On the 20th August last we received a communication from the British Government pointing out that they were limiting the convertibility of sterling. They indicated that the drawings on the available dollar resources had been increasing at an accelerated pace and that it was vital that what was left should be conserved to the utmost extent. They expressed the view that this was a matter of concern for all the countries in the sterling area and that it was desirable that those countries should come together to consider what action might be taken to see that the demand on dollars should be restricted to the extent that was obviously necessary. We considered the communication. We realised that it was a matter of concern to us that confidence should be preserved in sterling and that it was desirable that the remaining dollar resources should be utilised to the best possible advantage. We considered, however, that a narrow financial discussion would not meet the situation. In our view, it was apparent that, if demands on the dollar resources were to be restricted and if severe hardship was to be avoided, it was essential that the productive capacity of each country within the sterling area should be expanded to the utmost and availed of to the utmost. Self-help and mutual help, which were phrases that had become common in connection with the Marshall plan, clearly applied in this particular case. It was clear that, considering Great Britain and ourselves, our productive capacity should be availed of to the utmost and that the things which we needed for the future development of that capacity, if Great Britain could supply them, ought to be supplied in the common interest. Our productive capacity, both on the industrial side and on the agricultural side, was in question. Let us take agriculture first. It was quite clear that our agricultural production could be considerably increased provided we could obtain the necessary fertilisers, of which we were in great need owing to the shortage during the war and to the intensive cropping of our land during the war years. We used to use something like 250,000 tons of artificial manures before the war. During the war years we had available only a fraction of that amount —even last year. Therefore, it was of prime importance to us that our supply of fertilisers should be increased. Similarly, we were short of agricultural implements and agricultural machinery, and, if we were going to increase our agricultural output and make its products available for ourselves and for our neighbours, it was desirable that, to the utmost extent, the shortage of agricultural implements and agricultural machinery should be made good. There was also, of course, the question of feeding stuffs: was it possible by any means to increase the amount of feeding stuffs coming in here? It did not seem likely, but there was a possibility that by examination something might be arrived at in that regard. There was also the question of seeds. We knew that there was a shortage generally of seeds. We knew that in our case, for instance, owing to the fact that we had had a very severe winter, seed wheat was short—the winter variety particularly. In view of these facts, it was a question of seeing whether we could be helped by the British in getting the supplies we needed. Undoubtedly, if we could get these supplies, our agricultural production could be considerably increased. There was, of course, a further matter also—the prices that were to be offered to our farmers so that they might have the inducement which good prices always give.
On the industrial side, there was machinery which we wanted; there were raw materials which we wanted. We wanted a variety of articles of steel and so forth. There again, it was pretty clear that if we got the raw materials— certain machinery, spare parts and replacements which were required—it would help us to increase our own productive capacity, and, in so far as these particular things could be supplied by Britain, there would be no need to make demands on the dollar pool to get them from the dollar countries, particularly the United States. Coal was another obvious example. We wanted coal for productive purposes. We wanted coal even for the transport of agricultural produce. It was clear that if Britain could supply us with coal, in other words, if we could get it from the source from which we normally had got it, we would not need the dollars which were necessary—I think they were about 20,000,000 the previous year—to buy coal from the United States.
