilities hitherto accorded to them, she should make a full statement of the circumstances, giving facts and figures, which necessitated this step. Furthermore, it was, naturally, desirable that no one customer should be treated unfavourably, in a discriminatory sense. If Ireland was to be treated as suggested by the Chancellor, then she was entitled to know what the arrangements were between the U.K. and the other countries of the sterling area. There was, also, the point that if the bank had closed its doors, so as to maintain the reserves intact, the customers were entitled to know what were the arrangements for the safekeeping of the reserves. Mr. Rowe-Dutton interposed to say that the doors were not being closed against Ireland; they were still open but it was felt reasonable, on the part of the U.K., to ask Ireland, that she should remain outside the doors and limit her dollar expenditure to what was available to her from her own earnings and ERP. Mr. McElligott said that, while he was far from making any insinuation, it was desirable to have information on the question whether, if other sterling area countries were debarred from drawing on the reserves, the same would equally apply to the U.K. as the custodian banker. Mr. Rowe-Dutton took a note of these points and said that he had no doubt that the necessary information would be given by the Chancellor in his statement on the following night.

Mr. McElligott raised the question whether Ireland would be entitled to draw during the next quarter from the Pool the unexpended balance of the allocation of £12-14 mill. which had been made in respect of the nine months period ended 30th instant. Mr. Rowe-Dutton admitted that Ireland had done well in keeping her expenditure below the agreed figure but he did not think it fair to ask that she should get credit for the unspent balance. The object had been to restrict drawings on the Pool as far as possible; it would be contrary to that principle to spend more than was actually required for essential purposes within the period. Mr. McElligott reserved the point for further submission in the light of what the Chancellor might have to say on the following night.

It was pointed out to Mr. Rowe-Dutton that if Ireland was cut off from drawing dollars from the Pool and bearing in mind the prospective limits of American aid, the first means of achieving reduction in the rate of dollar expenditure would be the suspension by the Irish control of all approvals on Forms EE. for purchases by Irish importers of dollar goods through U.K. agents. There would also have to be an arrangement under which the U.K. would pay Ireland dollars in respect of Irish dollar credits received by the Pool otherwise than through the Irish banking system, e.g., American Account, sterling, the proceeds of sales of Irish-owned dollar securities sold on the London market, etc.