263 Full Cabinet Submission by Chifley

Agendum 669B CANBERRA, 24 September 1945

SECRET

BRETTON WOODS MONETARY PROPOSALS

Introduction 1. The previous agendum on this subject (No. 669A of 28th August, 1944) submitted the Bretton Woods proposals for an International Monetary Fund and an International Bank for Reconstruction together with the report of the Australian Delegation.

2. Cabinet deferred its decision as to acceptance or rejection of the proposals but authorized the tabling in Parliament of the proposals together with a summarized version of the report of the Australian delegation. [1]

3. One of the reasons for deferment was the desire to know the decisions of the United States Congress and the United Kingdom Parliament before determining the Australian attitude. Unless both these bodies accept membership any multilateral international currency scheme is bound to fail.

4. The Congress of the United States has now accepted the proposals without amendment but they have not yet been considered by the United Kingdom Parliament.

Closing Date for Original Membership 5. Under the proposals the Fund and the Bank will be established when membership has been accepted by Governments who together have 65 per cent of the total of quotas allotted to all participants at the Bretton Woods Conference.

6. Under the existing arrangements the closing date for acceptance as an original member of the Fund and the Bank is 31st December, 1945.

7. If any country participating in the Bretton Woods Conference does not accept membership by 31st December 1945 and the Fund and the Bank are nevertheless established by other participating countries, subsequent entry to the organisation will be on such terms and conditions as the management of the Fund and the Bank may determine. It is therefore clearly desirable that, if Australia is to become a member of the Fund and the Bank, it should do so as an original member.

Present Position 8. I have now received a letter from the Treasurer of the United States [2] asking for 'any information you feel you can give us with respect to your Government's plans for formal consideration of the Bretton Woods Proposals'.

9. Enquiry from United Kingdom has revealed that they have received a similar request from U.S.A. and have replied that the matter is receiving consideration but that they are not yet in a position to make any statement regarding United Kingdom plans. The United Kingdom authorities have also indicated that they are awaiting the outcome of the present financial discussions in Washington before making a final decision. However, as the United Kingdom Parliament will be sitting until late in the year, it is still possible that United Kingdom will accept before 31st December 1945.

10. The only country other than U.S.A. which is known to have taken legislative action on the proposals is South Africa. The Union Parliament of South Africa has accepted membership of the Fund and the Bank provided there is sufficient international support for the proposals. Canada proposes to take legislative action during the present session.

Comment 11. In my opinion Australia should adhere to its original decision to defer consideration of the proposals until both the United States and the United Kingdom have declared their position. This, however, will mean that it will be impossible for the Australian Parliament to consider the proposals before the closing date for acceptance as an original member, i.e. 31st December, 1945. The Australian Parliament will rise early in October and will not meet again until the New Year.

12. In view, however, of the delayed action on the part of the United Kingdom Government and the fact that the majority of the other participants at the Bretton Woods Conference have not yet taken action on the proposals, an extension of time for acceptance as an original member would not seem unreasonable.

Recommendation 14. I recommend therefore that I be authorised to inform the Treasurer of the United States (in response to his letter) that- (a) Australia had decided to defer action on the proposals until both the United States Congress and the United Kingdom Parliament had considered them.

(b) It will therefore be impossible for the Australian Parliament to consider the proposals before the present closing date, i.e.

31st December, 1945.

(c) We would be glad to know whether any consideration has been given to the desirability of extending the present time limit on acceptance as an original member.

J. B. CHIFLEY

Treasurer

1 For extracts from the report of the Australian delegation, see Documents on Australian Foreign Policy 1937-49, vol. VII, Document 260E.

2 Fred M. Vinson.

[AA : A2700, VOL. II]