650.S1 Washington/557

The British Ambassador (Lindsay) to the Secretary of State
No. 171

Sir: With reference to the Note which I addressed to you on May 12th6 informing you that His Majesty’s Government in the Commonwealth of Australia would be pleased to exchange views with the Government of the United States through the diplomatic channel as a preliminary to the World Economic Conference, I have the honour [Page 511] now, at the request of the Prime Minister of Australia, to communicate to you the enclosed Memorandum setting forth the views of the Commonwealth Government.

I have [etc.]

R. C. Lindsay
[Enclosure]
Memorandum
1.
His Majesty’s Government in the Commonwealth of Australia attach the highest importance to a successful outcome of the Conference and would welcome any action that would bring about a restoration of price levels especially in the case of primary products. Gold prices for Australian exports have fallen to less than thirty per cent of the 1928 level, sterling prices to forty-two per cent with a corresponding increase in the real burden of overseas interest. This now takes one third of the value of a greatly increased volume of exports. So far Australia has been favoured by an exceptional season, but the future balancing of external payments is less assured. In such circumstances, His Majesty’s Government in the Commonwealth of Australia, while agreeing that restoration of an effective international monetary standard—subject to effective safeguards—is urgently to be desired, and accepting the view that gold alone is likely to secure sufficiently universal acceptance, would have to insist on complete freedom in fixing a new parity of international standards which would be suitable to its internal needs and consistent with its external obligations. Never theless, until such time as an international standard is widely adopted, His Majesty’s Government in the Commonwealth of Australia are determined to avoid at all costs a depreciation of its currency not rendered inevitable by a deficiency in its balance of payments.
2.
His Majesty’s Government in the Commonwealth of Australia are in almost complete agreement with the suggestions contained in the annotated agenda,7 which, where they call for individual action, have already been carried out extensively in Australia. They refer particularly to vigorous steps to restore budget equilibrium, maintenance of sound conditions in the internal money market and avoidance of note inflation, complete conversion of internal debt and other fixed income, avoidance of competitive currency depreciation, discouragement of currency speculation, maintenance of the independence of the central bank, release of reserves to balance external payments, substantial lowering of gold cover ratio and provision for reserves to be held in sterling exchange, liberal credit policies, complete abolition of exchange rationing and prohibition on imports and removal of practically all surcharges on ordinary tariff duties.
3.
In accordance with their treaty obligations His Majesty’s Government in the Commonwealth of Australia are pressing forward with a complete revision of the Australian customs tariff. Under this review, which is still proceeding, considerable reductions have already been effected. His Majesty’s Government in the Commonwealth of Australia are convinced of the necessity of freeing international trade from every restriction compatible with the reasonable requirements of the internal policy of individual governments and also from the effects on trade and shipping resulting from shipping subsidies.
4.
Subject to the above, His Majesty’s Government in the Commonwealth of Australia are in general agreement with the draft annotated agenda (English edition) pages 12 to 17.
5.
Silver. His Majesty’s Government in the Commonwealth of Australia agree that bimetallism with a fixed ratio of gold and silver is impracticable but would welcome a step to raise the price of silver. They think that universal abolition of notes of small denomination and general adherence of the world to a silver token currency of a minimum fineness of 95 per cent would be calculated to secure this end.
6.
On prices (pages 18 to 20) they are strongly of opinion that further cutting of costs would be attended by political dangers from extreme opinion and hence would welcome action directed rather to restoration of price levels. They feel that much more prominence should be given to an examination of the effects of a simultaneous adoption by a majority of the stronger countries of a vigorous public works policy as a means to an initial fostering of activity and consequent stimulation of private investments; but they feel that such a policy should be so directed as to place its nature as a temporary stimulus beyond doubt.
7.
On capital movements (pages 20 to 23), Australia as a debtor country struggling under a heavily increased real burden of indebtedness, supports especially the suggestion for dealing with long-term debt. His Majesty’s Government in the Commonwealth of Australia draw special attention to the position that will ultimately arise with all international contracts which call for payments in gold coin of a specified weight and fineness and to the necessity which will arise for a complete revision of these contracts.
8.
On restrictions on international trade, (pages 23 to 26) Australia is vitally interested and has already abolished restrictions. On tariff policy (pages 26 to 31) they would call attention to the observations contained in paragraphs two and three of this memorandum. On production and trade (pages 31 to 34) His Majesty’s Government in the Commonwealth of Australia agree that discussion would be valuable, and consider that a checking of excessive government subsides to shipping is of considerable urgency.
  1. Not printed.
  2. League of Nations, Monetary and Economic Conference, Draft Annotated, Agenda (Official No.: C.48.M.18.1933.II. [Conf. M.E.I.]).