PM Transcripts

DIGEST OF DECISIONS
AND ANNOUNCEMENTS AND
IMPORTANT SPEECHES
BY
THE PRIME MINISTER
( THE RIGHT HON. J. B. CHIFLEY).
No. 132.
PERIOD 6TH NOVEMBER, 1947, TO STHii DECEMBER, 1947.
By Authority:
L F. JonSTON, Commnnwea! th GovernmemPmrnint tr, Canusu
( Printed in Australia.)
7858. pp I
_ I _ 11 C

DEFENCE.
POST-WAR-STRENGTH AND ORGANIZATION, PAY AND
CONDITIONS.
In. Parliamtenl.-On 6th November, 1947, the Minister for Postwar
Reconstruction ( Mr. Dedman) said-
The following rates of pay for the higher ranks have now been
approved:-The active rate of pay for vice-admiral, lieutenant-general
and air marshal will be 130s. a day. The active rate of pay for rearadmiral,
major-general and air vice-marshal will be 105s. a day. For
the rank of commodore ( Royal Australian Navy), which is a nonsubstantive
rank, no scale has been fixed, but an officer of this rank will
continue for the present to be paid an allowance of 10s. a day additional
to pay for the rank of captain ( Royal Australian Navy). Brigadier
and air commodore will receive an active rate of pay of 80s. a day.
The present maximum daily rate for captain ( Royal Australian Navy),
76s. 6d., will be adjusted to 77s.
The foregoing rates will be supplemented, in the case of married
men, by a marriage allowance of 4s. a day, and by a separation
allowance of a day if not living at home. The chiefs of staff of the
three Services will be paid a consolidated rate in the scale of
œ 2.600-œ 3,000 per annum. Proposals for a new superannuation scheme
to apply to long service members and career officers of all three Services
aire now under consideration, and decisions will be announced shortly.
The new pension scheme will supersede the existing deferred pay and
lsperannuation schemes now applying in navy, army and air."
( For earlier references, please see No. 126, page 37.)
JAPAN.
TRADE--PRIVATE TRADING.
On 6th November, 1947, the Minister for Customs ( Senator
(. ourtice) announced that arrangements had been completed for
Japanese nationals, or Allied or neutral nationals resident in Japan, to
be appointed to represent Australian buyers in that country. The
contract between the agent in Japan and the Australian businessman
must be authorized by the Supreme Commander for the Allied Powers
and licensed by the Japanese Board of Trade. All foreign exchange due
to Japanese nationals or firms a. the result of private trading transactions
must be paid to the board.
( For earlier references, please see No. 128, page 24.)
RECONSTRUCTION.
TRADE AND EMPLOYMENT-AGREEMENT.
In Parlilament.-On llth November, 1947, the Minister for Post-war
Reconstruction ( Mr. Dedman) said-
The recent Geneva negotiations are the latest phase of the programme
of international economic collaboration first foreshadowed in
the Atlantic Charter, and subsequently developed in Lend-lease, the
Mutual Aid Agreement, Unrra, the Food and Agricultural Organization,
the two Bretton Woods institutions and the economic machinery of the
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United Nations. They originated in an invitation issued by the United
States Government in 1945 to fourteen other important trading countries
to participate in two simultaneous sets of preliminary negotiations.
One of these was designed to draw up a draft charter, incorporating
rules to govern the future conduct of international trade, for submission
to a world conference on trade and employment with a view to establishing
an International Trade Organization. The other negotiations
were to give practical effect to the policy of expanding international
trade by bringing about a series of mutually advantageous trade agreements.
After the establishment of the United Nations organization, the
proposed charter negotiations were brought under United Nations
auspices by the acceptance of a resolution proposed by the United
States at the first meeting of the Economic and Social Council in
February, 1946. The council established a preparatory committee to
elaborate an annotated draft agenda for the consideration of a world
conference on trade and employment. Throughout the planning of the
United Nations economic machinery, it had been assumed that a
specialized agency would eventually be established to deal with international
trade-the most immediately important of all international
economic problems. The Economic and Social Council added three more
countries to those originally invited. They are-
United Kingdom, United States of America, the Union of Socialist Soviet
Republics, France. Belgium-Luxembourg. Netherlands, Czechoslovakia, Norway,
Lebanon. Canada. India. South Africa. New Zealand. Australia. China. Cuba,
Brazil and Chile.
The Union of Socialist Soviet Republics has not yet participated.
The first section of the Preparatory Committee thus set up was held
at London in October and November, 1946, and was preceded by an
exchange of views between British Commonwealth countries. This first
session had before it a set of draft proposals for an International Trade
Organization published by the United States Government in 1945, and
supported by the British Government, which had publicly expressed its
agreement on all important points. It had also to consider a more
elaborate draft charter subsequently published by the United States
Government on its own initiative. As a matter of convenience, and
largely because it was more detailed, the Preparatory Committee decided
to adopt the latter draft, together with less comprehensive proposals put
forward by other delegations as the ' basis for discussion.
The United States draft proposals were very substantially modified
in the course of discussion, and new sections were added, but time prevented
more than a hasty exchange of views on some significant questions.
The rough text of a possible trade charter was drawn up and
included in the first report of the Preparatory Committee to the
Economic and Social Council. A drafting committee was appointed to
examine this text in detail, and to recommend drafting changes. The
drafting committee met at New York in February and March, 1947,
and the resulting text became the basis for the second and final session
of the Preparatory Committee at Geneva which recently concluded. I

propose to deal later with questions of the draft charter for the International
Trade Organization, which will be the subject-matter of the
coming World Trade and Employment Conference at Havana.
Meanwhile, both for convenience and because the governments of
a number of countries felt strongly that the two sets of negotiations
were essentially interdependent, the first session of the Preparatory
Committee recommended to the Economic and Social Council that the
tariff negotiations for which the United States Government had issued
invitations should also be brought under United Nations auspices. As a
result, tariff negotiations began at Geneva on 10th August, 1947, about
a month before the resumption of the charter discussions. Both tariff
and charter negotiations were preceded by British Commonwealth discussions.
The pre-tariff talks at London in March, 1947, dealt largely
with the likely repercussions of the tariff negotiations on imperial
preference, ' but those on the charter at Geneva covered the issues in
rather more general terms.
The tariff negotiations have been quite distinct from the charter
discussions, and the aim has been to bring the results into effect without
necessarily waiting for the establishment of the International Trade
Organization. The results have been incorporated in a Draft General
Agreement on Tariffs and Trade for the consideration of governments,
which will be published on 18th November, 1947, and which the Government
ha. s decided to apply provisionally from that date. Until it is
published it is impossible to deal with the negotiations except in general
terms. The governments of all countries, members of the Preparatory
Committee, are invited to become parties to the agreement. This
generalization will extend the scope of the benefits to be received, and
as a result Australia will obtain the benefit of the reductions negotiated
among the other sixteen countries in addition to those negotiated by
itself. Some of the former reductions are of little benefit, : but others
will provide worthwhile benefits. In some countries these indirect benefits
are considerable, and, taken on the aggregate, they represent a
general extension of export opportunities for Australia. The agreement
is in three parts. Part I. contains-
The schedules of tariff reduction whici have beer, negotiated by all the
countries concerned.
An undertaking to extend imost-faiured-inatior treatment to other parties
except for existing preferences which are formally recognized as valid to the
extent that they have not been altered in the current negotiations.
Part II. contains undertakings regarding commercial policy. These
are necessary primarily to prevent tariff concessions granted being offset
by other protective measures and follow closely chapter IV. of the
draft charter. In practice they involve no significant change in Australian
commercial policy. In particular they preserve-
The right to impose new duties or protective purposes except where we
specifically have accepted. or niny accept. as binding in tariff negotiations.
The right to impose import restrictions to protet our balance rf payments.

Tih riiht ti jili' v'c stcitbilization scl iihemeiC fiir primary pruodUcts at present
op[ eratillg ill AItttralita. and the right to cstallli h suclih schemI es for other produictilln
i ilar circ ilusltances.
The right to take eCICIrgIelcy acti] ol if illy industry is enltdangered by any t: lriti
or ir'tferelcll redtuctil nelgotiated.
Part 111. contains mainly machinery provisions.
If finally ratified, the agreement will run for three years but will
continue thereafter unless it is specifically terminated. Special provisions
protect our right to withdraw particular items which, in changed
circumstances, we may wish to protect further without terminating the
whole agreement.
If changes are made in the draft charter at the Havana Conference,
it is proposed that relevant parts of the agreement would be amended
accordingly unless the parties to the agreement decide otherwise, and
consequently countries applying the agreement provisionally are
expected to carry out Part II. only to the extent permitted by existing
legislation. The negotiations have been conducted against an economic backgroundi
dominated by the slow recovery of war-devastated countries, and
by the world-wide shortage of dollars. United States' exports in 1945
aind 1946 totalled 26,000,000,000 dollars, compared with imports of
9.000,000,000 dollars. For 1947 the figures up to 31st July were
8.700,000,000 dollars and 3,300,000,000 dollars. There can be no world
economic stability until the United States spends abroad on direct purchases
of imports a greater proportion of her international income.
The results of the negotiations as a whole must, therefore, be judged
primarily hy their effect on the trade relationship between the United
States and tle rest of the world. While it is easy to exaggerate the effect
of tariff reduction, it is clear that a serious endeavour has been made t
open the United States' market to imports. The effect of this should be
apparent as soon as producion in countries other than the United Stat: e
reaches levels capable of taking advantage of the changes.
On the other hand, the agreement permits the maintenance of
quantitative restrictions for balance of payments reasons and until
dollars. ire available also permits discrimination against United State.-
goods. So long ns the present international payments difficulties being
experienced by practically all countries except United States persi: t.
the United States cannot expect to benefit fully from concession. s
granted to it. The agreement as a whole, therefore, should be a significant
contribution to a restoration of a more reasonable balance between
dollar and non-dollar payments.
Britain hopes to improve its direct dollar earning. by increased
exports to United States and indirectly by concessions granted by tbhe
United Sta'es to other countries. Similarly, any stimulus to European
recovery is of value to Britain. Any strengthening of Britain's position
is. of course, of great value to Australia since it increases Britain's
international purchasing power, on which we are very dependent.

I summarize briefly the direct and indirect benefits which may be
expected to accrue as a result of the proposals arising from the Geneva
negotiations if they are confirmed by the respective governments concerned.
The tariff concessions affecting Australian exports take the
form of actual reductions in existing rates of duty, or, where duty-frep
entry or low duties already operate, the binding of such duty-free entry
or low rates. In many items such binding is of material value because
of ; he insurance it gives against increases in tariff rates which now
tand at low levels. Tariff concessions have been offered to Australia on
almost all the principal products which Australia exports or can expect
to export, to the individual countries concerned. Generally, the offers
have been made directly to Australia, but in some cases the benefits wiil
arise indirectly from offers made to a third country which is a more
important supplier of the particular product. The concessions should
lie of real importance in relation to the future development of primary
production in Australia. Further, they include items of importance to
Australian secondary industry.
Trade opportunities may also be expected to arise in respect of a
number of products of export interest to Australia on which tariff con
ccssions have been offered to other countries. Indirect benefits will al-o
affect a wide range of manufactured products in which there is oppor
tunity for expansion of Australian production and exports. The reductions
of duties obtained in the course of the present negotiations are
important, not only in themselves, but also by reason of the fact that
they ensure a relatively advantageous starting point for futurein egotiations.
This is specially important in the case of the United States.
where a 50 per cent. reduction in duties is the imaximumn cut perminssible
in any one agreement under the United States Reciprocal Trad-
.\ greements Act. It is only by such negotiation. that high d; itie can
hle progressively reduced to reasonably low level.
To secure the above-mentioned benefits, Australia ha. s been obliged
to offer some concessions. These have taken the form of concurrence
in the reduction of certain preferences at present enjoyed in Empire
countries and of ecneessiun in the Australian tariff. Both were
unavoidable. We cannot expect to obtain the advantage of such negotiations
without making some concessions ourselves. In assessing the outcome,
it is essential to have regard to the likely effect on the Australian
economy. We have not concurred in any proposed reductions in preferential
margins except where such concessions are considered to be
within the capacity of the Australian industries affected and where
-alti4factory compensation concessions have been offered in return. The
other concession which Australia was required to make in return for tin
benefits offered were in the protective tariff. Most of the concessions
proposed are individually small but they cover a very wide field. The
Government has every confidence in the ability of Australian industry
to withstand the concessions. Prices levels in Australia have risen

