Extracts WASHINGTON, 8 April 1946
THE INTERNATIONAL MONETARY FUND Memo. on the question of Australian Membership 1. It is not my duty to share the responsibility of Mr. L. G. Melville as advisor to the Government on the above subject. My reasons for offering these notes are that I have watched the course of this international adventure during my four years in Washington and have seen it develop in its international setting; that I talked the subject over with Melville at Savannah , when he agreed cordially that I might make a useful contribution such as I now attempt, and that Senator Keane has asked me to do SO.
2. I should say at the outset that I have seen Melville's draft report as prepared before he left Washington, and that I agree with it entirely. These notes may be useful only as a supplementary view, as from a different angle. Moreover, I agree with the scope of Melville's report.  It was his duty to deal with the subject in a severe professional spirit, and with all the important details, each on their own merits. If I have any duty at all in this matter, it is not to go over the same ground, but rather to use my own particular knowledge and experience, coloured though they may be with international preoccupations.
It seems to be unnecessary for me to refer to the International Bank. 3. However a great deal of what I have to say may be applied with equal relevance to the coming series of discussions on Trade and Employment, which, it now appears, might extend throughout next year (1947). Melville has very properly linked these proposals with the Monetary Fund, but my more general view relates them both to a similar question. Are we -to accept specific risks, most of which we can anticipate, in becoming parties to international agreements we dislike, or other but less measurable risks by remaining outside them?
5. I need not go into any details of the Inaugural business of the Fund. The Fund must inevitably become a dispenser of dollars, and be mainly a dollar institution. it cannot help being dominated by the U.S.A., and by the criteria that determine U.S.A. policies in Washington. The experienced countries must play minor parts, and, indeed, play up to and flatter the U.S.A. ego, for the sake of the world, in this business as in all other United Nations' activities. Australia might behave differently, and with good effects, because she is not weighed down with the handicaps of Europe, and is now expected to be a kind of 'enfant terrible'. But on the whole the members of the Fund must put up with much that they will dislike and disapprove. Savannah confirmed such fears, and did nothing to reduce my general scepticism.
11. The U.K. The December 1945 U.S.A.-U.K. Agreement, here called the Loan Agreement, imposes preposterous burdens on the U.K. only under the most favourable circumstances could they be borne. I do not think that Lord Keynes dealt frankly with the people of the U.K. when he addressed them through the House of Lords, except when he said that the best possible bargain had been made with the U.S.A. If the Loan gets through the U.S.A. Congress it may be because Americans are afraid of Russia, and that sentiment is a poor basis. Nevertheless I am sure that the Agreement as a whole was a historic piece of statesmanship. The U.K. takes great risks for the sake of the world, for herself, and for US.
12. We must remember that whoever won the war, it was not the British. For the moment, at least, the British are a second-rate Power. And we Australians had better not assume anything else.
Whether we wish to or not (and I think we do not), we can no longer lean on the U.K. as we did formerly. We can scarcely expect the workers of the U.K. to go on subsidising our sugar industry, as they did before the war, through tax-free prices. But we can still look to the U.K. as our chief market.
13. Before the war, London did a profitable business as a world financial centre, and will do it again. It was a convenience for us too, and will be so again. But we cannot expect to lean upon London financially as we have been wont to do at awkward times in the past. On occasions we have gone to New York and paid dearly for it, but New York is not a likely substitute for London at an awkward time, should our domestic politics become involved.
14. As far as I can judge, the war has strengthened rather than weakened the association between Australia and the U.K. Indeed the British Commonwealth as a whole, which at times during the war appeared to be an uncertain unit, has survived with strength, dignity, and considerable repute. It is still the only effective League of Nations or group of independents. But it is the U.K.
that we must rely upon, if on any other nation.
17. Australia. I believe that Australia will do well to continue to 'play' with the U.K. on all serious international matters, but to continue to accept more responsibility for her own policies than hitherto. But to what extent? The question goes to the root of the whole problem of our international economics. I know of no analysis of it. Melville has furnished a good description of the situation we might find ourselves in if we become a member of the Monetary Fund. Other experts are trying to ascertain what might happen to us under the proposed International Trade Organisation, from the very tentative ideas so far furnished for conference discussions. Has anyone devoted as much thought to the question;
how well can we stand alone? 18. 'Wishful thinking' can plague all aspects of the problems herein discussed. We should not let it deceive us into assumptions about our economic freedom in the future world. It is not for me to proffer any answers, for I am too far from home, but I suggest that the question asked requires the same critical, candid, and objective analysis as is being given to the various proposals for our international economic cooperation.
19. The analysis would be more difficult, for there are no documents before us. There is nothing but the world we live in and some experience of the past. I suspect that the formal limitations on our freedom of action we are invited to accept have their counterparts in certain informal limitations on our freedom, which a candid analysis would disclose. I suspect that we might have less freedom than in the past, in the new balance of power, if international economic plans fail. I suspect that, whatever domestic policies we may pursue, we shall continue to suffer limitations in substance. We may modify them, or increase them, by changing their form. After the suggested analysis has been made, but not before, an intelligent judgment may be made as to the wisest choice.
The decision could be that for Australia herself, there may not be much in it, whether we go in or stay out.
If we were in fact friendless, then to be outside the Fund would not help us at all. I think that, as a rule, we can defend ourselves inside an organisation better than outside. And I think that as a member we might be able to invoke action early enough to prevent most untoward events happening. Indeed, without flattering ourselves, it could be said that we have something to contribute to such a body. Perhaps our friends are entitled to expect it.
And, I may as well add, the Fund could become a much more influential and quicker-acting body than the U.N. Economic and Social Council, especially in a time of impending crisis.
27. The Fund at present appears to be dominated by an obsolete pattern of thought, i.e. the U.S.A. pattern of the nineteen thirties (not of the pre-depression years). It is the fate of all such institutions. Unless there is growth, the radical thought of one generation becomes the conservatism of its successor, and the Fund will not escape that fate. Fortunately, the new economic thought of the world is almost without form and void. We Australians could share in its renaissance and contribute towards the future shape of what will come. I hope we shall do so.
Despite my opening scepticism, my line of thought has led me to the point of advocacy. Why should I alter my text? It is a genuine development.
31. After reviewing the above considerations, I see no real alternative to our membership of the Monetary Fund. We have elected to play a significant part in the new world, and indeed we can no longer avoid doing so. Responsibilities are thrust upon us.
New, but not necessarily added, risks accompany them. We can take them.
J. B. BRIGDEN