Cablegram 347 [1] WASHINGTON, 27 April 1944, 9.28 p.m.
SECRET
For Minister of External Affairs and Treasurer from Melville.
1. In the course of private discussion White [2] stated that no decision yet made about date of proposed conference on monetary fund. Nevertheless, because of the political situation in the United States it will have to be held late in May or early in June if it is to be this year.
2. White’s idea was that conference should be preceded by a drafting committee of officials who would prepare agenda and documents. Governments would be represented by Ministers but decisions of conference would not commit Governments.
3. Size and method of calculating quotas would be discussed by drafting committee and conference. Aggregate of quotas eight thousand million dollars for United and Associated Nations and individual quotas for the United States, United Kingdom, Russia and China had been determined but remainder have yet to be fixed.
Fixing of aggregate quota at eight thousand million dollars would apparently imply rejection of London proposal to increase smaller quotas and also aggregate. White thought it possible that some countries might be prepared to give up part of their quotas to permit an increase in the quotas of Australia and other small countries. He suggested that the United Kingdom and possibly the United States might be prepared to make some sacrifice for this purpose. It seems to me, however, that there may be difficulty in getting as large a quota as we need by this means.
4. We did not discuss with White the question of increasing the size of the annual drawings but from other sources it seems clear that he will strongly oppose this.
5. White would also be strongly opposed to making provision in fund for any greater flexibility of exchange rates.
6. Canadian Government has stated that its attitude to international monetary fund would depend upon promises made with other proposals, particularly those for reduction of trade barriers. White considers that agreement on internatitonal monetary fund should be pressed to a conclusion without waiting for progress on other proposals. He considers it unrealistic to insist that the monetary fund should be linked with commercial policy.
7. In my view monetary fund as now drafted [3] is quite unsatisfactory for Australia. This view is based on- (i) Altered purposes and policies of fund as compared with London draft. [4]
(ii) Doubts about size of Australian quota.
(iii) Limitation of annual drawings.
(iv) Emphasis on stability of exchange rates and limitation of unilateral right to vary exchange rates, with probability that highly industrialised nations and trade competitors would oppose any major depreciation by a country whose export prices had fallen, and (v) Uncertainty whether withdrawal from fund would involve withdrawal from other international bodies involving country concerned in heavy burdens.
8. If you agree with this view it might be desirable for the Australian Government to follow up telegram 535 [5] to Dominions Office by a further telegram- (i) expressing in a preliminary and tentative way doubts about proposals from Australian point of view;
(ii) expressing hesitation about accepting commitments under monetary fund before knowing obligations under other proposals;
(iii) opposing early holding of conference to give us more, time to study provisions of monetary fund and to allow for appropriate representation;
(iv) pressing again for completion of employment agreement before countries are asked to accept commitments under monetary fund.
9. I can see difficulty at a general conference in securing the changes that would make the monetary fund satisfactory for Australia and consider we should not accept commitments under monetary fund until either- (i) we know obligations under other proposals, or (ii) it is expressly provided in monetary fund that membership is not to be a condition of membership of other international bodies.
10. I regard right to withdraw from monetary fund without being hindered by obligations under other agreements vital to our interests.
_
1 Sent through the Legation in Washington.
2 Dr Harry D. White.
3 For the text of the ‘Joint Statement by Experts on the Establishment of an International Monetary Fund’ see cablegram D598 of 21 April. On file AA:A989, 44/735/56/6. A published version is in Proceedings and Documents of the United Nations Monetary and Financial Conference, Bretton Woods, New Hampshire, July 1-22, 1944, vol. II, Department of State, Washington, 1948, pp. 1630-6.
4 See annex A of ASD(44)16 of 21 March. On file AA:A989, 44/735/55/4/1.
5 Document 114.
_
[AA:A989, 44/735/56/6]