much less than in most overseas countries. This has resulted in Au. iiralian
industries enjoying greater competitive advantages and an
ability to compete within the shelter of a lower tariff wall than that
provided by the present Customs Tariff.
If the draft general agreement is eventually adopted by Australia it
is not likely to result in any substantial increase in imports into
Australia in competition with Australian production, and, where such
increase does occur, it is likely to be absorbed by greater demand and
consequently not affect Australian industry. The lower duties on goods
which are imported will tend to reduce prices, and this, together with
any increased supplies of goods, will be a useful offset to inflationary
tendencies in the economy. The narrowing of the margins of preference
at present enjoyed by Britain, Canada and New Zealand on a number of
items may affect to some extent the advantage which these countries
had had in the Australian market, but in no case has a contractual
margin of preference been reduced except with the consent of the country
enjoying preference rights under the Australian Customs Tariff.
It is to the outcome of our negotiations with the United States
that the Government attaches paramount importance. This market,
whatever its vicissitudes, is by far the world's greatest. It matches an
industrial output which is at least equal to that of the rest of the entire
world. Even since the outbreak of World War II. the population of the
United States has increased by almost double the total population of
Australia. At the same time rising living standards and soaring
incomes have greatly increased average purchasing power per head.
It is a country where agricultural costs, despite increasing efficiency,
steadily outpace those of other countries. At the prices at which we
could afford to supply, the American public would buy a , very much
larger quantity of foodstuffs. But in recent years exorbitant tariffs
have barred the way to meeting this demand.
" A significant section of Australian industry is geared to dollar
imports, without which, as we are finding now, our industrial capacity
is handicapped. Further development in the future will require much
greater supplies of dollars for the purchase of equipment and essential
supplies. Not only Australia, but also the whole sterling area is starved
for dollars. The only way to increase the supply permanently is to
increase exports to the United States. Any increase in our earnings
would benefit not only us but also nearly all our best customers. It
would help to redress the world balance against the dollar. The
cardinal point of our policy throughout the negotiations has been to
break down this great barrier to the further expansion of Australia's
greatest primary industries. Throughout the inter-war period market
factors, not technical, inhibited their growth. Wool, beef, butter and
lamb were all held back by the closure of the American market not
only to our produce but also to that of our competitors. When one
looks beyond the immediate dislocation and exceptional circumstances
of to-day, to the market prospects of coming years, two factors stand
out-shrinking markets in western Europe, including Britain,

and a growing one in the United States. The population of western
Europe is likely to start declining within a few years accompanied
probably by stationary if not falling income per capita. To make
matters worse, Britain, our main market for foodstuffs, is embarking
on policies of increasing self-sufficiency. This will in turn increase
its production costs and weaken its competitive power still further, thus
lessening its international purchasing power upon which we have
depended so heavily in the past. Dislocation in Asia, too, is likely to
reduce the flow and increase the price of many of the foodstuffs and
raw materials needed to sustain the industry and purchasing power of
western Europe.
Very different trends are manifest in America. So convinced has
the Government been of the necessity to break down the barriers to all
exports to the United States, not only of foodstuffs, that for a while,
as became well known, we risked a breakdown of the whole of the
Geneva negotiations in the period immediately preceding the veto by
President Truman of the United States Congress bill to increase wool
duties. In short, if the draft agreement is accepted by the governments
concerned, it should make a significant contribution to a solution of the
problems created by the world-wide shortage of dollars. It should
materially assist Britain in its economic difficulties and thus help to
maintain its international purchasing power, and above all it holds out
the prospect of greatly increasing our earnings of foreign exchange by
extending the range of our export opportunities, especially in the
United States, thus paving the way for the further expansion and
development of Australian primary and secondary industries.
Although our negotiations with the United States of America
overshadow the rest, the latter are in the aggregate of considerable
significance. We conducted negotiations with seventeen different countries,
including Britain, in relationship to which we are in a very
special position. The outcome of these negotiations will become
apparent when the general agreemen: on tariffs and trade is published
on 18th November. If and uhen the general agreement is accepted by
the requisite number of parties, an Interim Tariff Committee will be
established on which each accepting country will be represented on a
basis of equality. In due course, it is hoped that other countries will
negotiate sufficient tariff reductions to satisfy existing members and
thus qualify for membership of the Interim Tariff Committee. The
treatment to be accorded to non-members is still unresolved, but it is
likely to be as favorable as that extended to members at least until
they have had sufficient time to negotiate appropriate reductions and
have failed to do so. Eventually, if the International Trade Organization
is set up and the most important trading countries become n embers
of both the International Trade Organization and the Interim Tariff
Committee, the latter will be dissolved and its functions and membership
transferred to a tariff committee within the International Trade
Organization. Thereafter the Tariff Committee will be the competent
body for the conduct of all International Trade Organization activities
in regard to tariffs.

1 Turn to the v her part ot the progr iine-tlie csta blineuit of an
interna tional trade organization. The dra ft charter for the orga nization
which enwerged fromi the Geneva deliberationi is conitainled in the
report of thle . eeofld session of : he Preparatory Committee of thle
litcel Nations' Cion ference on Trade anid Emiiployinent. Thisi report,
wvhichis thle work of thc representa tives of thle seventen countries
concerned, will he laid before the World C onferencee on Trade and~
Ellpl) o0. v'iiienr at ILav1ina onl 21st N-ovemiber. No goVernmllent i. S Cuninutted
to the ( 1raft charter, though it seei proba ble that if thle Havana
on fIe rcilc( 1s r'tccssful. the resul ting driaft wvill f ollow . lie main
ofthde present text. TIhe draft charter coveirs I very extensive rflnge of
subjects connected wcith initernational Trade. It is ( divided inl, 4o inte
(' hapt'ers covering11 the purposes and objectives of the proposed international
t rad e oliga niiza tion, elu plIoyrn en t aIn d economIIic activi-: y,
ce( Ololni i developijitenlt, commeltrcial policy, re-t ricti cc buisines., practiceS.
iiter-governmental commodity 9greenivrntzi, treatnment of iiouneni [ ers
a il the aidini& ia tive arrangemlents for the organliza tioli * Itself. The1
general criticisin a well he, levelled at the ( itraft charter that it is
full Of gljiparent contradictions and i. i in places difficult to follow. Th e
i1ak of evolying a charter to suit the interests and ideas of all the
negotiating lairieas I as been execedinly tediouls a nd difficult. It Ii as
been nlecessarv to find a waly of ha rmonizing the interests of highly
developed and less developed countries, of those with a philosophy of
uiitraniirivhhed priva ' c enterprise and those helieving in a large mreasuiir e
( of government controh, of tho-e whosie interest in internatioiial. trade a,
suc( h Is slender, and] of those whose very life depends onl it. Thle text
reflects the( width of lie field covered, tin rainifica ions and comiplexitieIs
of the problems whichecna l a li-c in international trade anid the divergent
in teric. tq of dIifferent collul trie It Iml v well be that souic iimnpwl il t
factors havec bceili overlooked. The ,-hie-f preocculpa1tion aa i tuirally
with tie problems which have bee(-n parit of recent experiece m id ell
likely to confront us in the near fnt-uie. Quite different issues and new
initerpiretationls inay close over the horizon. Provision has been niade
bioth for amrendmients and for a review of tie whole chiart-er wi thin a
d ecade ofits ( ltr v into force.
The drcaft charter msq necessarily be assessedh to a coiisiderale
degree in terms of its applicability to culrrent economic conditions. It
was conceived originally, not as an interim instrument to meet the
immiediate problems of : he post-war transition period, but as A qvt of
guiding principles to governi thme conduct of international trade onl a
multilateral basis once normality had been restored. It isq clear 1now
that the scale of dislocation and the time necessary for recovery we
gravely underestimated. Relief and( recon-struction rather than eompetitive
intfernationaql trade are like to Ile -the magin object of international
attention in thle economic field for some time to come.
" The outstanding problems at pres ent revolve round -the deterioration
in Britain's trading position, formerly the pivot of international
trtide: the relapc~ of Fiurope after tile beginning of recovery, and( the

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cverance of ; he surplus food-producing capacity of the East from the
more industrialized West; and devastation and dislocation in Asia.
' ntil production and the supply of basic essentials in these areas can be
restored, they will be vitally dependent on North America, the only
area capable of dealing with the situation on the scale required, and
will be quite incapable of producing the surplus a ove e-sential needs
necessary to pay for the aid required. Thus, despite Unrra, the United
States loan to Britain and the other direct and indirect aid already
furnished by the United Statei on a huge scale, the shortage of dollars
persists. The United States is now the dominating force in international
trade, and while the demand for dollars so greatly exceeds tile supply,
disequilibrium in the payments position of other countries is likely io
continue. A reasonable measure of equilibrium in the balance ot
', aymnents of the main trading nations without widespread resort to
restriction however, a basic condition for the full application of the
ultimate International Trade Organization scheme.
Despite many obstacles, the projected organization could assist
rehabilitation considerably. In the first place, it would provide a
forum for the consideration of common problems in a conciliatory
spirit by acquainting the governments and their official advisers with
the problems of others which in sum are likely to add up to those of
rie trading world. The value of this understanding, often so grievously
lacking in the past, should not be under-rated. The will and practise
of co-operation between members in solving trading problems would,
in any case, be much more important than the governing rules, many
of lwhich are difficult to define in ways applicable to ail likely circumranees.
. Actually, the exceptions written into the charter are sufficient
to cover any measures likely to be necessary, even in the immediate
future. There is nothing to prevent the projected International Trade
Organization making a substantial and effective contribution to current
world problems from the moment it is established.
" Secondly, the main principles of the International Trade
Organization charter, even if impossible of rigid applications now, are
a beacon for the future. They uphold multilateral trade as a desirable
goal, as soon as conditions permit. This aiming point should incline
members towards an integral system, away from the exclusive trading
blocs which have proved so politically and economically expensive in
the past.
" Thirdly, in conjunction with the tariff reduction programme, it
would help to restore the balance of the re. st of the world with the dollar
area, by weakening restrictions on imports into the United States,
while permitting other countries to ration available dollars in accordance
with their needs, until they can earn enough to dispense with such
in pediments to expansion. A careful scrutiny of the charter will
reveal that the only really important trading country which will be
subject to all the restraints which it imposes on the conduct of commercial
policy for a long time to come is the United States. That
rountry will he extending negotiated tariff reductions to others which I

have been granted in exchange for concessions by other countries which
they, in many cases, will be unable to reciprocate. Balance of payments
restrictions, imposed within the provisions of the charter, will
prevent their extending many concessions made to the United States,
virtually until the present widespread dollar difficulties have been
overcome. Nearly all other members of the International Trade
Organization would be able to apply measures forbidden to the United
States because of its uniquely favorable position. Apart from temporary
difficulties, the more permanent escape clauses, especially those
designed in Chapter III. to facilitate industrial development in less
advanced areas, are not ones that are likely to be open to the United
States. Likewise, the measures envisaged by the charter in the event
of a failure to maintain employment, or in cases when one country's
payments position is causing widespread difficulties to others, all relate
primarily to the United States. The fact that such a charter should
be agreed upon by representatives of the United States reveals a
realistic understanding of the problems of the rest of the world which
is not only a far-sighted and enlightened gesture in this context, but
also a most hopeful augury for the future of the projected organization.
It is too soon to judge the likely effect of the charter on Australian
interests. The final draft has yet to emerge from the Havana
conference, and even then to be subsequently approved by the governments
concerned. It will have to be examined eventually in conjunction
with the overall programme which embraces the general
agreement on tariffs and trade. Even at this stage, though the
Government is in no way committed, it tay be appropriate to refer
to a number of factors likely to be relevant later when deciding whether
or not to join the International Trade Organization. I deal with a
few questions of particular concern to Australia. First, there is the
future of Imperial preference, which is, for us, a question of hard
economic reality. The effect of article 16 of the draft charter is to
ø preserve intact the existing British preferential system. There is no
obligation anywhere in the draft charter to reduce or eliminate any
margin of preference except by agreement of all the parties concerned.
It is clearly envisaged that any such action will be taken only in return
for equivalent tariff concessions by other countries as part of a mutually
advantageous bargaining process. At the same time, no new preference
may be created. Actually, no other British country has extended
any new preference of importance to Australia for many years, and,
in any case, the British Government is formally committed against
such a course, while it is well known that Canada concurs in this
attitude. British countries, and others already operating preference
systems, may thus continue to enjoy differential trading advantage.
in each other's markets, and even barter them for tariff concessions,
while only in very exceptional circumstances can other countries start
new systems between themselves. The creation of mutual preferences
by other countries which would discriminate against British trade, and
thus arouse our resentment, just as the discrimination applied by us

