Oral History Interview with
British Board of Trade, 1932-53, Under Secretary, 1947;
Second Secretary, 1952. Chairman of U.N. Interim Coordinating Committee
for International Commodity Arrangements, 1953-54
Sir Edgar Cohen
June 12, 1970
by Theodore A. Wilson
[Notices and Restrictions | Interview
Transcript | List of Subjects Discussed]
This is a transcript of a tape-recorded interview conducted for the Harry
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Opened June, 1984
Harry S. Truman Library
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Oral History Interview with
Sir Edgar Cohen
June 12, 1970
by Theodore A. Wilson
COHEN: The main problem immediately after the war was that the countries
hadn't the money and the resources to import freely from one another.
They had a tradition from before the war, many of them, of restrictionism,
and nobody would take the lead in getting trade going again. It was a
very difficult situation, in fact, when the Marshall plan started, I remember.
One couldn't see very far ahead, and we had had the loan, of course, from
the United States in 1945-46.
We were committed to certain conditions of convertibility and non-discrimination.
a breath of fresh air in Europe. It was seized after the way water is
in a drought. I mean the money available to conversion was sucked in,
wherever anyone could suck it because they were so short. And nobody was
prepared to use it as an opportunity to restore freer trade, instead of
making it an opportunity to get hold of some gold or dollars to pay off
debt or to meet immediate and urgent requirements of American raw materials
and equipment. But as far as that went, it was a drop in the ocean in
any event. I mean the money went in a fraction of the time expected, as
you remember, and we had to become inconvertible again. We had to stop
Apart from one or two countries like Belgium, which emerged from the
war rather stronger than some, and Switzerland, which hadn't been in the
war, or Sweden, which was a trading country on the periphery, nobody had
the resources, or the possibility, really, of getting trade moving in
a normal way. One of the things the Marshall plan did was to provide a
great opportunity for that,
because as we saw it in England, the need was there and the Marshall
plan should be partly used to enable people to meet the need, issue imports
more freely. If we don't import more freely from you, you run into a certain
amount of deficit. If you got support from the United States -- and you'd
be lesser alarmed at that prospect -- within reason you get a little bit
deeper into the swimming pool and see if you can't swim a bit. But without
that, people absolutely are at the shallow end dabbling, you know, and
very much afraid of moving.
WILSON: By your reference to trade in the normal way at the end of the
war, this was thought of as an attempt to restore what had been normal
commercial intercourse in the period between the wars, before the breakdown
in the thirties?
COHEN: Yes. That's right.
And also, as further moves towards the reduction of other barriers and
closer restrictions; that was left to the GATT [General Agreements on
Tariff and Trade] in Geneva. But there were at
the end of 1945 joint Anglo-American proposals for the freeing of trade
in a more generalized way with nondiscrimination and reduced tariffs.
Which has still survived in the GATT in Geneva.
WILSON: Yes. This is marked on the American side, of course. Some of
the persons whom I've interviewed have used the word "obsession" to describe
Americans who were pushing for trade liberalization as a solution to almost
COHEN: Well, it was a necessary condition for the solving of problems
on a basis of private enterprise, and they were quite right. They were
quite right I think. They've had to justify what they did. But in the
authority dealing with tariffs and the broad experiment on discrimination,
you want a world basis for what you're doing, and that we got through
the GATT. Insofar as you want to get the people shattered by the war to
restore their old economies and to build up again, and be able to play
a responsible part in world affairs,
it was a geographical problem of Western Europe, and that's where the
Marshall plan came in. You will put up this much money to it and now see
if they can't get on their feet again. You know, from others, how the
United States provided equipment, raw materials, and food in an enormous
quantity into Western Europe and gave these people a chance to breathe
and recover. The whole thing had to be restored. Germany had to recover
WILSON: Some of the information which I have been given suggests that
the thrust of American aid in this period, perhaps even, before the Marshall
plan, viewed Europe as a cohesive trading unit rather than at a part of
the world economy, and that this indeed in part defeated the effort to
reintegrate Europe into the world economy.
COHEN: I think that there may have been an attempt to do things that
way. It's awfully difficult for me to say without asking the individual
Americans who were doing it. But I don't think it defeated anything.
