THE NEEDS 0F GREAT BRITAIN FOR FINANCIAL AID
                                 DURING PHASE III
                   
                                       Summary
 
       1. At the end of 1945 the British wi1 have foreign 
liabilities of $14 to 15 billlon, largely in short-term 
sterling obligations to members of the British Common-
wealth. Their long-term foreign investments will be 
about $10 blllion, and their net gold and dollars a little 
over $2 billion.
 
       2. It has been estimated that in the first three 
post-war transitional years the U.S. will incur an addi-
tional indebtedness of from $2 to 5 billion to pay for 
essential imports.
 
       3. This need would be met in part by a limited 
liquidation of foreign long-term investments, a small 
reduction in gold and dollar balances, and an increase in 
short-term sterling indebtedness. The International Mone-
tary Fund and Bank would help some, especially indirectly 
by their effect on general international trade, invest-
ment, and economic activity.
 
       4. It is recommended that the President, if the 
Prime Minister raises the issue:
 
          a. Request a frank statement of Bristish 
       financial needs in Phase III.
 
          b. Call attention to the possibilities 
       of credit under a 3-C Lend Lease agreement, 
       to cover supplies such as foodstuffs and raw 
       materials on order under lend lease, but not 
       yet exported at the close of hostilities. 
       0ther financial aid would be made possible 
       by the adoption of our program of financial 
       legislation.