For Minister of External Affairs and Treasurer from Melville.

1. In the course of private discussion White [2] stated that no
decision yet made about date of proposed conference on monetary
fund. Nevertheless, because of the political situation in the
United States it will have to be held late in May or early in June
if it is to be this year.

2. White's idea was that conference should be preceded by a
drafting committee of officials who would prepare agenda and
documents. Governments would be represented by Ministers but
decisions of conference would not commit Governments.

3. Size and method of calculating quotas would be discussed by
drafting committee and conference. Aggregate of quotas eight
thousand million dollars for United and Associated Nations and
individual quotas for the United States, United Kingdom, Russia
and China had been determined but remainder have yet to be fixed.

Fixing of aggregate quota at eight thousand million dollars would
apparently imply rejection of London proposal to increase smaller
quotas and also aggregate. White thought it possible that some
countries might be prepared to give up part of their quotas to
permit an increase in the quotas of Australia and other small
countries. He suggested that the United Kingdom and possibly the
United States might be prepared to make some sacrifice for this
purpose. It seems to me, however, that there may be difficulty in
getting as large a quota as we need by this means.

4. We did not discuss with White the question of increasing the
size of the annual drawings but from other sources it seems clear
that he will strongly oppose this.

5. White would also be strongly opposed to making provision in
fund for any greater flexibility of exchange rates.

6. Canadian Government has stated that its attitude to
international monetary fund would depend upon promises made with
other proposals, particularly those for reduction of trade
barriers. White considers that agreement on internatitonal
monetary fund should be pressed to a conclusion without waiting
for progress on other proposals. He considers it unrealistic to
insist that the monetary fund should be linked with commercial
policy.

7. In my view monetary fund as now drafted [3] is quite
unsatisfactory for Australia. This view is based on-
(i) Altered purposes and policies of fund as compared with London
draft. [4]

(ii) Doubts about size of Australian quota.

(iii) Limitation of annual drawings.

(iv) Emphasis on stability of exchange rates and limitation of
unilateral right to vary exchange rates, with probability that
highly industrialised nations and trade competitors would oppose
any major depreciation by a country whose export prices had
fallen, and
(v) Uncertainty whether withdrawal from fund would involve
withdrawal from other international bodies involving country
concerned in heavy burdens.

8. If you agree with this view it might be desirable for the
Australian Government to follow up telegram 535 [5] to Dominions
Office by a further telegram-
(i) expressing in a preliminary and tentative way doubts about
proposals from Australian point of view;

(ii) expressing hesitation about accepting commitments under
monetary fund before knowing obligations under other proposals;

(iii) opposing early holding of conference to give us more, time
to study provisions of monetary fund and to allow for appropriate
representation;

(iv) pressing again for completion of employment agreement before
countries are asked to accept commitments under monetary fund.

9. I can see difficulty at a general conference in securing the
changes that would make the monetary fund satisfactory for
Australia and consider we should not accept commitments under
monetary fund until either-
(i) we know obligations under other proposals, or
(ii) it is expressly provided in monetary fund that membership is
not to be a condition of membership of other international bodies.

10. I regard right to withdraw from monetary fund without being
hindered by obligations under other agreements vital to our
interests.