I think it was a necessary step. You put it this way, that on the worldwide
philosophy that the United States had, and the British shared, you would
work on an issue of non-discrimination worldwide. None of these countries
could afford to trade freely; they hadn't the resources. They all have
what's called "balance of payments" difficulties. The demand in that country
was far in excess of what they had in resources. They got Central banks
Therefore, under the system of international law that was built up in
the GATT, the administration of the GATT, everybody could impose restrictions.
I think what the United States felt there -- and what we felt -- our common
approach was inside Europe there was a possibility, as a sort of limited
"hot house" experiment, to say, "Here as against one another, we don't
exercise our rights under international treaties to restrict imports from
one another. This time, let's set a more generous basis among ourselves,
and then when we are strong
enough, we can extend it more fully."
Then of course, the great problem later on was when the United States
demanded, quite rightly, that these things should be extended to imports
from the United States. But let's start now. The more you buy from one
another, the more one another can buy from you. See what I mean? So let's
try and break it down a bit. And we, independently, in Britain were interested
in liberalizing our trade. We had always been a world trading nation and
we reckoned that our industry would be healthier if it had to face some
import competition. I think it was a natural. We were better equipped
for export trade, and it was a natural requirement for development of
the British Commonwealth, to get away from close restrictionism.
Now the difficulty of doing that is that of course you run into balance
of payments difficulties if you do it too fast, and as other countries
are doing it at the same time. So the American move
for liberalization coincided with our own judgment of what really was
in the interest of ourselves and our neighbors, We saw it in the same
way, and we had our plans by 1948-49 to start liberalizing our imports.
We brought that into Europe, and in OEEC broader plans were made, which
subsumed our plans, generally on the basis of liberalizing, giving percentages
of your trade in manufactures, raw materials, and foodstuffs separately
-- as you all moved forward steadily at the same pace. When you got to
75 percent you were beginning to get somewhere. The main difficulty was,
of course, that some countries were more inflationary than others, and
therefore tended to suck in more, while others tended to squeeze out more
exports. That led to a balance of payments dis-equilibrium, which had
to be dealt with.
The parallel contribution, you see, the United States then made under
the Marshall plan was to say, "Now, you chaps liberalize your trade as
hard as you can, and we will finance the union for clearing payments --
a European Payments Union -- so there
will be an element of credit between you. There will be a certain amount
of gold there for your international settlement. You can settle credit,
one country with another, and that will give you the financial basis on
which you can be more courageous about lowering trade barriers."
WILSON: Just how strongly did the United States -- the American representatives
-- carry forward the plan?
COHEN: They carried it forward all right.
WILSON: I know 500 million...
COHEN: I forget the figure, the amount they put into aid in the EPU [European
Payments Union]; that must be readily available. They did put a substantial
sum into the EPU of Marshall plan money. It was very well used, because
the money in there enabled the Europeans to buy more from one another
and hence facilitated their own industrial reconstruction, and thereby
become more independent of American aid. It was money very well spent.
use just giving people food and materials and machinery; they can sit
back and say, "Thank you very much." It's a very pleasant way of living.
But this money was used to get all producing and trading with one another
on a scale which they could not otherwise have afforded, and therefore,
to get their industries restored more quickly. The European Payments Union
was really, I think, a major achievement of the OPEC. But it was introduced
out of the efforts of liberalization of trade, which previously had been
facilitated by payments arrangements of a more primitive kind, what we
called "drawing rights." It was then carried forward much more effectively
when the EPU multi-lateralized the credit arrangements, when each country
had a settlement on a multilateral. basis, whether or not its debtors
were good for the money, so to speak. But if you sold to Greece, and bought
from Belgium, you could convert a part of the surplus by paying it into
EPU. You settle through the EPU, and the American money was there. You
couldn't have got
out of Athens.
The principle was that you could cash in your credits and your deficits,
strike the net balance. If you wanted your net balance you had to surrender,
you had to pay proportionately, in gold. The amount you had to settle
increased according to the extent to which you had drawn up your quota
of credit. The more deeply you got in, the more you had to pay; the bigger
the proportion that was demanded of you. That naturally was the sanction.