arouses theirs, would be quite a likely development in the near future
unless the draft charter comes into operation and prevents it. The
attitude of the representatives of certain other countries at Geneva
clearly revealed this possibility.
In connexion with preference, the Government has borne constantly
in mind the future of settlement in the northern parts of the continent,
particularly Queensland which is dependent on the sugar industry.
It will be noted that sugar is subject to an international agreement and
consequently comes under the provisions of Chapter VI. Commodities;
those of Chapter IV., Commercial Policy, do not apply. The important
embargo and other devices used to protect sugar are not called into
question by the draft charter. It is recognized generally that different
considerations must be applied to the marketing of manufactured and
primary products because of the essential differences in the economic
factors which govern them.
Another important instrument of Australian economic policy are
the stabilization schemes for the marketing of primary products. In
a number of cases, these depend on differential prices, prices between
home and overseas sales and the periodic operation of subsidies in
various forms. Without entering into a detailed explanation now, I
point out that all our present schemes would be permitted under the
terms of the draft charter.
" From the more general point of view, the existence of some
international body to determine the lines on which international trade
shall be conducted seems to offer considerable advantages to Australia.
Such a body would almost inevitably increase the influence of small
and medium-sized countries, giving them a voice in decisions and
enabling them to play an important part in affairs from which they
would otherwise tend to be excluded. Without it, important decisions
would be made by the giants in concert and small countries would be
grouped around and dominated by them. The embryonic International
Trade Organization charter already bears considerable imprint of
Australian ideas. Our delegation has been enabled to play a constructive
part at every stage of the deliberations.
From the economic stand-point, Australia is highly dependent on
international trade. Only through this medium can many of our
industries be kept working and the living standards of our people
improved. Order rather than cut-throat chaos suits our purposes and
our resources. Our interests lie especially along the lines of flexible
multi-lateral trade. We need new markets to pay for the imports
which our development requires. Our old markets are located mainly
in Britain and Europe, the relative world economic importance of
which is declining. The population of western Europe will begin to
decline sharply within a few years and this will limit its need for our
foodstuffs. Our main avenues of development, partictularly for the
export of manufactured goods, point in new directions. It would be

foolish to allow old habits of thought to hide ail signposts to the future.
In such a changing world, it may be important for us to be able to meet
our future customers regularly round the conference table to dis.; use
our reciprocal needs and wishes.
We have a particularly strong interest in the maintenance of a
high and stable demand for our export products. The employment
provisions of the charter are an important psychological factor as well
as an ' escape' clause. They underline the source of demand for
exports and emphasize the bad neighbourliness of allowing preventable
unemployment. The commodity' provisions of the charter should
also assist in removing some of the instability from which we have
suffered in the past.
One of the main planks of Australian policy is industriilizatioll
and full development of our resources. While the original International
Trade Organization proposals might have resulted in certain
aspects of this policy being called into question, the latest draft stresses
the importance of such policies in ultimately furtheri worhl
prosperity, subject of course, to reasonable safeguards. ' Th iImu
trial development of other countries, especially those of wonul
enlarge Australia's potential export market. Another inpral. i t interest
of Australia is that of being able to protect our ec( uonv maT frll'
as possible against the impact of adverse worll conditionls \\ iht. it r ernational
measures fail, without incurring odillum elsewhere ) or provoking
retaliation. This is provided for by the charter. ThIe International
Trade Organization would provide for a forum for expressing
our views and explaining our position in sucl circuimsita ices.
For better or worse International Trade Organization is likely to , e
the only attempt to establish an international body in the trade sphelre
in this generation. If it is set up Australian interests will be markedly
influenced whether we go in or stay out. The Government is also
mindful of the implications of the International Trade Organization
programnme in the wide political sphere. The economic strife which
was both a product of and contributor towards the political rivalries
which eventually led to the recent war could easily revive unless positive
steps are taken to direct efforts along more enlightened channels.
The recent tariff negotiations at Geneva, though still to be adopted by
governments, do represent an example of international co-operation
in a sphere very susceptible to conflict. This is heartening in itself
at a time when so many aspects of international relations are unsatisfactory
and disturbing. Economic distress easily erupts into the major
poltical upheavals which eventually threaten the peace. The growth of
international co-operation on a functional basis to deal with the
practical problems facing the world is something which the Government
believes should be most actively encouraged. It will continue to
persevere in its efforts to secure the kind of International Trade
Organization charter which would be a significant contribution both
to material welfare and world peace."

In Parliament.-The 19th November, 1947, the Minister -for
Commerce ( Mr. Pollard) said-
SIn accordance with the arrangements entered into at Geneva, the
provisional application of the General Agreement on Tariffs and Trade
was made dependent on the signature by the following eight key countries
of the Protocol of Provisional Application, namely, Australia, Belgium
in respect of its metropolitan territory, Canada, France, in respect of its
metropolitan territory, Luxemburg, the Netherlands in respect of its
metropolitan territory, Britain in respect of its metropolitan territory,
, ind the United States. All eight countries have now signed the protocol
and the texts of the final act, the general agreement on tariffs and trade,
and of the protocol of provisional application were released by the
United Nations Organization for publication at 9.30 a. m. to-day
Australian eastern standard time.
The protocol was signed on behalf of the Australian Government
bY the Minister for External Affairs ( Dr. Evatt) and the following
statement waz issued on behalf of the Government:-
The Australin Government iundertake to apply pIrovisionally, provided all
other countries dio likewike. tile it rift redcttions inotiated with the other
countrics whose representatives have been engaged at Geneva during the greater
part of 1947. This action will be conswuent upon my signing on behalf of the
Australian GCovernneitt. the protocol oIf provisional a plication of general
agrterrent ii tnriffs alnd trtode.
The Autralianii (: overunent will applY the new rate' provisionally fron
18th Novembler. At a later date. the Governtment will dtecide whether to
reconinvlid to Par liantent that tie proviiional : tgtreemenlc t he cotifirined.
The breadth of tihe niegotiations conducted by a coummuittee established by
the Ecotnottic and Social Connl ci of the Lnited Natiois s withou t precedeut.
More than 120 5elarate inegotiation-r: langing over a vast iniiber o( if products
were compiled by representative' who imet to attentpt tittually advantageon'
arraugenents to free tihe channels of world trade. Australia niegotiated with a
fill conviction of the benefits to le gained, not only to herself, but by the whole
world from a , atisfactory settlenelt aind a selective rediction of pllresent
trade harriers.
The negotiatious have to be considered in the light of concurrent efforts to
et agreetnents. in the form of a charter fromi ani Intertnational Trade Organizttion,
to comimittments upon coltntries to imaintain cemployment and the detiand
ror goodtls. which are the basis of trade. and to adhere to agreed rules of good
trade condittet.
These cornmiitittents are inteldted to 1supplement tlhooe whicll the members of
the United Nation hiave already accepted in the United Nations chirter-naielv.
to promote jointly and severally, higher standard of living, full employmenet, and
' titiditions of eclonmic and social progress and development.
The project ettiarked on by the Ecotiomic and Social Council, through its
preparatory conitittee and the world conference which is to assemble shortly in
Havana. is onle of thle most construetive endeavours of the United Nations.
The progres( atlre) y uilne in tarift tegotiations artd the decision by a subLstaintial
ititnber of the governments to bring tariff redetions into provisiotil
effect lay a soutind basi-for itccessftll achievement of a significalnt ittiprovement
in world tradtling conditions andl for a solution of the presetit econoitmic crisis.

I lay on the table the following paper:-
United Nations Conference on Trade and Employment-General Agreement
on Tariffs and Trade-
Ministerial Statement, 18th November, 1947.
Explanatory Statement by the Acting Minister for Post-war Reconstruction.
18th November, 1047, together with accompanying docuilelnts.
Text of Agreeenict, together with-
Protocol of Provision al Application.
inall Act.
Schedules ' Tririff Coticessioins ( Volumes I. and II.).
This is the text of the general agreement on tariffs and trade,
which includes general articles, tariff schedules covering all the countries
concerned, and annexed protocols. The changes involved in the Australian
tariff are contained in the resolutions and explanatory memoradum
which I lay on the table. Statements have also been assembled
which, in conjunction with the tariff resolutions and explanatory
memorandum, contain the latest information bearing upon the effect of
the general agreement on trade and tariffs on Australia's interests if
the agreement i. s eventually adopted by the governments concerned."
( For earlier references, please see No. 124, page 5; No 127, page 3; No. 129,
page 25.)
WORLD ORGANIZATION-SOUTH PACIFIC COMMISSION,
INTERIM ORGANIZATION.
On 20th November, 1947, the Prime Minister ( Mr. Chifley) said---
At the South Seas conference at Canberra in February, 1947, six
governments signed an agreement providing for the establishment of the
South Pacific Commission. The agreement is to enter into force
when it has been formally accepted by all governments. Acceptances
have been effected by the Governments of New Zealand, Australia and
Britain. Procedural diflicultiees have delayed the acceptances of the
Governments of the United States, France and the Netherlands, but it
i. s expected that These will be notified to the Australian Government
within the nlear future.
In the meantime, the Australian and New Zealand Governments
have by agreement with the other four governments, established a South
Pacific Commlission interim organization with head-quarters at . Sydney
to make preliminary arrangements for the establishment of the commission.
A meeting of representatives of all signatory governments will
be held at Sydney in November, 1947. This meeting will examine the
past and future work of the interim organization and, with a view to
expediting discussions at the first formal meeting of the commission,
which it is hoped will take place early in 1948, will discuss plans for the
structure of the secretariat of the coilnnisicn and related matters."
( For earlier references please see No. 123, page 16; No. 124, page 3.)

THE GOVERNMENT.
POLICY-NATIONALIZATION.
In Parliament.-On 12th November, 1947, the Prime Minister ( Mr.
Chifley) said-
" Representations have been received from various trades unions
regarding the nationalization of coal mines and the iron and steel
industry, and in reply I have pointed out that the Commonwealth Parliament
has no power under the Constitution to nationalize those industries,
even if the Government wished to do so. Therefore, it is sheer
nonsense to talk of the Government's plans for nationalizing suhi
industries." MINISTERS OF STATE-BILL INTRODUCED.
In Partiament.-On 19th Novembei, 1947, the Prime Minister ( Mr.
Chifley) introduced the Ministers of State Bill. Mr. Chifley said-
The purpose of this bill is to increase the salaries of Ministers of
State. The Constitution made a temporary provision of œ 12,000 per
annum for a maximum of seven Ministers, and left the way open for
Parliament to make increased provision, both as regards the number of
Ministers and the appropriation. On five occasions, increases have been
made because of increased responsibility. The last occasion was
in 1941, when the number of Ministers of State was increased from
eleven to nineteen and the appropriation to œ 21,250. That change was
made at the instance of the Leader of the Opposition ( Mr. Menzies),
who was then Prime Minister.
Whereas the provision made in the Constitution 47 years ago was
an average of approximately œ 1,710 per minister, under subsequent
provision from time to time, the average has not only not increased in
keeping with rising costs but has actually been less than under the
original provision. In 1941 the average was œ 1,120, and there has
-been no increase in the meantime. The whole of the appropriation for
Ministers of State is not divided among the Ministers. A proportion is
paid to the Cabinet fund, to meet the expenses of Cabinet, and these
expenses have naturally increased. The ihcreasing responsibilities of
Ministers, the many additional calls on their financial resources, and the
rising costs, justify, in the opinion of the Government, some addition to
the salaries provision. The present measure proposes to increase the
appropriation from œ 21,250 to œ 27,650." [ The bill was passed.
( For earlier references, please see No. 122, page 13.)
FIGHTING FORCES.
AWARDS-U. S. DECORATIONS.
In Parliament.-On 12th November, 1947, the Minister for Defenc-.
( Mr. Dedman) said-
I inform the House of decisions on proposals communicated by tht
United States Government for the award of United States decorations
to members of the Australian Defence Forces. The Government

