1. With reference to your cable to Secretary of State for Dominion Affairs, London No. 122 repeated to me as No. 124  our Delegation at Geneva has already been instructed that my Government is in full sympathy with your position and that it should assist your Delegation in working out amendments to meet your case. Our only qualification was that any amendments should not be such as to leave the door open for other countries to practise restrictions which would injure Australian export trade or prevent its development. With this qualification, which applies equally to New Zealand's export interests, we feel you will be in full agreement.
2. We are most anxious, within these limits, to do out utmost to secure amendments which will meet your position, and our Delegation will be again instructed of our views. It is our desire that a charter should be evolved which will not only be acceptable to the Australian Government but will also be such as to command New Zealand's willing adherence, and we should be disappointed if your dissatisfaction with progress in Geneva on the Charter led you to refrain indefinitely from taking your place with us in the I.M.F.
3. While this position is sincerely held by my Government, we should be lacking in frankness if we attempted to minimise the difficulties of reconciling your special position and the present terms of the draft Charter without undermining the foundations of the whole structure. How to permit legitimate expansionist use of quantitative restrictions whilst guarding against disastrous abuses of the system such as occurred before the war is the crux of the problem.
4. We confess that at the moment we do not have a ready answer to this problem, but we are anxious that our Delegation should help in finding it. They have recently informed us that they have been working closely with the New Zealand Delegation to this end, and at a recent British Commonwealth meeting took the initiative in proposing that a small influential Committee be set up to consider this question when it comes before the Conference this week.
I am cabling to our Delegation immediately for further advice on latest developments in this matter, and will repeat the instructions already given to co-operate closely with your Delegation.