Equally, if you were a creditor, you had to give credit first, and the
bigger your credit position, the more you could claim as a settlement
in gold. The American money, you see, helped to finance it and to make
it possible for the European countries to do it. It treated all countries
as equally sound financially; that is to say, the American money enabled
you to obtain, within limits set by EPU, a convertibility of any of the
currencies involved, because you paid in your chips, your IOU's, and they
counted towards your creditor or debtor position. That meant that people
didn't need to be selective as the partner trade developed. That is something
that was overcome when European recovery had reached the point, had passed
the point, where these countries could, on their own resources, finance
these deficits. It anticipated a position that was artificial at first.
Once the position was reached, where the countries could settle these
claims -- it wasn't all that difficult once countries got their industries
going again -- then we reached a point where we didn't need the EPU any
longer. We were able to convert our currencies from one another on a worldwide
Looking back on the thing, one is bound to admit that it was a very great
success. I don't think it's exaggerating it to say that it was a successful
venture, carried through by a handful of extremely able men.
WILSON: Might you identify the ones that you...
COHEN: I forget the main people but there were obviously my people, a
handful of them, the people who devised the European Payments Union, the
people who devised the payments agreement. The payments plans, which they
started with, were quite an ingenious device. What they said in effect
was that, look at a country like Belgium, she came out of the war fairly
well -- Belgium, you might say, well she hadn't gotten dollars, she hadn't
gotten hard currency, to afford the credit. But she didn't need help from
the United States, except to the extent that if she sold to people who
couldn't pay in hard currency, she was making what were formerly bad debts,
but if she was to sell her steel to the British, we will say, she must
charge convertible money for it, because she needed that to buy from the
United States. For the other half, she could balance her account subject
to being paid.
Then the United States in effect said, "Well, we will give you Marshall
aid, on condition that
you give as much aid to European countries immediately as you got from
us." In other words, we'll convert the money for you. But the Belgians
in that case would be given, shall we say, conditional aid X, and would
establish drawing rights equal to X with other European countries. She
would then have given as much as she received in a way which in today's
conditions simply means she was paid in good convertible cash. And then
she wouldn't have needed American money. America said, in other words,
"We will give you money, in effect, to which you convert. Having convertible
money again would be our contribution to it."
On that basis, countries were able to establish drawing rights for the
benefit of countries who were in deficit with them, where those countries
couldn't afford to buy as freely as they should. American aid underpinned
the process by saving the creditor country from the inflationary pressure
that would ensue, and indeed from the economic sacrifice it could not
afford. That would have happened in supplying goods to a deficit neighbor,
instead of selling them on the world market for good money, or using
them at home.
The Americans in effect said, "Well, you can have so much aid, so much
absolute and so much conditional. So the other countries that need your
stuff can get it from you instead of coming to us for it, but we will
pay for it. We're giving you aid, the goods you want from us, but on condition
that you in turn pass it on, because you don't need that much aid net."
Then the multi-lateralization of that was really the next step in the
European Payments Union. The man who had a lot to do with the devising,
or the planning for the conditional aid, and the drawing rights, was Ansiaux,
WILSON: I will see him.
COHEN: Yes. Well Ansiaux had a lot to do with that. He is a very ingenious,
able man, and Ansiaux had a lot to do with it. Other people who know
a lot about it, or did know, was Sir Hugh Ellis-Rees in London, have
you got his name from anyone?
WILSON: Yes. Ambassador [Henry J.] Tasca recommended him and I wrote
him, but I did not receive a reply.
COHEN: I guess he's all right, he's getting pretty elderly; he's in London.
WILSON: I'll try to call him.
COHEN: See if you can call him. He lives in London. I've forgotten the
address, on Georges Square; he's in the phone book, and he had a lot to
do with it. In the United States [Hubert F.] Havlik had a lot to do with
it; he had a lot to do with what I call the "wet metal;" he and Ellis-Rees
used to work with the financial committee there. Do you know Frank Figgures
from the Treasury?
WILSON: Yes, I'll see him in August.
COHEN: Well, he knows a lot about that, he was on
the Secretariat. He might tell you some. All I remember was, the drawing
rights did enable countries to get help from one another, so the European
trade recovered. The United States made that possible by giving aid conditionally
against those rights. The difficulty sometimes was to anticipate what
the deficit should be; the drawing rights might not be used.
WILSON: Germany got into some prime trouble just after the...
COHEN: We got into difficulties before we diverted sterling on the basis
of the exchange rate. There was a difficulty in these artificial things,
but the principle of the thing was to try to plan forward. What were the
likely requirements in excess of what we could meet, or could afford?