received 229 proposals for the bestowal of United States awards which
required extensive examination and correspondence with the service
departments, and cablegrams to Britain, in the light of the rules
governing the acceptance of foreign honours. The Australian Government
has applied to the Australian forces the rules adopted by the
British Government and communicated to the Australian and other
British Commonwealth governments in 1942. One of the rules was that
the scale of acceptance of United States awards by inenmbers of the
Aius: ralian forces should, in general, be one acceptance for each British
award granted to United States forces in the South-West Pacific Area.
The Government represented to the British authorities that it would
be loath to contemplate the wholesale rejection of awards sponsored by
America for operational service for no other reason lthan that they
would involve a departure from a numerical . balance. Further, by
virtue of the close association of United States and Australian forces
throughout the war in the South-West Pacific Area, the Government
believed that it was fitting that acceptance of awards for operational
service should be permitted on a generous scale for the final series of
recommendations to mark the end of hostilities. The British authorities
have agreed with this view, and consideration of the proposals has
proceeded without regard to any of the limitations which would have
been imposed if the one for one rule had applied.
" The Government has accepted 102 United States award. for
gallantry or heroism, or for outstanding service directly in, or associated
with, operations in an operational area. They include awards for
Allied Intelligence Bureau parties which landed in enemy territory,
for intelligence patrols, heroism and good service in action, coast
watching in enemy territory, operational flights and strikes against
the enemy, the rescue of survivors of crashed aircraft in enemy territory,
and many other instances of gallantry and outstanding service in
operations. The Government has expressed its appreciation of the offer
of the United States Government and its pleasure in accepting them.
The Government regrets that it is unable to accept United States awards
in the following cases, and for the reasons stated:-
United States awardf, fir inon-optratiotal service, acceptance of which is
precluded by the policy of the ( Govemriiient, 21. ( These awards include
proposals f'or the rrecoPiition of service in Australia. with general headquarters,
and for ervicee in Washiiingtoni, all of which is non-operational.)
United States a wrds for pIer sonnl vwho have already received a British
award for the samile service. a'cept; nce of which nwould infringe the rule against
duplication of recoinition. 35. ( The ptrinciple of this rule is that service
rendcered during oiperations by a nilemtler of any British Commonwealth force
is more properly recognized by an awird by his own Sovereign than by acceptance
of foreign ioni( our. In noe of the-e euses have tlie services recommended that
: nl exception be made to the application of the rule against duplication of
iw ards.) United States awards for personnel in the following categories, acceptance of
which is recluded by tile rules ioverning the acceptance of foreign honours:-
Awards for services for which United Staltes decorations were previously
. ranted, five: Iposthumou s awards which, in the case of British awards, are
permitted only for the Victoria Cross and George Cros,. and mentions il
despatches and commenl dations,. six.

The total number of award. s which, for the reasons already stated,
cannot be accepted, is 67. In certain cases, the proposed United States
awards have been deferred for further examination by the services as to
whether or not the service for which they are proposed was operational.
There are 60 cases in this category, mos; of them being for service with
general head-quarters, the greater proportion of which was on the
mainland of Australia." PRIMARY INDUSTRIES.
POULTRY FARMING-EGG EXPORT CONTROL, BILL
INTRODUCED.
In, Parliament.-On 12th November, 1947, the Minister for Commerce
( Mr. Pollard) introduced the Egg Export Control Bill. Mr.
Pollard said-
The purpose of this bill is to provide for the constitution of an
Australian Egg Board to regulate and control the export of eggs and
egg products from Australia. In July, 1943, responsibility for the
stabilization of egg prices and control of the marketing of eggs was
assumed by the Commonwealth Egg Control organization, constituted
under National Security ( Egg Industry) Regulations, and continued
in force under the Defence ( Transitional Provisions) Act 1946. When
this control ceases on 31st December, 1947, responsibility for marketing
of eggs will revert to State egg boards, which will be responsible for
stabilizing prices and marketing the production of their own States.
The Australian Government recently concluded a long-term contract
with . the British Government for the purchase of Australian eggs
in shell, egg pulp and egg powder for the seasons 1947-48, 1948-49
and 1949-50. To assist in the orderly marketing of the anticipated
surplus, and to ensure that the conditions of the long-term contract are
fulfilled, the Government has decided to establish an Australian Egg
Board, which will supervise the disposal of that portion of surplus
production which is of suitable quality for export. The bill provides
for the establishment of a board of ten members, who will represent the
following interests:-Egg Producers of Australia ( one from each
State), 6; persons with commercial experience, 2; employees engaged in
the handling, grading and processing of eggs, 1; Australian Government
representative, 1; total, 19." [ The bill was passed.
( For earlier references, please see No. 128, page
INDUSTRIAL.
DILUTION OF LABOUR-TRADESMEN'S RIGHTS, FURTHER
BILL INTRODUCED.
In Parliament.-On 12th November, 1947, the Minister for Labour
( Mr. Holloway) introduced the Tradesmen's Rights Regulation Bill.
Mr. Holloway said-
This bill extends the principal provisions of the Tradesmen's
Rights Regulation Act 1946 to the trades in the boot, shoe, sandal and
1s4pper manufacturing industry which were subject to National Security
( Boot Trades Dilution) Regulations.

The bill adds to the act another part and schedule, and makes
consequen'wial amendments, so that recognized tradesmen in the boot
trades shall be entitled to the same priority in employment in their
trades as recognized engineering tradesmen receive in the engineering
trades. That is to say, in the case of engagements, an employer may
not employ on tradesmen's work a person other than a recognized
tradesman if a competent tradesman is available and offering for
employment; and in the case of dismissals or retrenchments, Iby another
provision in the same section that a recognized tradesman shall be
the last to go unless a local comm: nittee otherwise permits and subject
to an employer exercising his award rights regarding summary
dismissal. " The bill provides for ex-servicemen to qualify as recognized
tradesmen by a probationary period of training in employment under
the supervision of a local ( boot trades) committee. These probationary
tradesmen will receive the full tradesman's rate of pay during their
probatonary period. Applications by ex-servicemen for authorization
of their employment as probationary tradesmen must be made, unless
there are special circumstances, within six -months after the date of
discharge from the forces or the same period after the coming into
operation of these amendments, whichever is the later.
[ The bill was passed.
( For earlier references, please see No. 117, page 4.)
IJNEMPLOYMENT-FIGURES.
On 25th November, 1947, the Minister for Labour ( Mr. Holloway)
said-For many months there has been a steady increase in the demand
for labour in Australia accompanied by a progressive decline in
unemployment. At October, 1947, recipients of unemployment benefit
( including re-employment allowance) had fallen to a record low level
of 2,945 ( 2,830 males and 115 females) representing less than one
in 11,000 Australian workers. Unfilled vacancies held by the Commonwealth
Employment Service numbered 52,200 for males and 35,200 for
females, an increase of nearly 7,000 above the September total.
It is difficult to find any occupation suitable for females in which
unfilled vacancies do not greatly exceed available applicants. For
example, in the clothing and textile trades the number of vacancies for
women workers approaches 15,000.
" During October, 1947, the Commonwealth Employment Service
referred 20, S00 males and 6,500 females to employers."
PRICES.
GOODS DECLARED "-POULTRY, REVOCATION.
On : 12' th November, 1947, the Minister for Customs ( Senator
Courtice) announced that price control of live poultry had been
removed.

INCOME TAX.
SECOND BOARD OF REVIEW.
On 12th November, 1947, the Prime Minister ( Mr. Chifley) said-
An additional Board of Review has been established under the
Income Tax Assessment Act.
The functions of the Board of Review, although primarily associated
with income tax, have, from time to time, been extended to
include matters arising under sales tax, pay-roll tax, war-time ( company)
tax, social services contribution, flour tax and entertainments
tax, as well as estate and gift duties. The volume of cases referred for
determination has been such that one board has been unable to cope
with it within a reasonable time.
The new board will comprise the Deputy Commissioner of Taxation
( Mr. H. H. Trebilco), chairman, Mr. J. A. Nimmo, and Mr. R. A.
Cotes. Appointment will be for seven years from 1st December, 1947.
For the present, this board will deal with cases arising in Victoria,
South Australia, Western Australia and Tasmania. The existing
board will dletermine cases arising in New South Wales and
Queensland. Both boards have been constituted Boards of Referees under the
War-time ( Company) Tax Assessment Act."
( For earlier references, please see No. 128, page 4.)
BRITAIN.
PRINCESS ELIZABETH-WEDDING.
In Parliament.-On 19th November, 1947, the Prime Minister
( Mr. Chifley) moved the following motion:-
T the Ning's Moit Excellent Majesty:
We, the members of the Senate and the House of Representatives of the
Commonwealth of Australia in Parliament assembled, tender to Your Majesty
and to Her Majesty the Queen greetings on the occasion of the forthcoming
marriage of your elder daughter and Heir Presumptive to the Throne, Her
Royal Highness the Princess Elizabeth, with Lieutenant Philip Mountbatten.
We desire to express the happiness felt by the people of Australia at this
event and ask Your Maiesty to convey to Her Royal Highness and to Lieutenant
Mountbatten our wishes for a happy future marked by good health and the
absence of anxieties occasioned by war or by any other calamity which could
fall upon the peoples of the Empire.
We take this opportunity of expressing our continued loyalty to the Throne
and Person of Your Majesty and to Her Majesty the Queen"
The motion was seconded by the Leader of the Opposition ( Mr.
Menzies) and supported hy the Leader of the Country party ( Mr.
Fadden). The motion ywas carried.
In the Senate, a similar motion by the Leader of the Government
( Senator Ashley) seconded by the Leader of the Opposition ( Senator
Cooper) was carried. I

On 4th December, 1947, Mr. Chiflcy received the following letter
from Princess Elizabeth: Buckinglham Palace,
21st November, 1947.
31I dear Priie Minister.
The Australian High Coimni-iioner in London and Mrs. Beasley have presented
to me the magniificent silver fruit dishes and salvers which are a wedding
preent froin the Government and people of Australia. We are both delighted
with them and greatly admire tie skilful craftsmanship and excellent taste
with which they have heeni decorated. Both tie fruit dishes and the salvers
will be in constant use ill our house, and will remind us of the love and gsodwill
which the people of Australia have shown us on this most happy occasion.
My husband has visited Australia of which lie lhas the pleasantest memories
and I hope that it may not be long before I can visit the C'onuionwealth amn
inrself learn to know it-people. Yours sincerely,
ELIZABETH."
CONSTITUTION.
AMENDMENT-REFERENDUM, PRICES, BILL
INTRODUCED.
In Parliament.-On 19th November, 1947, the Minister for Labour
( Mr. Holloway) introduced the Constitution Alteration ( Rents and
Prices) Bill. Mr. Holloway said-
To safeguard the Australian people from inflation and depression,
and to keep in check the profiteer and the racketeer, are nation-wide
problems. They can be solved only by nation-wide action. The object
of the bill is to amend the Constitution so as to give to the National
Parliament the necessary powers. The bill proposes to give it the
power to make laws with respect to ' rents and prices ( including
charges) The powers will have to be exercised particularly throughout the
present critical years or transition from war to peace. But the need
for their exercise will not lapse when the transition is completed,
however far ahead that may be. They will be needed again from time
to time, whenever economic conditions become unstable. The object
of the bill is to give permanent, nation-wide protection to every tenant,
every income-earner, every housewife, to every user of services and,
indeed, to every purchaser as well as to primary producers dependent
on unsheltered markets.
" The proposed new power is one to make laws first and foremost
about rents. In an economic sense, rents are only a particular group
of prices. But there must be no doubt whether they are included in
the power. They are a vital element in the life of the people. In
the first place, rent absorbs a large proportion of the income of most
families. Unless rents are kept at a reasonable figure, other forms of
price control will not be effective to maintain the living standards of
the community. Moreover, the shortage of housing is likely to last
longer than other shortages, and rent control will therefore be essential
for a long time.

