DOLLAR STATISTICS AND POLICY
I commence my reply to your letter of 19th April  at paragraph 35 because I want to assure that you do not have to convince me of the need for all of us to understand just what we are trying to do about the dollar statistics and related matters. Surely you will remember that in our discussion a month ago I pressed the need to lock a number of people (not including me) in a room and to keep them there until they ironed out the statistical aspects. And now to turn to the important parts of your letter.
2. Your paras. 2, 3 and 4 I agree with your aim to keep Australia in the dollar pool on a flexible 'gentlemen's agreement' basis. Perhaps the last part of 4 would be better stated somewhat along the following lines 'we take note of the changing fortunes of the dollar pool [and] practice the maximum degree of economy in dollar expenditure that seems necessary from time to time'. This, of course, is vague but it seems to me to express what we really feel about the matter. I don't see how we measure our economies against those of the U.K.
or, for that matter, any other member of the sterling area.
3. Your para. 5 My reason for supporting a draw from the I.M.F. was not because I thought that something less than our present gold holdings and drawing rights were sufficient as an ultimate reserve but because I thought the U.K. request was not unreasonable in light of our expected dollar deficit of $150 million or more this financial year.
4. Your paras. 6 and 7 I would like to avoid further cuts in our import programme until we see how E.R.P.  is going to work. In light of what we have done this may be practicable. At least we can defer a judgment until your cable re the I.M.F. drawing goes off and the reply comes to hand. Maybe, however, the price of deferring further cuts win be a drawing from the Fund. If so, I would make the draw. I think that E.R.P. must give us some indirect benefit. It seems convenient to mention here also that I am much concerned about the possible effect on our economy of the cuts already made in our dollar imports and I think we should give high priority to the job of really examining our position from this angle.