WILSON: Let me ask two questions. As you suggested, sterling was in a
somewhat unique position at the beginning of the EPU, and had a rather
special relationship in the sense that they set up, I understand, the
EPU unit as the dollar. And
sterling was also recognized.
COHEN: No, it wasn't as I remember, no. We had to settle in gold or dollars
at the end of each month. We were treated just like everybody else. Sterling
was inconvertible for this purpose. It was one of the problems of the
EPU, and it is, if you like, a reason that the EPU couldn't last indefinitely.
But the main reason, of course, the EPU couldn't last indefinitely is
that it was a regional system, which made for regional liberalization
and regional assistance. It had built-in discrimination against the rest
of the world. There were problems about this, also. Of course, it did
facilitate acceptance of sterling in many parts of the world. That is
to say, people who ran into sterling debt could draw on EPU. I don't think
as far as I can remember there's any means of identifying whether the
debt of Mauritania or Italy was due to buying more from England than from
buying American wool. I mean sterling-area payments were bound to come
into it. These
countries accepted sterling and the money went through London. There
it was. But they did not recognize that they could buy freely, or liberalize
from the sterling area. But the financial ground for discrimination had
gone. And some did, I think, liberalize with raw materials, because that
was common sense, and they had to settle part of it in dollars. It wasn't
always done. The principle of the OEEC as a code was that they must liberalize
for the overseas territories, that's the colonial territories. They were
in the plan, and they were at liberty, as far as I can remember, to liberalize
for other countries in the financial areas. They worked apart. As far
as I can remember, that's how it went, but I don't, honestly, remember
exactly about that.
Some other people you could speak to may remember more clearly, but my
recollection was that it was optional. But certainly sterling's position
as an international currency must have made it impossible to identify
position of the United Kingdom from the wider payments position of each
country with the sterling area generally. Because they were always at
liberty to use sterling within the principal area and in the sterling
area itself they could all use sterling.
WILSON: There was some difficulty as I recall at the time the EPU was
set up, because Great Britain was placed in a creditor position rather
than a debtor position just at the beginning.
COHEN: We went into it; we were in a creditor position, I imagine --
about 1950. I don't remember that we were in a strong creditor position
until the Korean war. The Korean war pushed us into a very strong creditor
position for the reasons I just mentioned here. There was the sterling-area
crisis in raw materials. There was a heavy demand for raw materials after
the Korean war, at high prices to be paid to Australia and Malaya in Asia,
and those high prices were paid in sterling.
WILSON: Which caused some difficulty because prices went up on imports
to Great Britain.
COHEN: All these countries were in sterling deficit -- and therefore
we were in a very strong creditor position with the European Payments
Union. That illustrates, as I said before, that you can't distinguish
them. You are either buying in London on the London Produce Exchange or
the London produce markets. They are buying; and the monies were paid,
even if their buying is through Malaya or Australia. They are buying and
they pay sterling. You can't distinguish sterling's impact in London by
the central banks of those countries. Therefore, we became a very strong
creditor position. In fact, after the Korean war, when prices fell, the
United Kingdom was in a debtor position on capital accounts, to the sterling-area
countries. They built up these huge balances out of the Korean war. And
the running down of those balances caused us consequently to run down
accounts in the European
Payments Union. The reaction after the Korean war ran us into a deficit
to the EPU, but we as an individual nation, so far as I can remember,
were balancing our accounts fairly well in Europe all the time. The independent
sterling countries -- Malaya, Southeast Asia -- the fact that these countries
were running a heavy surplus against the others, put us into a creditor
position. And the fact that they ran down the balances afterwards when
the prices fell, threw us into a deficit position.
WILSON: What about the EPU as an instrument for European integration?
That is, as you suggested, the impetus for it came primarily for...
COHEN: Primarily for the liberalization of trade more than the payments
thing. The fact that it financed the freer development of trade did facilitate
integration. It paved the way for the closer relations of the six, first
in the Schuman plan and then more importantly in the Messina talks. It
got people much more in the habit of meeting around the table
to discuss practical plans to cut their trade barriers, and they got
much more used to trading among themselves. I think in that respect the
EPU was very important. I don't think the payments agreements, the bilateral
agreements, would have done it even though they were made. You had transferable
drawing rights before; they tried to make them transferable. But they
couldn't even then get the same flexibility in the multilateral trade.
