balances by about $100 million a year, and by $200 million 
                 if India and Australia join in.            
 
                                                            
 
 
6. The British argue that some growth of their reserves is 
      indispensable to the delicate system they are operating by which 
      they finance the war on credit throughout a large part of the 
      world, and that the retention of some part of the above receipts, 
      as a support to this credit system and an offset to a much larger 
      increase of liabilities, is not open to legitimate criticism. 
      They point out that the Russians are believed to hold gold reserves 
      nearly double the total reserves of the British and have no significant 
      liabilities against them. But, in the case of Russia, it is not 
      at present proposed to require them to surrender any part of 
  their reserves as a condition of further Lend-Lease assist
 
                                                            
 
 
7. The British feel that they ought not to be aspect to agree 
      to ceiling to their balances, since their reserve position must 
      be their own concern, nevertheless, if the British argument is 
      accepted as valid, the position could be regularized by a new 
      Directive, which would set up a revised formula for the guidance 
      American Departments. If the figure given by the new formula 
 was being approached, then the whole question could be re-o
 
                                                            
 
 
8. The new formula might provide that an increase in British 
      reserves is not unreasonable if the increase does not exceed, 
    say, 30 per cent, of the in-crease of British liabilitie
 
                                                            
 
 
9. Figures furnished to Congress hitherto have not disclosed 
      the full burden of British overseas liabilities, or their rate 
      of growth. It might necessary to justify the new arrangement 
      to provide that the information given to Congress in future should 
      be fuller, and should show in some fashion, which would, not 
      be dangerous to British credit, the growth of liabilities as 
                 well as the growth of reserves.            
 
      26th October, 1943