1. I submit herewith my report of the discussion and proceedings of the United Nations Monetary and Financial Conference held at Bretton Woods, U.S.A., from 1st July to 22nd July, 1944.
Representation at Conferences 2. In addition to the attached report of the proposals formulated at the Conference, I am preparing a fairly detailed report of the procedures and working of the Conference for guidance in the appointment of Australian delegates to future conferences.
3. As a result of my experience at Bretton Woods, I am convinced no country can expect to play an effective part at a conference of this kind unless it has a large and strong delegation. For a country with a small delegation, such as Australia had at this Conference, it is a matter of great difficulty to be represented effectively at all the various discussions which are of importance to it. In this connection, it should be noted that it is not sufficient to be represented merely on those standing and ad hoc committees dealing with issues of particular importance to Australia. After an issue has been decided in principle, it must sooner or later be dealt with by one or more drafting committees, and these committees have considerable opportunities to modify in small but important ways the reports and documents which finally emerge. Membership of even a proportion of these committees, however, entails a considerable volume of work not directly related to the immediate work of the delegation. Accordingly, it was impossible for us, and will be for any future delegation of similar size, either to seek or accept membership on these committees.
4. Moreover, it is even more important that one at least of the delegation should be free to participate in informal negotiations which are not part of the formal organisation of the Conference but where some of the most important decisions are made.
Commercial Policy 5. There is another lesson which I feel should be drawn from the experience of the Conference at Bretton Woods. The discussions on monetary policy commenced as long ago as October, 1942, and for a long time it appeared that discussions at the official level would not very rapidly reach a conclusion. The Conference at Bretton Woods, however, has shown that, once the United Kingdom and the United States resolve their major differences, the discussions can proceed very quickly to the stage of formulating definite proposals which Governments must accept or reject.
6. It is probable that the attempt to draw up an international agreement on commercial policy will meet much greater difficulties than the proposals for a fund and a bank. Nevertheless, the United States administration is pressing the United Kingdom to resume discussions on commercial policy, and there is always a possibility that an agreement on this subject might move swiftly to a conclusion.
7. This is a matter in which Australia is vitally interested, and she should seek to influence the final agreement at as early a stage as possible and aim to work through smaller bodies, such as the British Commonwealth, or to organise a group of countries with similar interests before the discussions reach an open conference of the United Nations. To be effective, however, Australia would have to be able to present a well reasoned case supported by carefully assembled data.
8. I should therefore like to repeat the recommendation made in my report  on the London discussion on Article VII, that it is urgently necessary for a detailed investigation to be made of the effect (as far as possible in quantitative terms) of the latest commercial policy proposals on Australian industry, employment and overseas trade.
Employment Policy 9. In the report I have referred to the misunderstandings which I found at the Conference about Australia's attitude to international agreements. The delegation was constantly being confronted by the belief that we were unwilling to co-operate with other countries on economic matters. No opportunity was provided at the main meetings of the Conference for general discussions during which this belief might have been dispelled, although the discussion in Commission III of our proposed employment agreement  gave me some opportunity to state the Australian point of view. The atmosphere became particularly unfavourable when the attitude of the Australian delegation on the question of voting on the resolution adopting the reports of the Commissions and signing the Final Act  was revealed. There was some improvement, however, when I attached my signature to the Final Act 'for purposes of certification'. Further comments on these matters will be found in the body of the report.
10. It is, I believe, urgently necessary that Australia should state her general attitude towards international arrangements as soon as possible, on the highest possible plane. And it appears to me that Australia has a suitable opportunity not only to explain her attitude but also to become a spokesman for a positive and constructive policy of international cooperation, which would make the various international proposals now under discussion subsidiary to the general requirement that all nations should commit themselves to maintain high and stable levels of employment. A policy for international co-operation of this kind based on a commitment to maintain high levels of employment would, I am sure, receive a sympathetic hearing in many countries and even from an important section of the United States public. What has been interpreted as a negative approach by Australia to international questions would then appear in its positive aspect, as a constructive attempt to direct international activities towards objectives which the people of ail countries wish to attain.