There were a number of reasons I think why you had some move more toward
real integration through the OECD. Of course, I think it was partly political.
European countries which had been occupied in the war all lost a certain
amount of their sense of national exclusiveness. Put in broader terms,
there were these human beings, on the one hand, and the oppressors, who
didn't interfere with the Fascist reactionary-Nazi type on the other.
The resistance groups were the Allies, fighting alongside them on the
ground; some of the Vichy people, on the other hand, with the Germans.
I think there was a general
realization that really nationality isn't quite the dividing line.
Then, through the Marshall plan, the people of good sense and good spirit
and good quality of character, got into the practice of working together
so much more closely in OEEC, getting to know one another. It was so much
easier than it had been before the war for them to avoid unnecessary difficulties
in their trade and financial arrangements. It became so much easier for
them to discuss a question around the table and solve it constructively.
We got away from the top-hatted diplomat putting in an aide mémoire,
and got down to the position where you can say, "Why, let's get hold of
two or three wise chaps and sit down at the table and get a judgment on
WILSON: The technical approach, yes.
COHEN: In other words, you got the spirit, the political spirit, I think,
to some extent that
came after the war. Then you had the opportunity for the technical approach
that came through the Marshall plan, which forced the issue in that they
couldn't work the Marshall plan without doing so. But in the process they
had the opportunity through meeting in these committees to do work of
the kind that couldn't be done before, since these things didn't exist
in the League of Nations. It was also, to some extent, due to the fact
that by whatever good chances men of very high quality were here in that
period of time. Not only did you on the outside put in some of the best
men you had available, from your universities, as well as from administration,
and your businessmen - I don't remember the businessmen too well, but
no doubt they were there -- but certainly you got from the administration
and from the universities particularly able men, both in Paris and in
the ECA missions in the capital. But the European governments, realizing
the importance of it, the vital need to make a success of it, put some
of their best men into Paris, or
into the government jobs at home.
So, really the quality of men who might make a success of it were available
at the table. And some of these men have since had ministerial offices
in European countries; others have become heads of their departments in
the Foreign Offices. All of that meant that the policies worked much better
than they could have worked in other circumstances.
WILSON: Would you suggest that the quality of men sent -- I'm speaking
particularly of the American side here -- people who were really aware
of both the opportunities and difficulties of achieving integration, resulted
in a more realistic approach to the problems? In political terms the American
representatives would often talk about, "Well, why don't you just create
a United States of Europe? Why don't you just set up a custom union; why
don't you allow Switzerland to produce all the watches," and that sort
of thing -- the planning approach. But American representatives here,
in Europe, were not as simplistic, I gather, in that approach. There were
problems in moving from
national economies to an international -- supranational economy?
COHEN: I think it was an education for them; let's put it that way, for
them to be in Paris and hear these discussions. They were bound to realize
that it wasn't as simple as it might sound. They would see it firsthand;
there were still important differences of character, temperament, and
of outlook and interest. As I said just now, they were remarkably reduced
at the political level by the experiences of the German occupation, and
the common effort of liberation. So, there were differences and differences
of interest, particularly, and you couldn't overnight create these. There
were, indeed, technical difficulties with the customs union as such. I
think that they did sometimes still oversimplify what was wanted; I'm
To answer your question, do you really want the people who are full-time
dealing with all OEEC business? We could deal with that. On the
trade front it went better. It was easier, but I'm thinking everything
was not as easy as on the trade front. Everybody really had an interest
in doing what OEEC wanted on trade. It paid off ordinarily for any country
to buy and sell more freely. As long as a country has reasonable flexibility
to pick and choose what it is doing in its customs area. Everybody's really
better off with than without it. And, therefore, there is a will. to do
all these things, and it wasn't oversimplified. It only got to that point
when we were asked to provide equity, and then of course, a difficulty
I'd expect it, in fact, to be possible that the United States members
would oversimplify. They would think, "Well, we might not be able to do
this or that at home, but you've got special problems. These people in
Europe have got such a massive uphill climb ahead of them, surely they're
not going to hold things up for the sake of protecting their apples and
their pears and their canned milk products." There may be certain
people dealing with agricultural liberalization who could tell you more
about this. I think, sometimes, when I dealt with American officials they
have tended to think that the governments are uniquely difficult and the
Europeans had bloody well get on with it. But they are not in a strong
position when they carry a waiver of all the rules in the GATT.
