1. When I was in Canberra, you asked me to send you a note setting out the worst that can happen to Australia if we do not join the International Monetary Fund.
2. The most obvious and probable penalties for not joining are covered by paragraphs 28 to 32 of my report.  There are, however, other possible penalties, some of which I do not regard as at all likely but which might, nevertheless, be imposed on us.
3. The meaning of Article XI of the International Monetary Fund is not at all clear , but it is possible that, under this article, sanctions could be imposed against any country which did not join the Fund. These sanctions would take the form of exchange restrictions designed to prevent trade between the non-member country and members of the Fund. In these circumstances, the only Australian exports which could be sold would be those which members of the Fund could not get elsewhere and could not do without.
4. Even if these sanctions were not invoked immediately, as a penalty for not joining the Fund, it is conceivable they might be used to compel Australia to comply with the provisions of the Fund, even though we were not a member; that is to say, that we would be compelled to accept all the obligations of the Fund without gaining any of its benefits.
5. If we do not join the Fund, we would not be permitted to join the International Trade Organisation. In these circumstances, the United States of America could, if it so wished, impose a very high tariff on Australian wool and give preference in its markets to wool from countries which were members of the Organisation.
This would encourage not only increased home production but also imports from South Africa and South America instead of from Australia. This might condemn the Australian wool industry to a very bleak future, for wool interests have hoped, not without some justification, that the United States of America would be an important purchaser of Australian wool in future.
6. It might also happen that, under the International Trade Organisation, the United Kingdom would be required to give preference in her markets to goods from members of the Organisation. This would place Australian butter, sugar, meats and fruits at a serious disadvantage in competition with countries such as Denmark, Holland, Cuba, the Argentine, New Zealand, the United States of America, and Canada, if they were members of the Organisation.
7. Under Article XI of the International Monetary Fund, it might be possible for the Fund to prevent investment of overseas capital in Australia.
L. G. MELVILLE