A vital duty of a national government is to give its people that
freedom from fear and want held out to them in the Atlantic Charter
as one of the aims which made the sacrifices of the war worth while.
I will show that the power to control rents and prices is a power without
which the Commonwealth Parliament will be severely handicapped
in carrying out this duty in the economic sphere. The Australian
Government is convinced that the people should be given the opportunity
to arm themselves, through their Parliament, with essential
power. In the past, the economic security of the common man has been
menaced lv recurring economic depressions bringing in their train the
miseries nf unemployment and want. Those depressions have usually
been preceded by periods of unhealthy expansion, leading to inflation
and the crash from ' booin' to slump'. The horrors of war have
always been followed by tlhis cycle-scarcely less terrible in its effects.
In modern times, these economic troubles have not been coinfined to
single countries, but have been world-wide. They are the result of
mnan's activities or neglect, and it is within his power to prevent them.
lThe problem of recurring depressions must be tackled on a world-wide
basis, and Australia is playing its full part in the work being done in
rthis direction. But an important part of the problem must be tackled
within iiir own economy. Moreover, we must be ready to act quickly
whenmiever tlie necessity arise-. The vital thing is to see that ' boom'
condirions, ( if 1an unhealthy kind, which, as experience shows, lead to
depression, . shall not develop. Further apart from the prospect of
depression. another evil that must be fought vigorously in boom
times and in times when houses and goods are in short supply is the
evil of exploitation by profiteers. When money is plentiful among
some sections of the community and houses and goods are scarce, unscrupulous
landlords or vendors can, if not controlled, exploit the rest
of the contimmuity. Even in times when goods are plentiful, the
creation of monopolies leads to the same evil. We all know the
enormous profits made during and after World War I. Thanks to rent
and price control, there was much less profiteering in Australia during
World War II., but the sudden removal of these controls at present
would undoubtedly lead to profiteering. We have only to see what is
happening in other countries, such as the United States, to realize this.
In the United States, prices rose so steeply within a few months of the
removal of control, that an attempt is now being made to replace price
control. But with the flood-gates once opened who can say whether
they can he shut again?
No intelligent person would be so foolish as to think that all
fluctuations in rents and prices can be avoided. If costs, especially
eosts of imported goods and materials. are rising, prices must rise.
But the people rely on their government to ensure that the rises shall
be jiustificd. that increases of wages intended to improve living stanlards
shall do so and shall not be made the excuse for unreasonable
price and rent increases. I will show later that an essential weapon in

the two battles against depression and exploitation is the power to control
rents and prices. I will also show that the States are not in a
position to handle those weapons effectively. The people will rightly
look to the National Parliament to grapple with these national
problems. The Government is confident that they will freely grant the
powers necessary to enable it to do so.
The bill does not mean that the Government considers that it will
be necessary to operate price control indefinitely, or to operate it in
the detailed and complete form to which we have become accustomed
over recent years. Price control in that form is necessary only in a
period of general excess of demand over supply, a condition which is
now being steadily removed. As shortages disappear, so can price control
disappear, until it will become essentially a reserve power, operating
only when and where it is required for the health of the economy.
Price control will be required beyond the transition period in relation,
for instance, to houses and rents, where shortages must be expected to
continue for some time. Where production of certain commodities is
under the control of monopolies, price control may be necessary to ensure
that the industry concerned shall apply a policy of high output, low
prices and moderate profits, rather than a policy of low output, high
prices and excessive profits. Similarly, where industries have been
granted tariff protection to enable them to carry on against overeas
competition, price control will be essential to ensure that this tariff
protection shall not be used to exploit local consumers.
Periods of expanding activity occure from time to time in any
economy, as a result, for instance, of the development of new public and
private investment. It will be possible for price control to check the
increase of prices that would other wise result from this pressure of
demand on resources of production. It is the effect on costs of this
increase of prices which has in the past led businessmen suddenly to
change their minds about undertaking new production, and which has
led to financial crises followed by prolonged depression. If price control
can prevent the development of this inflationary tendency, that
alone will be the greatest single factor contributing to the avoidance
of depression. In the other direction, continual difficulty has been
caused in the Australian economy by the violent collapses of overseas
prices for exports Price control cannot prevent these falls, but, when
drops occur, price control can, by maintaining minimum local prices,
help to cushion their effects of primary producers' incomes and on the
Australian economy generally.
i turn now to a consideration of the immediate need for rent and
price control in Australia during the period of transition from war to
peace. I need not draw in great detail the picture of what would happen
if the present rent control were removed. Although good progress is
being made with housing, there must inevitably be a shortage for a long
time. But while any shortage remains there must be protection for
home-seekers against extortionate charges for accommodation. After
World War rents rose steadily, right up to the beginning of the

depression in 1929, by which time they were 50 per cent. higher than
in 1918. Even in normal times the rack-renter is always with us. L
am not saying that all landlords are grasping and unscrupulous-far
from it. But there are always some-and their number tends to grow
with opportunity-who are willing to take the last penny from people
whenever there is either a general shortage or a local shortage such as
occurs from time to time in particular places.
" On prices generally, there can be no doubt that external and
internal inflationary pressures will continue for some time. Prices of
imported goods are now more than two and a half times their pre-wr
level and are still rising. These cost inreases_ have been pressing
throughout the war, and have, thanks to price control, been absorbed by
the economy with a minimum of disturbance. Internal pressures are
equally strong. Income of primary producers, enjoying record
production and record prices, will be at an all-time high
level this year. Prices for exported goods are more than two
and a half times their pre-war level. There have been substantial
increases of the basic wage and of skill margins this year. Wage costs
will be still further increased by the adoption of the 40-hour working
week throughout Australia, on 1st January, 1948. There is, in addition,
a large volume of liquid balances accumulated by the people as a
result of war-timue shortages, and still awaiting spending. Prices control
has so far given owners of savings an assurance that the real value
of these balances will : be maintained. A threat to the continuance of
price stability, as a result of the cessation of price control, may cause a
wave of buying a, a hedge against inflation and thus bring about the
inflation that we fear. Against this high and increasing volume if
spending power, there is a serious deficiency of goods. Despite our high
export income, imports are held back by dollar shortages and the production
difficulties of easier currency areas. like Britain, Europe and
Asia. We may not be able to import even enough goods to balance our
exports, let alone to import surplus goods to meet excess spending
pressure. In the domestic sphere, production is at a high and
increasing level, but is still seriously short of the people's needs. The
postponement of capital replacement and expansion during the
war requires an abnormally large proportion of current production to be
devoted to the production of capital goods. In addition to this heavy
and continuing drain on resources to meet capital requirement, shortages
of labour and materials and the hangover of war-time disorganization
of production are causing bottlenecks in several lines of essential
production. An important feature of the Australian economy at present is the
substantial subsidies being paid by the Government to prevent cost
increases from passing into the price structure. An abrupt removal of
these subsidies, as would be required by the cessation of price control,
would cause an equally abrupt rise in prices. This represents an inflatinarvy
force which must be controlled until it can safely be released.
With all these inflationary forces at work in Australia, it cannot be

doubted that an immediate relaxation of price control would lead inevitably
to price increases comparable with those that have occurred
recently in the United States. There, within five month. s of the
abandonment of price control, retail prices generally rose by 14 per
cent. and food prices by 29 per cent. Those figures should : be compared
with the increase of prices in Australia, where in the two years
since the end of the war, the rise have been only 6 per cent. for prices
generally, and 7 per cent. for food alone.
The war-time history of price control gives us firm ground for
confidence that it brings real advantages to the community and that it is
po.'-ible to administer price control successfully. Rent control during
the war was amazingly successful. Rents on an average increased by
less than I per cent. During World War retail prices rose by 32 per
cenlt. and two yea'rs later they were 70 per cent. above pre-war. During
World War II., they rose by 23 per cent., and two years later they are
only 30 per cent. above the pre-war level. World War II. lasted
six year-as againl-t four yrcars and involved a far greater strain oil
resource.-. rThpio'st -war | iriod has also been far more difficult, due : o
the greater dislocation in Australia and overseas. Apart from our own
arrears of civilian production, the war-torn countries of Europe and
Asia have not been able to make anything like their normal contribution
to our needs. Instead, they have been a drain on our supplies. In
spite of far greater shortages and disorganization of production, price
control has thus far saved Australia from the worst effect of a second
post-war boom. If it is continued through the transition period, we
may reasonably hope to avoid the worst effects of a slump such as
occurred in 1921.
Although, with the full concurrence of the State governments, the
Commonwealth assumed full power to control rents and prices at the
outbreak of the war. it has exercised these powers only to the extent
rendered strictly necessary : by circumstances arising out of the war.
During the first two and a half years of the war, for instance, only a
relatively frew commodities were made subject to control, because general
short:;: ze wcre not apparent until after the Pacific war broke oit.
When it i. s realized that the post-war boom lasted two years after World
War which was so much milder in its economic effect than World
War it can be understood why no great measure of de-control has
becn permitted up to the present stage, early in the third post-war year.
Nevertheless. the Government looks forward to the time when it will 1x'
able to lay down the burden of assessing most price increases, and t'i
revert to the state of affairs before the Japanese war, when only a
relatively small number of items was scarce and under control, and
traders did their own pricing under a formula, subject only to
occasional check.
" Recently. the Commonwealth Government has returned to State
and local governments control of goods and services handled by State,
semi-governmental and local-governing bodies, including tronsport, gas

27
and electricity undertakings, and locally produced and consumed goods
and services, such as milk and taxi-cab fares. A considerable extension
of this process will take place, in consultation with the States.
The amendment of the Constitution proposed would give the Conmmonwealth
Parliament power to legislate with respect to rents and
prices, including charges. The power over rents would cover the
fixing or pegging' of rents, would include power to provide for the
determination of fair rents and, as an incidental matter, to protect
tenants against eviction. It would apply to rents of goods as well arents
of land and buildings. The power with respect to prices would
enable Parliament to control and regulate the prices at which property
uf any kind, including commodities, land and shares in companies, is
sold. Explicit power to control charges is included in the bill to remove
any doubt about charges which are in the nature of prices or rents, but
in relation to which the term prices or rents' may not be ordinarily
used; for example, charges for hairdressing or for board and lodging.
The words would also include charges for the use of money, or, in other
words, interest.
" Since minimum prices, as well as maximum prices, could be fixed
under the power, it could be used to ensure a home-consumption price
for primary products. Minimum prices could also be used to prevent
disorder and losses to holders of stocks of imported goods which could
follow a sudden collapse of raw material prices overseas. Further,
the new power would make clear the right of the Commonwealth to
pay subsidies to maintain reasonable prices to consumers as well as
producers for essential goods, such as potatoes and dairy products.
" Control over rents and prices by the Commonwealth is at prese: t
carried on by regulations in force under the Defence ( Transitional
Provisions) Act. That act depends for its validity on the defence
power' of the Commonwealth. The High Court has held that I he
extension of the defence power to measures necessary to the economic
stability of the country does not cease abruptly with the end of hostilities
in a war. The power retains a wide scope during the period of
transition from conditions of war to conditions of peace; -but the scope
of the power is constantly dwindling, and it affords a very uncertain
basis for measures essential to Australia's economic stability. With this
consideration in view, the Government sought the assistance of the Stale
governments, all of which expressed willingness to support the contiuunnce
of price control on a national basis during the post-war transition
period. In some States this legislation has expired and in others
will shortly do so. Further, there is little prospect of this legislation
hieng extended in all or even a majority of States. This creates the
position that, in some States price control now virtually rests on the
defence power, and will have ! egal validity only for as long as that
power is held to support it. Even if there were any certainty that the
defence power is adequate to cover the winding-up of war-time controls

and measures necessary during the period of transition to conditions of
peace, the Commonwealth would still be without adequate power to deal
with and guard against future economic disturbances. The permanent
power to act effectively and promptly in economic crises is, in the
opinion of the Government, an essential power of a national parliament
quite apart from present circumstances. It is very likely that there
will be long periods during which these powers will not be exercised, or
will be exercised only in limited fields, but they will be a vital weapon in
the nation's defences against inflationary booms, followed by economic
depressions. It is these circumstances which have led the Government
to recommend to Parliament that the people be asked, by way of referendum,
to give the Commonwealth Parliament power to legislate for
the control of rents and prices.
As rent is one of the main items in living costs for the average
person, movements in rents have an important influence on social and
economic stability. State governments have power to control rents,
but it is unlikely that they will all do so at the same time, in the same
way. We have seen earlier what happened to rents after the last war,
when control could have been exercised only by State governments.
If rents are allowed to rise in one , State, but not in others, wages will
rise in that State above the general level. With wages, many other
costs and prices will rise as well. As a result the whole economy may
be thrown out of balance. In practical terms, uniform control of rents
can be secured only if it is applied by the Commonwealth Government.
State government. s have power to control prices. But mainly
because commodities can move freely between States, it is not practicable
for State governments to control more than a limited range of commodities
produced and sold locally. Where goods such as galvanized
iron are produced in only one State it would be impracticable for the
Government of any importing State to maintain an adequate control
over consumers prices while prices charged by the imanufacturers were
beyond their control. Consequently, since the States have only a limited
practical power to control prices, and the Commonwealth has not, in
normal peace-time, any legal power to do so, there is not any really
effective power to control prices anywhere within the country. This,
obviously, is a serious anomaly.
Siress has already been laid on the responsibility of the Commonwealth
for the preservation of economic stability. This means, in plain
terms, the prevention of booms' and slumps', which, in the past,
have brought so much loss, unemployment and misery. It means the
maintenance of steady incomes for producers, in town and country alike.
It means the preservation of a stable purchasing power for money, and
the protection and improvement of living standards for the various
clasaes within the community. This is of particular importance to

