Drawing from International Monetary Fund, I have carefully Considered your telegrams 960  and 961  Outlining your discussions with Martin and Southard.
Whilst I am anxious to obtain the drawing as soon as possible, I do not feel that I can accept Southard's suggestion that we offer an intention to consult the Fund regarding repayment after 'a reasonable period, say 3 or 4 years'. My reasons are:-
(a) It would involve accepting a commitment or condition going beyond the Articles of Agreement and, particularly at the present time, this could be very embarrassing.
(b) Further, the Treasurer of the day could legitimately feel aggrieved on becoming aware of this additional commitment and having to deal with it.
(c) Even though the offer might not go beyond indicating an intention to consult, I feel there would be an implied obligation to take some action at the end of the 3 or 4 years. Even if this were not so, Australia would be on the defensive in the discussions.
(d) In this connection it is significant that Southard added that the Fund would not press where a substantial repayment would damage a country.
(e) More generally, it is wrong for the Americans to attempt to alter the Articles of Agreement by establishment of administrative precedents, particularly when the precedents limit the rights of members under the Articles. I would also add that these limitations are of a kind which give considerable substance to the criticisms which had to be overcome before Australia joined the Fund.
I would therefore like you to pursue the matter further with Southard with a view to obtaining his agreement to a drawing by Australia without any special conditions. I feel that Australia's record in fulfilling its international obligations should be sufficient assurance to the Fund, particularly as it is a first drawing which we desire.
At the same time you may inform Southard that we appreciate the significance of the problem that is worrying him. We recognise that the Articles of Agreement were framed on the assumption of convertibility of sterling and other major currencies after a reasonable transition period. It may well be that Southard's expectation of a lengthy period of inconvertibility requires some re-examination of the Articles. The proper way to do this, however, is for the matter to be raised with member Governments, perhaps at the Annual Meeting of Governors, and arrangements made for an investigation and the submission of recommendations.
Australia would be prepared to support any such investigations.
I have not communicated with the Chancellor informing him of Southard's suggestion and my response, but I see no objection to your keeping Bolton and Tansley  informed.