The people, you see, who are going into attack ought to be able to defend
the other side; therefore, they see the light better. But the trouble
is that they can't put across at home, and, therefore, they aren't taken
too seriously by those who want to resist them. I think it is their problem
there, which would have been felt then. It must have been felt then, but
to what extent I wouldn't know.
WILSON: This was certainly true; American protectionist policy on agricultural
imports was very strong during this period. So you're suggesting that
the anomaly was recognized in Europe?
COHEN: Well, we just thought they won't do it; they won't remove their
restrictions in the field. They won't when it comes to the point. The
vested interest of the farmers is such that they can't be able to do it.
They'll buy what they need to meet their requirements, but they don't
want to commit themselves to freedom of trade. The American pressures
I think were a little selfish at times. It was well-known of course, that
they couldn't do it themselves and they took stock of the fact that their
difficulties were not altogether different in kind than those of others.
Certainly, by 1950 they had not removed their own restrictions in the
GATT which were legal. When they came and asked for a waiver of the GATT
rules in 1955, it made it very difficult for their people in Paris to
request the Europeans to do the thing in GATT they couldn't do themselves.
Whether or not it was overtly argued in Paris, it is a fact that ministers
were aware of these things. It would weaken their case. But
I wouldn't like you to think I was saying that I thought that if the
United States were set free, the Europeans would not have had any difficulty.
But I think when you get to that point it's very difficult. You see even
now, the community has problems of freeing their trade in agricultural
products. They have to have common prices agreed, and they have to have
arrangements for payments from one another, the extent to which they buy
from outside and so on. It's been the one part of the Common Market that
has caused difficulty of any kind that almost might have broken it down.
Well that shows what policy resistance you get there, even amongst people
who are almost entirely integrated in their economies, in every other
respect. I don't think that at the time in Paris it was possible to appraise
quite realistically what we now see were the difficulties you have in
trading foodstuffs, and especially in raw materials.
WILSON: Were you involved in the UNISCAN arrangements? [Plan for economic
union between the United Kingdom, Denmark, Iceland, Norway, and Sweden.]
WILSON: Tell me about that.
COHEN: They were mainly financial, you know. UNISCAN never really became
much more than an arrangement for a freer transferability of sterling.
To have done anything on that front would have meant either having preferential
tariffs, which we certainly didn't wish to have in Britain -- it was very
complicated -- and/or it would have meant a discriminatory liberalization.
And I don't think, as far as I remember, that we liberalized anything
on a UNISCAN basis and kept up the restrictions against the rest of OEEC;
it would have been a breach of OEEC codes to do it. You've got me here
on something I don't remember very clearly. There may have been in the
code some provision that countries who got closer together would liberalize
more quickly for one another.
WILSON: I seem to recall that was the case.
COHEN: It didn't mean you could permanently do something. You could move
more quickly, but then you
must catch up afterward.
WILSON: The assumption was that FINABEL and the others, FREDELUX, which
didn't actually go into effect, would be regional groupings that would
then be merged themselves.
COHEN: That's how I remember it. I don't think anything came of it. It's
the same philosophy, I think, that some Americans still have for dealing
with the tariff preferences of developing countries. It is one of accelerating
the entire production of these countries, rather than doing it permanently
for them, while not for other people. You might say you would agree to
reduce the tariff by 50 percent every five years. You do it at once for
some countries, and take your five years for the others. It's a temporary
Anyway UNISCAN never did have tariff preferences. I don't think, from
memory, that it ever had quota preferences. It did have freer travel because
there were understandings between the central banks that made it possible
to get money
out more freely. I think, in turn, that was based on fairly traditional
relations between these countries, who before the war had been in the
sterling area, almost surely within the sterling area before the war.
The sterling area then may have had different sorts of rules and arrangements.
The Scandinavian countries did substantially bank in London and the currencies
were substantially linked to the pound. The UNISCAN was sort of a half-way
house between the sterling area and the EPU, but they were in the EPU.
I dare say some of the arrangements were made on the sterling basis and
were not clearly accounta