pensioners, people with fixed incomes, and all who contribute to the
savings of the community. Control of prices is wrapped up with all
these things. Rises and falls of prices are part and parcel of booms
and ' slumps'. They determine also the value of money, and the distribution
of the national output among the community.
Control of profiteering and monopolies again is closely bound up
with prices, and this is a field in which, for the most part, only Commonwealth
action can be effective. Since monopolies are often nation-wide
in scope, State governments are virtually powerless to deal with them.
Many of the special functions of the Commonwealth are dependent on
a power to regulate prices. The Commonwealth, for example, is concerned
with the overseas marketing of exports. Primary producers are
only too well aware that high prices are likely to be followed by low
prices. All systems of guaranteed prices and home-consumption prices
designed to promote orderly marketing will be greatly strengthened if
the Commonwealth Parliament has power to legislate for minimum
prices. Such a power would overcome many of the difficulties created
in the rural economy by section 92 of the Constitution.
Again, it is the Commonwealth which fixes levels of tariff protection
for local industries. it does so with a view to assisting such
industries to establish themselves and expand. Unless prices charged
by local industries for their products can be supervised and regulated,
there is always a risk that tariff protection : may be abused and the
community exploited. Producers are likely to rely on tariff protection
to maintain their high prices, instead of increasing their efficiency and
moderating their profits to reduce their prices.
All these considerations add up to an overwhelming case for giving
the Commonwealth power to legislate on rents and prices. It is the
only authority in Australia which can exercise such power effectively.
It has had such a power during the war and the post-war period, and
has used it with highly beneficial results. It will need such a power in
the future if it is to preserve and advance the economic welfare of the
nation through a time which threatens very great dangers and
difficulties. There is no short-cut to this end, and we should be warned
by the example of other countries that the quick and easy step of
abandoning all controls can bring far worse troubles than those it was
sought to avoid. Unless the power to control prices is written into the
Cons'itution now, it will not be available to the Australian people when
it is most needed.
The question is not political. It is a simple question, as every
Australian should realize, of making sure that nation-wide protection
can be given in times of difficulty to the tenant, the wage-earner, and the
housewife, to the primary producer, and, in fact, to every Australian
who has to pay for land, or goods, or services of any kind-in other
words, to every Australian." [ The bill was passed.
( For earlier references, please see No. 129, page 36.)

COMMONWEALTH GRANTS COMMISSION.
SPECIAL GRANTS 1947-48.
In Par it-ment.-On 19th November, 1947, the Prime Minister
( Mr. Chifley) introduced the State Grants Bill. Mr. Chifley said-
The object of this bill is to obtain the approval of the Parliament
to the payment, during 1947-48, of special grants aggregating
œ 5,042,000 to the States of South Australia, Western Australia and
Tasmania. Provision for the payment of these grants follows recommendations
of the Commonwealth Grants Commission. The commission
recommended that special grants aggregating œ 6,050,000 be paid to
the claimant States in 1947-48, but added that these recommendations
were made on the assumption that the amount of tax reimbursement to
the States, œ 40,000,000, and the shares of this amount allotted to -the
claimant States remain unchanged in 1947-48. The commission therefore
stipulated that in -he event of any claimant State receiving in
1947-48 more or less by way of tax reimbursement than it received in
1946-47, the commission's recommendation should be adjusted by the
amount of such increase or reduction. The bill authorizes the payment
of an additional tax reimbursement grant of œ 5,000,000 to the States
in 1947-48 under the uniform tax plan. Of this amount, South Australia,
Western Australia and Tasmania will receive œ 432,000, œ 423,000
and œ 153,000 respectively. In accordance with the recomnmendation of
the commission these amounts must be deducted to arrive at the special
grants which the commission considera should be paid this year. On
this basis, the special grants payable in 1947-48 compare with those
actually paid last year as follows:-1940-47. 1947-4.?.
Actullal. llrO Ilot elld ed.
South A satralia 2,000,000 2,318,000
Western Australia 1,873,000 1,) 77.000
Tasm nia 875,000 747.000
rotal I 4.748.000 5.042.0
[ The bill is pai.-. srd.
( For earlier references, please see No. 127, page 32.)
APPOINTMENTS.
On 25th November, 1947, Mr. Chifley said-
Cabinet decided to-day to reappoint Professor G. L. Wood and
Mr. J. J. Kenneally as members of the Commonwealth Grants Commirssion
for a period of two years and nine months as from 1st January,
1948. The term of the chairman ( Mr. A. A. Fitzgerald) does not
expire until November, 1948."

WHEAT POOLS PAYMENTS.
TOTALS.
Onl 20th November, 1947, the Mvinister for Agriculture, ( M-r.
Pollard) said that all nrheat pools had been finalized, excepting" No.
for 1946-47. The followingo table Eshoxed the advances ini the various
pooI. Baga.,. Bulk.
s. d. d.
No. I Pool 9.908 1 2 7. S
No. 2 Pool -1939-40 3 7 .95S i 5
No. : 1 Pool-19319-40 Iii N. S. W. 3d. per bwshel less
No.! 4 Pool-1940-41 4 0.375 1
No. 5 Poo1-1941-42 4 0.625 3 ( 9.125
No. 6 Pool--12-t-0. 4 R. 5 4
No. 7 Poo I-143--4~ 5 63 233 5 3. 733:
No. R Pool-1944-45 .5 4 9. 9
NO.-9 Pool-945-4i 6 61.25 6 2.75
No. 10 PofI-1946-47 6 10 6 7
1ooplctc) ( 1 Il0ofl1pltt()
All pikynients less ftei. hlt.
( For earlier references, please see No. 126, page
PETROL SUPPLIES.
RATIONING SYSTEM--TJGIITENING
On 24th -November, 1947. the Prime Minister. Mlr. Chificy., iaid-
" In eoiisequence of the increasing gravity of the dollar position,
I have conterreul to-day with the Minister for Supply ( Senator Ashley).
the Secre'arv to the Treasury S. G. MeFarlanc), the acting
IDirector-Gencral of Posts anid Telegraphis ( Mr. G. T. Citippindall), the
Secretary of the Departmnent of Supply ( Mlr. F. A. O'Connor), and the(
C ontroller of Liquid Fuel ( Mr. W. if. Tucker) to determine measures
to eliminate illicit use of rationi tieke'. s and( eii. sure that each consumer
is limlited to the ration onl his licenice.
" A review of~ the sales of petrol throughout Australia during Septemnber
anid October, 1947, shows that the quantities of petrol being
u1sed are in excess of the total Ilcensed galloniage. Thiis drain of petrol
thirough illicit channels endanger., the whole national petrol supply
po~ ition and, uinless arrested, the movement of essential transport
th rough out the Commonweal th will be jeopardized.
" The Government is dletermined to stamp out [, reaches of the Liqjuid
Fulel Regulations and, as a first . step, has decided that petrol coupons
will in future require to be drawn by consumers from a permanent
issuing office, which will include post offices, as from 1st December, 19471.
It is proposed to regard the post office or other issing-office fromn which
a conmumel drawsE is petrol for Decemlber, 1947. 9s his future permanent

issuing office. Only in cases of change of residence or for other very
good reasons will consumers be allowed to transfer their licences from
one issuing depot to another.
Consumers will be free to surrender coupons and purchase petrol
at any garage they desire. Arrangements have been made with the
Postmaster-General and . State Liquid Fuel Control Boards for a
thorough internal audit check in each post office and issuing depot to
prevent any illicit practices. The boards can rely on the full support
of the Commonwealth for any action they take against vendors or
consumers who breach the regulations.
It will not be practicable to follow the procedure of previous years
of issuing January petrol coupons in December, and each month's ration
will have to be drawn separately."
NATIONAL OIL PTY. LTD.-GLEN DAVIS PROJECT,
MINISTER'S REVIEW.
In Parliamenl.-On 4th December, 1947, the Minister for Supply
( Senator Ashley) said-
The experiments at Glen Davis have proved to be very costly.
While flow oil is availalle there will be no possibility of oil produced
from shale competing with it; it is not economically possible. The
Government has spent a considerable sum of money and has taken the
best possible advice in regard to the experiments at Glen Davis, and an
appreciation of the development there has to be made. I do not regard
the considerable atount of money that has been expended as being
entirely wasted, because, as a result of the development at Glen Davis,
we know as much about the production of oil from shale as most other
countries in the world at the present time. The development is still
continuing and it is anticipated that at Glen Davis the oil will be produced
at a cost of approximately 2s. a gallon. However, even with
mass production methods, the retorts situated on the side of the shale,
and all the other ingredients available on the spot, the venture is not
profitable at present, and I do not think the Government would be
interested in supplying further capital for shale oil production in
Australia." EXTERNAL TERRITORIES.
PAPUA-NEW GUINEA-UNION.
On 25th November, 1947, the Prime Minister ( Mr. Chifley) saicl-
Cabinet decided to-day that a bill be drafted for presentation to
the Federal Parliamentary Labour party, to provide for an administrative
union of the Territory of Papua and the Mandated Territory
of New Guinea with provision for one administrative head, one legislative
. body and conmmon services. The title of the united territories
will be the ' Territory of Papua and New Guinea

BRITAIN.
FINANCIAL POLICY-DOLLAR IMPORTS.
On 26th November, 1947, the Prime Minister ( Mr. Chifley) said-
' A report received yesterday on the commitment for imports in
1947-48 from dollar sources leaves the Government no option but to
make further savings in Australia's dollar commitment. The drift in
the dollar position of the whole sterling area is serious and the latest
figures of the dollar drain are particularly disturbing.
Australia is, as a result of the nature of its international trade, a
net purchaser of dollars from the pool, and if the pooling system were
to break down the resultant dislocation to the Australian economy
would be very serious. But it is very clear that every sterling area
country, including Australia, has to ration itself severely on dollars
if the pooling system is to survive. Last year Australia had a substantial
deficit in its dollar trade. The total commitment revealed in
the report of the special committee investigating the matter showed big
increases over last year's imports from the dollar area. On the other
band, Australian exports to the dollar area are not yet up to last year's
rate. Outstanding import licences were recalled for review on Sth
October, 1947, by the Minister for Customs ( Senator Courtice). At
that time, importers were asked to defer shipment until the review was
completed in the hope that in the final analysis some arrangement
could be made to confirm the licences. The position has now become
so grave that the Government is reluctantly compelled to cancel all
licences recalled for review except those covering goods shipped to
Australia on or before 23st October, 1947; those covered by irrevocable
letters of credit; anld those for goods included in the list announced
by the Minister as having a high degree of essentiality. The importation
of any goods from dollar sources without a licence is prohibited
and importers in their own interests should immediately notify their
suppliers of the cancellation.
" Only a limited amount of dollars can be made available for the
issue of new licences for goods from dollar sources to be imported
before 30th June, 1948. The Customs Department has been instructed
to ensure that this amount is allocated only to the highest priority
goods. The committee has also made recommendations for further savings
in regard to certain items involving heavy dollar expenditure which
were not included in the licences recalled for review. These recommendationlu
will be considered by Cabinet on 8th December, 1947.
There is little likelihood of any early easing of the critical dollar
position and, for the future, it has been decided to operate the licensing
of goods from dollar areas on a quota system associated with a budget
ceiling. \ An announcement will be made by Senator Courtice of the
procedure to be followed by importers to establish base year quotas.
7858.-2