L. G. MELVILLE
26 August 1944
Report on discussions at United Nations Monetary and Financial Conference held at Bretton Woods, U.S.A. from 1st July to 22nd July, 1944
1. The discussions at Bretton Woods, New Hampshire, arose out of Article VII of the Mutual Aid Agreement, which provided for agreed action directed towards the expansion of production, employment and consumption, the reduction of trade barriers, and the elimination of all forms of discriminatory treatment in international commerce.
2. The discussions were at the official level only and did not involve any commitment on Governments. In accordance with the terms of the invitation  from the President of the United States of America, the Conference was merely to formulate proposals for a monetary fund and a reconstruction bank, for subsequent reference to the respective Governments for their consideration and acceptance or rejection.
3. The proceedings of the Conference are covered by this report under the following headings:
A. General B. Procedure C. International Monetary Fund D. International Bank for Reconstruction and Development E. Employment Agreement.
The outcome of action taken by the delegation in accordance with the Government's instructions is covered under appropriate headings of the report and summarised in Appendix D.
4. Prior to the discussions at Bretton Woods between the representatives of the 44 United Nations, there had been earlier discussions between the United Kingdom and the United States of America, between United Kingdom, Dominion and Indian officials, and discussions between the United Kingdom and the United States of America and most of the other countries represented.
5. As a result of these discussions, a joint statement on the establishment of an international monetary fund was prepared by the experts of a number of countries. These included experts of the United Kingdom, the United States of America, Russia and China. This joint statement was published by the United States of America, the United Kingdom and some other countries, on 21st April, 1944.  A preliminary draft outline of a proposal for a bank for reconstruction and development of the United and Associated Nations was also prepared by experts of the United States of America and circulated on 24th November, 1943. 
6. By agreement between the United Kingdom and the United States of America (and presumably the U.S.S.R. also), these skeleton proposals for a fund and a bank became, in effect, the terms of reference of the Conference. No opportunity was provided for general discussion of the merits of the proposals before the Conference. Neither was there any opportunity to discuss the desirability of developing alternative forms of international financial collaboration. The form of the proceedings confined discussion for the most part to suggested amplifications and modifications of each of the various articles and sections of the skeleton proposals for a monetary fund and a reconstruction bank.
7. Important modifications in the proposed monetary fund were made at the instance of the United States, the United Kingdom and Russia, and the South American Republics were successful by combined action in striking some useful bargains. Most of the modifications which were made were settled during the course of informal negotiations, although they had eventually to be brought forward in open conference. Modifications which were made in response to representations by the Australian delegation were reasonably satisfactory. The Australian quota in the fund was increased from A47 million to A62.5 million. The 25 per cent.
limit on annual drawing rights was not increased, but a 'waiver' clause was inserted which permits the fund to relax the limit. A portion of the amendments proposed by Australia to the 'purposes and policies of the fund' was accepted. In addition, the modifications made at the instance of the United Kingdom in the direction of greater flexibility in exchange rates were as favourable as we could reasonably expect in view of the United States outlook on this matter and would seem to meet Australian requirements.
8. In view of the modifications made to the proposals, I now believe that, on balance, it would be to Australia's advantage to participate in the proposed fund.
9. Important modifications were also made, largely at the instance of the United Kingdom, to the original United States proposals for the reconstruction and development bank. On balance, I believe that it would be to Australia's advantage to participate in the proposal, as now drafted, for an international bank for reconstruction and development.
10. It is difficult to forecast the final attitude of the other countries represented at the Conference. The Final Act, as adopted by the Conference, gives an appearance of greater unanimity than actually existed. The Articles were drawn up by majority decisions, and important reservations were made by Russia, China, France, India, Australia and a number of other countries. However, as a result of an appeal by the United Kingdom and United States delegations, these were recorded only in the minutes of the technical commissions appointed by the Conference and were not published with the Final Act. As Australia was not voting on the motions for the adoption by the Conference of the documents drawn up by the commissions, I did not oppose this procedure.
