BRETTON WOODS MONETARY PROPOSALS

Introduction
1. The previous agendum on this subject (No. 669A of 28th August,
1944) submitted the Bretton Woods proposals for an International
Monetary Fund and an International Bank for Reconstruction
together with the report of the Australian Delegation.

2. Cabinet deferred its decision as to acceptance or rejection of
the proposals but authorized the tabling in Parliament of the
proposals together with a summarized version of the report of the
Australian delegation. [1]

3. One of the reasons for deferment was the desire to know the
decisions of the United States Congress and the United Kingdom
Parliament before determining the Australian attitude. Unless both
these bodies accept membership any multilateral international
currency scheme is bound to fail.

4. The Congress of the United States has now accepted the
proposals without amendment but they have not yet been considered
by the United Kingdom Parliament.

Closing Date for Original Membership
5. Under the proposals the Fund and the Bank will be established
when membership has been accepted by Governments who together have
65 per cent of the total of quotas allotted to all participants at
the Bretton Woods Conference.

6. Under the existing arrangements the closing date for acceptance
as an original member of the Fund and the Bank is 31st December,
1945.

7. If any country participating in the Bretton Woods Conference
does not accept membership by 31st December 1945 and the Fund and
the Bank are nevertheless established by other participating
countries, subsequent entry to the organisation will be on such
terms and conditions as the management of the Fund and the Bank
may determine. It is therefore clearly desirable that, if
Australia is to become a member of the Fund and the Bank, it
should do so as an original member.

Present Position
8. I have now received a letter from the Treasurer of the United
States [2] asking for 'any information you feel you can give us
with respect to your Government's plans for formal consideration
of the Bretton Woods Proposals'.

9. Enquiry from United Kingdom has revealed that they have
received a similar request from U.S.A. and have replied that the
matter is receiving consideration but that they are not yet in a
position to make any statement regarding United Kingdom plans. The
United Kingdom authorities have also indicated that they are
awaiting the outcome of the present financial discussions in
Washington before making a final decision. However, as the United
Kingdom Parliament will be sitting until late in the year, it is
still possible that United Kingdom will accept before 31st
December 1945.

10. The only country other than U.S.A. which is known to have
taken legislative action on the proposals is South Africa. The
Union Parliament of South Africa has accepted membership of the
Fund and the Bank provided there is sufficient international
support for the proposals. Canada proposes to take legislative
action during the present session.

Comment
11. In my opinion Australia should adhere to its original decision
to defer consideration of the proposals until both the United
States and the United Kingdom have declared their position. This,
however, will mean that it will be impossible for the Australian
Parliament to consider the proposals before the closing date for
acceptance as an original member, i.e. 31st December, 1945. The
Australian Parliament will rise early in October and will not meet
again until the New Year.

12. In view, however, of the delayed action on the part of the
United Kingdom Government and the fact that the majority of the
other participants at the Bretton Woods Conference have not yet
taken action on the proposals, an extension of time for acceptance
as an original member would not seem unreasonable.

Recommendation
14. I recommend therefore that I be authorised to inform the
Treasurer of the United States (in response to his letter) that-
(a) Australia had decided to defer action on the proposals until
both the United States Congress and the United Kingdom Parliament
had considered them.

(b) It will therefore be impossible for the Australian Parliament
to consider the proposals before the present closing date, i.e.

31st December, 1945.

(c) We would be glad to know whether any consideration has been
given to the desirability of extending the present time limit on
acceptance as an original member.

J. B. CHIFLEY

Treasurer