It is clear that the cancellation of licences will interfere with some
production programmes in Australia and the decision has been taken
with the greatest reluctance. The effect of the cancellation can, in
many cases, be absorbed by stock adjustments or new sources of supply
and users of goods are urged to use their utmost resourcefulness in
overcoming the difficulties ahead."
FINANCIAL POLICY-DOLLARS, TRAVEL.
On 4th December, 1947, Mr. Chifley said-
In view of the deterioration in the dollar position the Government
has decided that approval will not be given to the provision of
dollars for travel for personal reasons. Except in special circumstances,
travel involving dollar expenditure will be restricted to visits
for business purposes which are important from the point of view of
maintaining essential industry or industrial development. In the case
of busine-s visits which would still qualify for the provision of dollars,
a further reduction has been made in the amount which may be
provided." FINANCIAL POLICY-DOLLAR IMPORTS, PRIME
MINISTER'S STATEMENT.
In Parliament.-On 4th December, 1947, Mr. Chifley said-
" At present there is practically a world-wide shortage of United
States dollars. Among regions affected are Britain, Australia, New
Zealand, India and the other countries of the sterling area, most of
Europe, Canada and the South and Central American countries. For
most of the world, Canadian dollars are also scarce while Canada is
faced with an acute shortage of United States dollars.
Although other factors have contributed to this situation, the most
important cause is the disparity between levels of production in the
United States on the one hand and in Europe and Asia ( including
Indonesia) on the other hand. Restoration of the war-devastated
countries has in general been slow, with the resultr that they have been
able neitier to produce the normal proportion of their own needs nor
to re-cstablili their export trade. Hence there has been a concentration
of demilland on the United States and Canada, where production has
risen more rapidly than elsewhere. The position has been greatly
aggravated by the increase in United States prices, particularly during
the past year.
On recent figures, the rate of exports from the United States has
exceeded the rate of imports by about 10 billion dollars a year.
Whereas during the early post-war period contributions such as those
made under U. N. R. R. A. and the large dollar loans made by United
i

States and Canada eased the position for a number of countries, the
greater part of such aid had, by the middle of 1947, been exhausted and
dollar deficits are now for the most part being met by drawings on
gold and dollar reserves. In most cases such reserves are dwindling
rapidly and cannot sustain for long the present rate of drawings on
them. In efforts to reduce the dollar gap in their balances of payments,
most countries have by now imposed severe restrictions on United
States goods.
There can be. no satisfactory solution to the present dollar problem
until European production and trade are . brought into balance with
Western Hemisphere production. To a large extent this will require a
reconstruction of the European economy and the Marshall Plan is
based on such a concept. It calls for the utmost co-operation and
mutual help between European countries themselves as a condition of
further aid from the United States. The participating countries have
submitted a four-year reconstruction programme for which they are
seeking United States aid to the extent of 22 billion dollars. The
United States Congress is now considering interim proposals for
assistance valued at 597 million dollars to Austria, Italy and France to
cover the needs of these countries until 31st March, 1948. Committees
have been examining the longer term proposals. However, even if the
long term proposals are approved, it is not intended that the assistance
will begin to be available until April, 1948, or later.
Britain emerged from World War II. with her productive structure
seriously impaired and her external income from exports and overseas
investments greatly reduced. She needed a certain level of imports,
largely from the United States to maintain a reasonable living standard
and to supply raw materials and replace capital equipment. With her
overseas investments largely liquidated and her shipping depleted,
exports were the only substantial means of payment remaining, but
even these had fallen by the end of World War II. to 40 per cent. of
the pre-war . volume. It was estimated that the volume of exports would
have to rise to 75 per cent. above pre-war before Britain's overseas
payments would balance again. It was against this background that the
United States loan of 3,750,000,000 dollars was negotiated to assist
Britain in its transitional period. The United States loan became
available on 15th July, 1946. It was estimated that the loan would
last for two to three years. However, it was used up in just over
twelve months, largely because of-
The rapid increase in American price levels; the slow recovery of production
in Europe and Asia; the severe 1946-47 winter in Britain which dislocated
British production; and the demands of other countries for conversion of sterling
into dollars after 15th July, 1947, when sterling became formally convertible
into dollars under the Loan Agreement ( Convertibility was suspended on
August, 1947).
7858.-3

" Details regarding the expendi'ture of the American loan were givenl
to the House of Commons by the former Chancellor of the Exchequer
( Dr. Dalton) on 24th October, 1947. Briefly, details are:
EA ejiiiiti tle et'. l i in ( 1-1946 whent dia ii iñ biegan andi 20th ngust, 19147,
, xlien they c-ca. ed \ vi, ii ide fli i is
Uniited Ki igdolii net lilt vIAtaQ e ill Ut itud State'
L711iteil, Ki igduii inet purc-ha'ze iii Canaoda. Latli Ainetiantd
lt ( itf \\ e-Icnil Heitisplhie
Other stetling iiiititrie. tiet disliitteteit-to WVe-tet i
United Riingdottt Mtid othl 40t1ilzig uzaunltlries itet dklaui setntit'
totch -st Of tilie Woli outside Westerit Heii there, i. e.. 9630 620
3,080
> n~ z-i ipitti is Act ug en ittii tt the litcnitiia n
anid Batik .3 : 1,115
Tfis tigute Is utitlrstoi) d to teipresitit the' ltt Liiuverilili ( it tr iti to
tIlatrs tby thes. e noiitNiltn c-eul tries ri' 1i-t tli. ir curre-lit expeiitlltr ill
the-donl alct.
Four hundred ilioti dollar-s of tue 3,750,000,000 dollarez, miade avrailabtle to
Br itain undiicer title Fitnantc-ial Agirecetint. wis fr-ozei witeit cotivertibil ity was
suspended nit 20th . Xngust. 1947
Anuothier 2: 35.000l. 000 dollar,, althonughi din -itpiior to 20th Auut. 1947,
wa,, s not ac-tuaii N' sjitt unltil a fter that cate.
Tlue Uutiteti Kin-diu itet pur chases ill tite Uttitcd States, % vIiici atcc-oiat for
over 40 per tetit. of the total expendcituire of the loaii, were sptent onl various
tomoi ti t i-aid -erric-es ill the foil ow iig pr0oport ionis:-
Ravw iatet iii-inicludting-oil)
Food Mfachlinery Tobaccto Ships, Filin.' Cost of Gernuu occuptation 23 4
13
100
The Uiz ited Rhngdooiinet pttrelhie, iii the re-I of the Westetri Hemisphere
outside tliv Uited States:, whichi acc-ouiit foi anteur : 30 per c-eut, of the total
expetiditure of thle liii, wvere uuuate in the followvig tontitries:
( Centra Ai., merita
Soulth . Ainleui-. ( particullarly Ar-eutiuua I iiiiiillioii. 360
240 960
Practic-ally thte ' cli of the abuove poirelhu-ez hay Britain repre-etuted imports
of food, oil anid raw tiiattnials.
" The following figures, showing the amounts of sterling converted
into United States dollars or transferred to American accounts between
1st January, 1947, and the suspension of convertibility on 20th August,
1947, by countries with which monetary agreements were in force providing
for convertibility through the transferable account procedure,
wxere made public by Dr. Dalton on 5th November, 1947.

CONVERTED INTO UNITED STATES DOLLARS OR TRANSFERRED TO
AMERICAN ACCOUNT.
lstJanuaryto 1st July to Total.
o. tThu n. 20th August. œ M.
Argentina 1S. 7 23.3 42.0
Belgian rnonetaiy area 1S. 3 34.4 52.'
Brazil 5.0 7.5 12.5
Finland 2.8
Italy 1.3 1.3 2.6
Netherlands monetary area 1.1 2.7 3. S
Portuguese monetary area.. 4.7 2.9 7.6
Other countries 0.2 0.9 1.1
49.3 75.8 125.1
Dr. Dalton also released at the same time a further table showing
the estimated changes in the short-term sterling liabilities of Britain
to the same countries between 1st January, 1947, and 31st August, 1947
( the date nearest 20th August, 1947, for which figures were available).
CHANGE IN UNITED KINGDOM'S SHORT-TERM STERLING LIABILITIES.
1st J. aus ary to 1st July to Total.
30th June. 31st August. ol
I œ iM.
Argentina 9.3 7.5 1.8
Belgian monetary area 21.6 23.2 1.6
Brazil 5.0 2.9 2.1
Finland 2.9 2.2 0.7
Italy 7.7 4.1 3.6
Netherlands monetary area 4.3 4.0 0.3
Portuguese monetary area. 1.8 0.6 2.4
33.6 36.3 2.7
Increase+; Decrease-.
SThese tables indicate that although the listed countries used
œ stg. l125,000,000 of their sterling holdings for expenditure in the dollar
area by converting sterling into dollars or by transferring sterling to
American account, the United Kingdom short-term liabilities to the
same countries declined by only œ stg. 2,700,000 over the period 1st January,
1947, to 31st August, 1947. Thus the movement into dollars
resulted from expenditure in the dollar area of currently earned
sterling rather than a withdrawal of accumulated sterling balances.
However, most of the countries concerned added to their sterling
balances during the first six months of the year and drew heavily against
them in the June-August period. The drain over this latter period
accentuated the running down of the American loan and made inevitable
the suspension of convertibility of sterling into dollars.
On 7th August, 1947, Dr. Dalton informed the House of Commons
that British gold and dollar reserves amounted to about 2,400,000,000
dollars. As there is a limit ' below which the British Government could

not permit these reserves to fall, it became necessary, after exhaustion
of the American loan, to devise means of reducing the dollar deficit
drastically enough to safeguard these reserves, which are the reserves not
only of Britain but also of the whole sterling area.
" Britain took the lead in imposing very heavy restrictions on
dollar imports, instituting a renewed export drive and curtailing the use
of dollars on travel, films, military expenditure, and so on. The effect
of these restrictions was to reduce Britain's dollar import programme
for 194S by 400,000,000 dollars.
On 24th October, 1947, Dr. Dalton informed the House of Commons
that the rate of drain was still about 70,000,000 dollars a week, or
about 3,600,000,000 dollars a year.
" On 23rd October, 1947, Sir Stafford Cripps stated that, as a result
of the various measures taken, it was estimated that by the end of 1948
the dollar deficit would be running at a rate not greater than
1,000,000,000 dollars a year, by which time the reserves remaining would
only be something over 1,000,000,000 dollars.
To assist in meeting the position, Britain has drawn 180,000,000
dollars from the International Monetary Fund against its yearly quota
of 325,000,000 dollars. It has also negotiated with South Africa a
loan of gold to the value of 320,000,000 dollars, but has had to ship to
the United States gold to the value of 220,000,000 dollars in payment for
goods. It is clear that, unless the rate of drain from reserves can be
reduced by further cuts in dollar expenditure, there will be no alternative
for sterling area countries but to live within their current dollar
earnings. Even if the long-term proposals contained in the Marshall
Plan are approved and Britain benefits to some extent directly, any
significant improvement in the British position can only come from
the restoration of the European countries.
" These benefits can be expected to mature only gradually. It is
emphasized that the immediate relief contemplated by the United States
Government for European countries is comparatively small and is confined
to France, Italy and Austria and it may be several months before
even this becomes effective. Even if approved by Congress the major
measures of the Marshall Plan may not come into operation for a considerable
time and it should be realized that the principal form of
aid at present contemplated is a contribution of foodstuffs, industrial
materials and equipment. This will help to reduce the dependence of
the countries concerned on dollar supplies. But it will not directly
relieve Britain's problem of securing payment in dollar-convertible
currencies for her exports to those countries.
The grave economic difficulties with which Britain is confronted,
largely as a result of her sacrifices during the war, must be a matter of
much concern to all other members of the British Commonwealth.
Among the greatest of these difficulties is the dollar shortage. The
Australian Government desires to do everything in its power to assist