11. While participation in these proposals seems to me to be to Australia's advantage, from a more general point of view they contain certain defects. For this and other reasons, there is much opposition to them, and particularly to the fund, in the United States. It is far from certain that Congress will accept them.
There was also strong opposition to the earlier joint statement on the fund in the United Kingdom. The modifications made to the joint statement at Bretton Woods should meet some of the criticisms, but by no means all.
12. If Congress accepts the proposals, I should judge from the attitude of the representatives of various countries at Bretton Woods that, despite some reservations, most countries would be prepared to accept them. It is, however, difficult to know, in the case of occupied countries, to what extent their representatives are likely to reflect the opinions of the countries when they are set free.
13. The formal work of the Conference was divided between three commissions. Commission I reviewed the proposed monetary fund and Commission II the proposed bank for reconstruction and development. To Commission III was given the task of considering other means of international financial co-operation brought forward by various delegations, such as proposals for the purchase of silver as well as gold by the fund, for the liquidation of the Bank for international Settlements, for the disposition and transfer of enemy assets, and for reducing obstacles to international trade, and bringing about the orderly marketing of staple commodities. It was before this Commission III that the Australian delegation sought, unsuccessfully against United States opposition, to have a resolution adopted by the Conference urging member countries to accept an agreement for the maintenance of high levels of employment.
14. The reports of the commissions were finally submitted to a plenary session of the Conference for adoption.
15. It was at first intended that the Conference at Bretton Woods, following the procedure of the United Nations Conference on Food and Agriculture at Hot Springs, should adopt resolutions recommending to Governments the acceptance of the plans drawn up by the Conference. It was also proposed that the Final Act, a document containing a brief record of the proceedings together with the plans, recommendations and any reservations, should be signed by the various delegations. As at Hot Springs, signature was to be no more than a certification to the accuracy of the Final Act as a record of the proceedings.
16. In accordance with my instructions , I urged on the United States and the United Kingdom delegations that the Conference should make no recommendations and there should be no signature of the Final Act.
17. I was told by the United States delegation that the Conference could not dispense with formal signature involving merely a certification to the accuracy of the record.
18. However, delegates of some other countries were also unwilling to take part in proceedings under which they might appear to be making recommendations to their Governments. Accordingly, the resolution which the plenary conference was to be asked to accept was reworded to read:
'Resolved: That the Conference accepts the Report of Commission I, adopts the Articles of Agreement of the International Monetary Fund, and directs that they be incorporated in the Final Act of the Conference.' This seemed to me sufficiently neutral to meet our objections, particularly as the plans for a fund and a bank were to be drawn up by majority decisions without committing delegations to approval of the texts either in whole or in part.
19. Accordingly, in my cable No. 26 of 16th July, 1944 , I recommended on purely technical grounds that I should be authorised to sign the Final Act of both the fund and the bank, and in my cable No. 35 of 19th July, 1944 , quoted the above resolution and gave full details of the proposed procedure.
20. On receiving the Government's reply  that in their view the re-drafted resolution was not neutral, together with instructions not to vote on the resolution or to sign the Final Act, I conveyed this decision to the United States and the United Kingdom delegations with whom I had been negotiating.
21. The United States and the United Kingdom delegations felt that the Australian Government's attitude must have been due to some misunderstanding. Since I stated I was satisfied my cables had fully explained the procedure, they decided to take the matter into their own hands, and cables of explanation were sent from the State Department  and the Dominions Office. 
22. In accordance with my instructions, I stated at the plenary session that the Australian delegation was not voting on the resolutions adopting the reports of Commissions I and II on the fund and the bank, and asked that this be recorded in the minutes.
This statement would without doubt have been taken by the Conference to mean that the Australian Government had made a policy decision against the acceptance of the proposals. I therefore thought it necessary to explain that, while we had no authority to vote, this must not be taken to imply that the Australian Government had made any decision for or against the fund or the bank. I added that, although the Australian delegation was not voting on the proposals, the proceedings would be submitted to the Government for consideration and would in due course be presented by the Government to Parliament.
