650.S1 Washington/557
The British Ambassador (Lindsay) to the Secretary of
State
No. 171
Washington, May 15,
1933.
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.]
[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.
Washington, May 15,
1933.
