Dear Fred:
Further to my letter of the 3rd June¹ with which I enclosed copies of letters written by Senator O'Mahoney to the Secretary of State and to Mr. Hoffman on the grant-loan question, I now enclose copies of (1) a letter dated July 2nd sent to the Senator by the State Department in reply to the Senator's letter of June 1st, (2) a letter dated July 6th from the Senator to the Secretary of State, and (3) a letter dated July 30th from the Department of State in reply to the Senator's letter of July 6th.²

It seems clear from the State Department's letters that the powers that be are still of the same mind as they were at the time of the Minister's visit here i.e., predicating our ability to repay loans on the eventual convertibility of sterling.

Their application of this yardstick to us and not to other countries, and in particular to our 'sterling' neighbour, leads me to think that factors other than economic ones are being taken into account.