23. There was considerable antagonism to this attitude of the Australian delegation at the Conference, which, as far as I could discover, was shared by all delegations, including New Zealand. In private discussions, the view was freely expressed that, if the Australian delegation was not prepared to vote on the resolution or sign the Final Act, it should not have taken part in the Conference.
24. This unfavourable atmosphere was slightly improved when, in accordance with instructions, I attached my signature to the Final Act, followed by the words 'for purposes of certification'.
Nevertheless, the other delegations remained unsympathetic and critical of the Australian attitude.
25. New Zealand and one South American Republic also had some fear that their signatures might be misunderstood. New Zealand met the position by sending a private letter to the President, pointing out that their signature was not to be taken to imply approval of the plans. The South American Republic had a note attached to their signature to the effect that their signature did not imply that they would recommend to their Government approval of the agreements. In neither case was any reference made to their attitude in open conference, and both delegations avoided any publicity on the point.
C. INTERNATIONAL MONETARY FUND
36. In response to our representations at the Conference that the Australian quota was too small, it was twice raised from an original figure of A47 million. Although relatively favourable, it will not by itself be adequate to meet our post-war needs in view of the large fluctuations in our balance of payments. The waiver provision was specially inserted in an attempt to meet the needs of Australia and countries subject to similar conditions.
However, the safeguard it provides is an uncertain one, and we should aim at supplementing our drawing rights by building up gold or dollar balances or by having some of our blocked sterling set free to supplement our working balances. While by themselves inadequate, Australia's drawing rights would be a useful addition to our international liquidity.
Effect of the Fund on a policy of full employment 62. In deciding whether to accept the Fund, the Australian Government will no doubt wish to consider what effect it might have on a local policy of full employment. Were Australia maintaining a high level of employment by the expenditure of public money at a time when employment abroad had fallen, prices and wages in Australia might be steady or rising at a time when they were failing elsewhere. This together with a fall in our export income, which we must expect to accompany any fall in employment in our principal markets, would place a strain on our balance of payments. We could not correct this by exchange control, but the Fund would not prevent us from curtailing imports by means of import restrictions. Nevertheless, import restrictions might not be the best way of defending our balance of payments, and some depreciation of the Australian pound might be needed.
Provided this would not reduce the value of our currency by more than 10 per cent. below the initial par value, we could make the adjustment without hindrance from the Fund. If a greater depreciation were needed, we should need to secure the approval of the Fund and could argue that a fundamental disequilibrium had developed which needed correction. If the Fund did not agree, we could still depreciate our currency by the amount required, though we would then be denied use of the Fund's resources and, after a reasonable period, could be expelled from the Fund. But this is unlikely. Provided we built up international reserves outside the Fund, for use in the event of the Fund denying us the use of our drawing rights, our freedom to follow a policy of maintaining a high level of employment in Australia should, therefore, not be hampered by membership of the Fund.
Defects of the Fund 63. From an Australian point of view, the Fund would be better if our quotas and drawing rights were larger. The degree of flexibility proposed for exchange rates is as favourable as could reasonably be expected. The fundamental disadvantage that it is not closely associated with commitments on employment policy is discussed in a later section.
64. Some critics have argued that there is at present much uncertainty about the kind of monetary policy that will be needed in a world where some countries will have national policies of full employment and others will not. We should not, these critics claim, be trying to lay down a new set of monetary rules until we are clearer about the international monetary policy that will be best adapted to these national policies. For example, the Fund would ban exchange control, but it is not at all certain that exchange control may not be the best and most flexible international instrument for maintaining full employment in individual countries.
65. This may possibly be a defect in the Fund from Australia's point of view. It seems probable, however, that we could use import restrictions to give us much the same results as could be secured by exchange control, while exchange control applied by other countries, and particularly by the United Kingdom, might do us much harm.
66. The position of gold in the Fund might be misunderstood. The United States, as the world's largest holder, and Russia and South Africa, as large producers, could not be expected to agree to any proposals which would damage the international market for gold.
