194 Strahan to Evatt

Memorandum CANBERRA, 14 June 1944

CONFIDENTIAL

AGENDUM No. 669: INTERNATIONAL CONFERENCE, PROPOSED INTERNATIONAL MONETARY FUND [1]

With reference to the above subject, I am directed to inform you that full Cabinet on 12th June, 1944, decided:-

1. That the Commonwealth of Australia should be represented at the proposed conference;

2. That this representation be on an official expert level only;

3. That Australia's representatives should be Professor Melville, Mr. Wheeler and Mr. Tange;

4. That the representatives should seek an improvement so far as Australia is concerned in the proposed scheme somewhat clown the lines of Paragraph 9 (i) and (ii) and Paragraph 10 (a) and (b) of the memorandum entitled 'Australia and the Monetary Fund' [2] attached to the Agendum dated 10th June put forward by the Treasurer and the Minister for External Affairs.

This phase was discussed further on 13th June when Cabinet approved of the following summary of instructions to the Australian representatives:-

That the Australian representatives are to seek amendments of the proposed scheme as it now stands somewhat along the following lines:-

A. To press strongly for substantially increased accommodation both in respect of the 'quota' and the annual drawing rights.

B. To seek:

(a) the inclusion in Clause (IV) [3] of a provision that the Fund shall not reject a requested change in the exchange rate which is designed to meet a serious and persistent deficit in the balance of payments on current account accompanied by a substantially adverse change in the terms of trade.

(b) the alteration of the 'purposes and policies' of the Fund to give more emphasis to employment and less emphasis to exchange stability and to strengthen the safeguards against the Fund interfering with the domestic policies of a country.

C. To ask that it should be made clear that the right of withdrawal from the Fund should not be prejudiced by making membership of the Fund a condition of membership of any other international body.

D. To urge that an employment agreement should be concluded before a final decision is sought on whether countries will become members of the Fund.

E. To report any proposals made concerning the time of commencement of benefits and obligations before a decision regarding the Australian attitude is made.

5. That Australia is not to be committed to adherence to any resolutions of the conference even on an official level;

6. When the decisions of the conference are received they shall be referred to Cabinet for consideration before any definite commitment is entered into. Later any scheme approved by Cabinet will be submitted to Parliament for ratification.

7. The representatives are to be instructed as to the Government's views and desires on the lines of the Cabinet discussion and the decisions arrived at. They are to be instructed that in all their discussions they are to keep in mind that any scheme of international monetary stabilisation arrived at may not be acceptable to the Government in any event.

Cabinet also decided that if questions relating to commercial policy come before the conference in any form an Australian representative acquainted with the fiscal policy and problems of the Commonwealth should attend.

Proposal for United Nations Bank for Reconstruction and Development It was decided that the delegates be instructed to hear the proposals of the conference in this regard and on their return to Australia submit a report for the consideration of Cabinet.

F. STRAHAN

1 Document 191.

2 Dated 10 June. In AA:A2700, vol. 11. Paragraph 9 read:

'(9) We can attempt to meet the difficulty in two ways:-

(1) We can propose the insertion of words which will make it clear that "fundamental disequilibrium" will include conditions under which we would be likely to need a large movement of the exchange rate.

(2) We can propose amendments of wording of the "purpose and policy" of the Fund which will guard against the danger of "essential" being interpreted in such a way as to force restrictive measures on us.' The wording of paragraph 10(a) and (b) is identical to paragraph 4B(a) and (b) in this Document.

3 See Document 120, note 3.

[AA:A989, 44/735/56/9)