PROPOSED INTERNATIONAL ECONOMIC AGREEMENTS
I understand that the recent proposed international agreements under Article VII, including the international Monetary Fund, are not on the agenda for discussion in London by Prime Ministers.
Nevertheless I found an expectation both in London and Ottawa that they would be raised. Canada particularly is keen to see the Commonwealth countries committed to agreements that would stabilise currencies and reduce barriers to trade. Our interests, in some vital respects, are not the same as those of more highly industrialised countries such as the U.K., the U.S.A., or even Canada. Some of these differences are stated in my report on the London Conference , which I have already handed to you. It seems to me, therefore, that our policy should be to avoid accepting commitments until we have had an opportunity to study the proposals more thoroughly.
You may have had an opportunity to consider whether it is possible by means of subsidies to give protection to industries to supplement that allowed by the Commercial Policy proposals. It seems to me there may be serious political, fiscal and administrative obstacles in the way of the payment of subsidies.
Moreover, industrialists planning new enterprises might be deterred by the uncertainty of subsidies. If subsidies are thought to be either impracticable or undesirable, then the Commercial Policy proposals would have very destructive effects upon Australian industry and gravely hinder the industrial development of the country. Without this development I can see no way of keeping the Australian people employed or of materially increasing our population, both of which I take to be major aims of the Government.
My views on the latest draft of the proposed International Monetary Fund are stated briefly in the attached cable  which I have sent to Canberra. You will note that, as now drafted, the Fund seems to me to be opposed to Australian interests. Considerable modifications, which will be difficult to secure, would be needed before we should, in my view, approve it. On the other hand, if the Fund is found to be acceptable to other countries, it may be difficult for us not to join.
Because of my doubts about the proposals under discussion, I feel they need much more critical examination before we should proceed with them or become in any way committed to their acceptance. in particular I should like to discuss the proposals with Ministers and officials in Canberra and have an opportunity to give them my criticisms based on the conference proceedings and discussions I have had with many people in London, Washington, and Ottawa. I cannot be back in Australia before the middle of May at the earliest and may not arrive until early in June.
For all these reasons, I would strongly advise you to try to avoid any discussion of the proposals at the Conference of Prime Ministers in London if an attempt is made to have them raised there. If discussion cannot be avoided, then I would suggest you should seek to keep the discussion very general and non-committal.
It is important that you should be aware of the deep division of opinion in the United Kingdom about these proposals and I would urge you, if you can find time, to read at least the first six pages of my report on the London Discussions. 
L. G. MELVILLE