The United Kingdom is also anxious to retain a market for gold because of its importance to the sterling area and France because of her large holdings. In the face of this support, it was necessary to make some provision for gold in the Fund. There is no intention, however, to tie the value of member currencies permanently to gold, and provision is made, if necessary, for a general adjustment of currency values in relation to gold. The Fund does not represent a return to the gold standard. If the alternative to the gold standard is a managed currency, then the Fund must be regarded at least as a half-way house towards a managed international currency.
67. The fact that the Fund will sometimes hold large quantities of Australian currency need not occasion any misgivings. The operations of the Fund will be transacted through an account with the Commonwealth Bank, and the Fund may use this Australian currency to discharge Australian liabilities only on the initiative of the Treasury or Commonwealth Bank, as fiscal agent of the Australian Government.
Conclusion 68. My conclusion is that it would, on balance, be to Australia's advantage to participate in the Fund as now drafted, and I recommend its acceptance to the Government.
D. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT 
Benefits 78. Australia is not likely to be a borrower or large lender.
Since the resources and facilities of the Bank are to be used exclusively for the benefit of members, the operations of the Bank may result in Australia participating in the sale of capital equipment for the reconstruction or development of overseas countries. Borrowers, however, are not to be 'tied' to any particular member in spending the proceeds of loans, and the benefits of the Bank to Australia will lie mainly in the effect such an organisation would have on the market for our exports, since any increase in international spending will indirectly increase the demand for Australian exports. The proposal arose in the need for loans, first, to facilitate reconstruction in war- damaged countries in the immediate future and, secondly, to aid the development of underdeveloped countries in the long-term future. Reconstruction loans could not be provided by the Monetary Fund without straining its resources to breaking point. The development of backward countries is urgent, not only to promote world trade but to ensure the necessary conditions for a lasting peace in the Pacific. From our point of view, successful reconstruction of the devastated countries means the very necessary restoration of our old export markets. The development loans mean the expansion of new markets and the prospect of exports of capital equipment to the Far East and Netherlands East Indies.
Obligations 79. It is hoped that the commission of 1 to 1 1/2 per cent. to be paid into a special reserve will meet any losses incurred by the Bank. An important function of the Bank would be to subject requests for loans to an expert examination, and all loans must be guaranteed by the Government of the country receiving them.
Nevertheless, loans will be made to countries which are not first class risks, and there will remain a possibility of loss.
Australia's contingent liability to meet these losses is A50 million. Any loss, however, would be discharged over a considerable period of years and need not be embarrassing.
Australia would have to provide annually only her proportionate share of the foreign currencies needed to amortize the loss and pay interest and other charges.
80. Apart from any loss of this kind, however, Australia's contribution would be the gold subscription of A1.25 million and the currency subscription of A11.25 million. This subscription is not a gift but an investment which may in the end give a moderate return on capital. Moreover, no loan need be made out of Australia's subscription if her balance of payments is not favourable.
Conclusion 81. Australia stands to gain more from the indirect effects of the successful operation of the Bank upon her trade than she is likely to lose through its failure. I therefore recommend acceptance of the Bank to the Government.
E. EMPLOYMENT AGREEMENT
82. Commission III was formed to consider other measures of international co-operation brought forward by the various delegations. Owing to shortage of time, it was impossible for the Conference to give sufficient attention to the problems resulting from wide fluctuations in the value of silver which were troubling some South American Republics. The Conference therefore recommended that these problems merited further study. The Conference also passed a resolution recommending the liquidation of the Bank for International Settlements at the earliest possible moment and one recommending the action that should be taken by member countries to deal with the disposition or transfer of assets belonging to the Government or individuals or institutions of enemy or occupied countries.
83. A number of countries argued that the International Monetary Fund could not function successfully unless it were accompanied by efforts to reduce tariffs and other barriers to trade, and a resolution was carried recommending to the participating Governments that they reach agreement as soon as possible on ways and means whereby they may best- (1) reduce obstacles to international trade and in other ways promote mutually advantageous international commercial relations;
(2) bring about orderly marketing at fair prices of staple commodities with due regard for the interests of producer and consumer alike;
(3) deal with special problems of international concern which will arise from cessation of production for war purposes; and (4) create by co-operative effort the harmonising of the national policies of member States designed to promote and maintain high levels of employment and progressively rising standards of living.
84. On this last recommendation, we stated that we could not support a resolution which did not advocate a specific agreement between countries to maintain high levels of employment, and we urged the Conference to accept the following resolution-
'Whereas the raising of standards of living throughout the world must be the primary aim of economic policy and the most essential conditions for this and for the achievement of the objectives set out in Article I of the International Monetary Fund are the promotion and maintenance of high levels of employment; and Whereas the operations of the International Monetary Fund and other forms of international economic co-operation will have the best prospects of success if member countries by domestic measures maintain high levels of employment and consumption and by so doing enable the accumulation of persistent credit (and debit) balances on international account to be avoided;
This Conference resolves that Governments which are to be invited to accept an International Monetary Agreement should be invited to accept concurrently an international agreement in which the signatories will pledge themselves to their. own people and, to one another to maintain high levels of employment in their respective countries, and to exchange information on measures necessary to prevent the growth of unemployment and its spread to other countries.'
85. Our statement to the Commission urging acceptance of this resolution is given in Appendix C. 
86. The United States opposed the resolution on the grounds that- (a) the extent to which domestic policy can properly be made the subject of international concern and agreement requires further more careful study than can be given in a few days available at this Conference;
(b) the subject could better be treated as part of any subsequent Article VII conversations.
87. No reference was made at the Conference to the United States political difficulties, but I believe these to be dominant in their opposition to our resolution at the Conference.
88. In the discussions and debates preceding the taking of the final vote in the Commission, we had the full support of the United Kingdom and New Zealand. France, Poland and a few smaller countries also voted for our resolution in the Commission. Several South American Republics supported us in the early stages but were more interested in the special bargains they were making with the United States and in gaining some acknowledgement of the need to reduce tariffs.
89. In the discussions, there was fairly general opposition to the specific proposal that the countries represented at the Conference should be invited to sign an agreement concurrently with the monetary agreement. The United States and Canadian delegations in particular objected that, while they recognised the relationship between employment and monetary policy, any resolution implying that acceptance of the Monetary Fund should be contingent on an employment agreement went beyond the terms of reference of the Conference.
90. Against this opposition, we were unable to gain sufficient support for our resolution to have it carried, particularly since Russia, China and India are interested in increasing production rather than in maintaining employment. Nevertheless, I believe that after the educational work Australian representatives have done at the Hot Springs Conference, in the London discussions, at Philadelphia and at Bretton Woods, there are now good prospects of securing widespread support for an employment agreement as part of a programme of international economic co-operation.
91. Because of domestic political difficulties, the United States may continue to oppose it, but the agreement would obtain influential support from sections of the administration and from an important part of the United States public. Whether the agreement is eventually accepted or not, it is, I believe, important for us to state our general attitude towards international arrangements. Our general policy on international arrangements is not yet fully appreciated abroad, and, in the absence of a general framework by reference to which our stand on specific proposals can be judged, the attitude of Australian delegates at international conferences is apt to be misunderstood and to create an unfavourable, impression.
Conclusion 92. I believe it is urgently necessary for Australia to set out a positive and constructive policy for international arrangements based upon the prior acceptance by countries of an obligation to maintain a high level of employment. I therefore recommend that the Government state its attitude and endeavour to organise a conference at which countries will be asked to accept an employment agreement.
GOVERNMENT INSTRUCTIONS TO AUSTRALIAN DELEGATION AND SUMMARY OF ACTION TAKEN BY DELEGATION AT BRETTON WOODS
Instruction A 'To press strongly for substantially increased accommodation both in respect of the quota and the annual drawing rights.'
The Australian delegation was successful in obtaining an increase in the Australian quota from an original figure of A47 million to A62.5 million. The 25 per cent. limit on drawing rights has not been changed, but a waiver provision has been inserted to meet the needs of countries subject like Australia to conditions of a periodic and exceptional nature.
Instruction B(a) 'To seek the inclusion in Clause IV of a provision that the Fund shall not reject a requested change in the exchange rate which is designed to meet a serious and persistent deficit in the balance of payments on current account accompanied by a substantially adverse change in the terms of trade.'
Under the original statement of principles, an alteration of a member's exchange rate (beyond the permissible 10 per cent.) could not be made without the consent of the Fund. Under the Monetary Fund as now drafted , a member's exchange rate can be altered without the consent of the Fund, but a member's drawing rights from the Fund would cease. The Fund would still have the right to expel a member in the case of continued disagreement, though expulsion is unlikely. As modified, the Fund meets Australia's needs reasonably well and would afford us an opportunity to justify any unilateral action which might be taken.
Notwithstanding this modification, the delegation continued to urge, but without success, that the articles should contain a provision of the kind given in the Government instructions. In view of the changes in the text, it was hardly to be expected that our proposal would be accepted.
Instruction B(b) 'To seek the alteration of the "purposes and policies of the Fund"
to give more emphasis to employment and less emphasis to exchange stability and to strengthen the safeguards against the Fund interfering with the domestic policies of a country.'
The delegation pressed strongly for modifications of the purposes and policies of the Fund. Some modifications were secured, and while one of the purposes is still to promote exchange stability, the significance of this is greatly modified by the subsequent provisions of the Fund providing for changes in par values of members' currencies. The emphasis on exchange stability has, as a result, been greatly weakened. Nevertheless, the purposes of the Fund still place too much emphasis on exchange stability and too little on the maintenance of high levels of employment to be altogether satisfactory to Australia. (See paragraphs 42 to 47 of report.) As suggested in paragraph 44, however, by building up substantial reserves outside the Fund, we could protect our freedom of action.
The Conference also accepted the insertion of 'in accordance with the above' before the words 'to shorten the duration and lessen the degree of disequilibrium in the international balance of payments of members'. This provides an additional safeguard against the Fund interfering with the domestic policy of a country in the interests of stability in the balance of payments.
Instruction C 'To ask that it should be made clear that the right of withdrawal from the Fund should not be prejudiced by making membership of the Fund a condition of membership of any other international body.'
The delegation pressed for modifications to the withdrawal clause but without success, and it now seems clear that the right of withdrawal from the Fund may be prejudiced by membership of the Fund being made a condition of membership of other international bodies. However, the Fund has been made so much more satisfactory from the Australian point of view that it now seems very unlikely that we should ever need to withdraw.
Instruction D 'To urge that an employment agreement should be concluded before a final decision is sought on whether countries will become members of the Fund.'
The delegation submitted to Commission III a resolution under which Governments were to be invited to accept concurrently with the International Monetary Agreement an international agreement in which the signatories would pledge themselves to their own people and to one another to maintain high levels of employment in their respective countries and to exchange information on measures necessary to prevent the growth of unemployment and its spread to other countries. Appendix C gives the statement to the Commission which urged the acceptance of this resolution. This resolution was opposed, particularly by the United States delegation, because it went beyond the terms of reference of the Conference, and could better be treated as part of any subsequent Article VII conference. It was also objected that the matter required more careful study than could be given in the few days available at the Conference. The resolution, in consequence, was not adopted.
Instruction E 'To report any proposals made concerning the time of commencement of benefits and obligations before a decision regarding the Australian attitude is made.'
The articles provide that the Agreement shall come into force when Governments having 65 per cent. of the total quotas have accepted it. The delegation pressed for an increase in this percentage to 70 but received no support. The quotas of the United States, the United Kingdom, Russia and China, aggregate about 66 per cent. of the total, so that the Fund could come into force on acceptance by those countries.
The draft articles of agreement leave to the discretion of the Fund the determination of the date when the Fund's resources will be available to members. The implication is that after establishment, the Fund will commence exchange operations as soon as the necessary mechanical arrangements have been made but not before major hostilities in Europe have ceased. We understand it is hoped that quotas will be available from January, 1946.
Instruction 'That Australia is not to be committed to adherence to any resolutions of the Conference even on an official level.'
After receipt of subsequent instructions from the Government, the Final Act was signed 'for purposes of certification'. The matter is referred to in paragraphs 15 to 25 of the report.