39
Britain in overcoming her dollar difficulties. For this reason the
Government announced on 4th September, 1947, that it had been
decided to sell, for the time being, current gold production to Britain
as a special measure of assistance. Before this, Au, ralia's current
production lhd leen added to the gold reserve.
It must be realized that the normal pattern of Australia's overseas
trade is such that we are usually not drawers on the sterling area dollar
pool in respect of both Unites States and Canadian dollars. During
the war years, when a large number of American troops were stationed
in Australia, dollar accruals substantially exceeded dollar outgoings.
The net surplus of dollars was sold to Britain for sterling and was used
by Britain in the prosecution of the war. With the removal of American
troops from the Australian theatre and the cessation of hostilities ( and
with it, the termination of Lend-Lease), Australia's international
receipts and payments resumed their traditional pattern and it again
became necessary to purchase dollars for sterling from Britain to cover
out net dollar deficit. This deficit has tended to be larger than in
pre-war years because of the factors already mentioned as underlying
the whole problem of the world-wide dollar shortage-the slow recovery
of production in Europe and Asia and the rise in American pri,: e
levels. " Conservation of both United S: ates and Canadian dollars is
an inescapable necessity for Australia. We can, of course, help by
increasing our exports to the dollar area. Wool is our greatest dollar
elarner, but the scale of American wool purchases is governed by factors
largely outside our control. Exports of wool to the United , States in
1946-47 were valued at œ A. 25,900,000. This figure does not include
wool valued at œ A. 9,900,000 which, although shipped during 1946-47,
had been purchased at issue prices during 1945-46 from the Australian
Wool Realization Commission before the resumption of the wool
auctions. The Australian Wool Realization Commission expects sales of
wool to America during 1947-48 to be less in quantity than in 1946-47.
This reduction in quantity will be partly offset by the rise in wool prices
Iut the commission, on present indications, expects the value of sales
to the United States to be slightly less than last year. In addition, the
commi-sion anticipn'c thte!' r wli1 some small sales to Canada and
other countries which will pay in dollars.
The Minister for Commerce ( Mr. Pollard) is examining the
possibility of increasing exports of other commodities to the dollar
area. There is at presnt a strong demand in the Unied States for
various raw and manufactured products produced in Australia, but, in
many instances, exports have been restricted to preserve adequate
supplies to meet the needs of the home market. We may, however.
have to consider whether additional quantities of sone of these goods
can be released for export to earn dollars to pay for more essential
goods which we need to import from dollar sources to keep our
industries operating.
7858.-4

" Since the outbreak of war in 1939, imports from the dollar area
have in general been limited to essential goods not available in adequate
quantities from sterling sources of supply. However, in present circumstances,
a great many items are obtainable only from the dollar area
: and the great development which has taken place in Australian industry
has increased the demand for imported machinery and raw materials.
During the period immediately following the cessation of hostilities,
when reconversion of American production to a peace-time basis was
incomplete, the level of dollar imports was limited by lack of availability.
During the current year, however, American production has
caught up with the backlog of domestic demand in many fields and
many items have come into free supply for the export trade. This,
coupled with the steep rise in dollar prices, has led to a very rapid
growth in the value of dollar goods imported into Australia. Our
imports from the United States and Canada in 1946-47 were valued at
œ A. 63,000,000, on the recorded basis of f. o. b. plus 10 per cent. In the
first four months of 1947-48, imports from the United States and
Canada were about œ A. 41,000,000-an annual rate of œ A. 123,000,000.
Accurate estimates of Australia's balance of paymeuts with individual
countries are difficult to obtain, particularly because of the high
propor: ion of our overseas trade which is financed through London.
However, on 30th September, 1947, the House was informed that, on the
basis of such information as is available, it was estimated that in 1946-47
Australia's dollar deficit amounted to about 100 million dollars.
" Following the suspension of convertibility of sterling into dollars
and the exhaustion of the American loan, the Commonwealth Government
took stock of the position and decided on certain measures to
reduce the size of Australia's deficit for 1947-48 and thus reduce the
demands we would have to ' make on Britain to provide us with dollars
from their ultimate reserve of gold and dollars.
" Following the September decisions, Australian officials were sent
to London at the request of the BritisL Government to participate in
discussions between representatives of the various sterling area countries
on the general dollar situation and the steps required to meet it. Those
talks revealed that the rate of drain on the British gold and dollar
reserves was even more serious than had been realized and the British
authorities requested that Australia should undertake to live within
its current dollar income and to make no net claim on Britain for
dollars. The Commonwealth Government felt unable to give a rigid
undertaking. Since our dollar earnings are apt to vary widely from
year to year there could be no certainty as to what such a commitment
would entail. But it was evident that should our dollar income decline
heavily we might find ourselves unable to fulfil such an undertaking
without causing excessive dislocation to Australian industry. The
Government did, however, undertake to co-operate with the British
Government in reducing dollar expenditure to the fullest practicable
extent.
i' 1

41
" When the September review was made, no clear picture was
available of the extent to which we were alrecady comnitted to expenditure
of dollars by import licences already granted. Statistics were
available on the total value of licences issued, but it was not known
to what extent the goods covered by these licences had already been
imnportedl or what proportion was still to come forward. Accordingly,
early in October, 1947, all outstanding dollar import licences ( except
for certain commodities covered by special arrangements), were recalled
for review, to establish more precisely the extent of our dollar commitments
for imports during 1947-48 and to enable consideration to be
given to the possibilities of further economies in dollar expenditure.
* An inter-departmental committee was subsequently appointed to
examine the figures obtained from the review of import licences and to
make recommendations on the steps necessary to reduce dollar imports
in 1947-48 to a figure which we could hope to finance from current
dollar earnings and dollars available from Britain.
" This committee has presented an initial report which indicated
that, despite the September dollar cute, outstanding commitments were
so high that, in the absence of further measures, imports from the
United States and Canada during 1947-48 would exceed œ A. 100,000,000,
as against œ A. 63,000,000 for 1946-47. Even if dollar earnings during
1947-48 reach the 1946-47 level, it is clear that with imports of over
œ EA. 100,000,000, Australia's dollar deficit for 1947-48 would be considerably
greater than la. 9t year's, notwithstanding the sale of current
gold output.
wa" The picture disclosed by the inter-departmental committee's report
wsso serious that the Government felt compelled to take drastic action
to reduce dollar expenditure on imports during 1947-48 and to ensure
that the rate of importation throughout the whole of 1948 would hwe
confined to levels which it would be practicable to finance. The total
value of dollar import licences recalled for review was œ A.. 52,000,000.
Action is being-taken to confirm these licences in all cases where goods
were in transit, irrevocable letters of credit had been established and the
goods covered were included in the list of highly essential items
announced on 30th October, 1947. The Government had hoped that it
would be possible to avoid cancellation of any licences, but, in the light
of the inter-departmental committee's report, it was felt that there was9
wastho alternative but to cancel all outstanding licences not falling
wihnthe above categories. It is estimated that the effect of these
decisions will be to confirm licences to a value of œ A. 35,000,000, ' and to
cancel licences to a value of œ A. 17,000,000.
" Major items involving dollar expenditure such as newsprint, motor
vehicle chassis, tobacco, petrol and film remittances are being dealt with
separately and were not covered in the general review of import licences.
Further economies in these major items will be inescapable and specific
proposals will he submitted to Cabinet for decision.

12
" Despite the action already taken and the further action proposed,
our inescapable commitments are so great that the possibilities of
effecting reductions in dollar expenditure durng 1947-48 are limited.
Even when all possible action has been taken it seems probable that
imports from the United States and Canada during 1947-47 will be
about œ A. 90,000,000. However, a marked tapering off in dollar imports
may be expected during the second half of 1947-48 and imports during
the calendar year 1948 from the dollar area will be reduced to a level
bearing a much closer relationship to our current dollar earnings.
The Government appreciates that, to meet cases of special urgency,
some new licences will have to be granted for the importation of goods
from the dollar area during 1947-48. However, a ceiling figure has
been placed on the value of such licences and the inter-departmental
committee has been given ' the responsibility of recommending the
allocation of licences withing the ceiling . figure. The Government is
now considering the basis on which dollar import licences are to be
issued for goods to be imported during 1948-49. It is proposed to
establish quotas for the various classes of goods within a budget ceiling
and the Minister of Trade and Customs ( Senator Courtice) will
announce as soon as possible the procedure to be followed in granting
import licences.
The Government regrets the inconvenience and hardship which
cancellation of import licences and other dollar conservation measures
have caused in industry and commerce. It feels confident, however, that
the Australian people as a whole will support the action taken, since
failure to reduce dollar expenditure would inevitably increase the much
greater hardships at present being endured by the British people.
Britain is at present making sales from its reserves of gold and is
borrowing from the International Monetary Fund to pay for imports
of food and other essential goods and to meet the dollar deficit of other
members of the sterling area. Australia must do what she can to help
by reducing net demands on Britain for dollars to the absolute
minimum." FINANCIAL POLICY-DOLLAR. S, PRIME MINISTER'S
. STATEMENT TO PARLIAMENT.
In Parliament.-On 4th December, 1947, Mr. Chifley said--
" To understand the Government's attitude towards the dollar
shortage, it is necessary to go back to the time when Sir Kingsley Wood
was Chancellor of the Exchequer in Britain. For a long time, Britain
had been selling foreign securities to finance the war, and was thus
losing its income from foreign investments. This income had formerly
come to Britain in the form of food and raw materials, and. no doubt,
in the form of luxury items, also. It did not require any one of great
sagacity to forecast that if this process was continued much longer,
economic difficulties must inevitably arise. During the war, and afterwards,
the Australian Government maintained restrictions on the use
of dollars. I realized that the British Government. operating under

43
the Anglo-American Loan Agreement, was bound by certain obligations
which did not apply rigidly to Australia. We have guarded, so far
as we thought reasonable, against the undue expenditure of American
dollars for goods and equipment.
There is nothing very mystifying about the position. It is true
that the situation has deteriorated very rapidly during the last eighteen
months. The loan that Lord Keynes negotiated on behalf of the
British Government with the United States Govermnent was not as
large as the British Government wanted. The terms of the loan were
generous, but some of the conditions attaching to it I regard as very
obnoxious. It was hoped, however, that the loan would be sufficient to
maintain the Empire pool of dollars long enough to allow certain things
to happen. The first was the rehabilitation of British industry, and
the development of the British export trade; the second was the
rehabilitation of Europe, which would have provided a market for
: British goods, and would have supplied other goods in return. This
hope was defeated by the disastrous inflation of prices in the United
States, which meant that the quantity of goods which could h. e bought
out of the loan was much smaller than had been expected. Moreover,
the price of goods bought from Argentina, and other hard currency
rountries, rose in some instances by 150 per cent., and prices generally
increased by 40 per cent. The second factor which helped to defeat
the original plan was that the rehabilitation of Europe has not proceeded
as was expected. For some time, climatic conditions in Britain
were disastrous, a fact which added to that country's troubles. For a
considerable time, more than two million of Britain's men were overseas
on military duty in various parts of the world, and it was not
possible to withdraw them immediately, although that is now being
done as quickly as possible. Those inen were not producing, and some
of themn-tho. e in Germany, Palestine and Egypt-were drawing on
dollars from the American loan for their upkeep.
It is true that we could export to dollar, or hard currency, areas
a quantity of goods and coiiniodities that we are now either using ourselves,
or are sending to Britain, where they are sorely needed. I have
discussed this matter with the Minister for Commerce ( Mr. Pollard).
I have gone into it very fully. We could, no doubt, export more goods
to hard currency areas such a. s the Philippines, China, Panama, South
America and to Switzerland. But we must never lose sight of the fact
that, for a number of reasons, we owe a great responsibility and duty
to Britain. One reason is that the British are a great nation with
wonderful traditions. During the last seven or eight years they have
shown a magnificent spirit. They bore the brunt of the catastrophic
war from 1939 until 1945. To-day, they are in most difficult circiunstances.
A second, and very material, reason is that Britain has been
Australia'. greatest customer. Therefore, we cannot lightly brush
aside our duty to Britain. Australia is one of the countries which made
the least economic sacrifice, and suffered least in World War II. Are
we to deny to Britain wheat, butter and other good. s which our kinsfolk

44
urgently need because they can offer us payment only in sterling? If
we decided to withold those goods so that we should not make any
sacrifices, we should increase intensely Britain's economic difficulties.
The Australian Government is not prepared to do that.
Two problems arise. One is whether we should export to the
dollar area certain materials and commodities in short supply here,
which Britain does not particularly require but which we ourselves
badly need for our own industries. In the hard currency countries we
could sell cement, steel, constructional steel, . steel rods and timber.
But if we did so we should accentuate the scarcity of these materials.
One of the great problems now confronting the people of the United
States arises because America has exported such enormous quantities
of goods as to produce a shortage in the domestic market. That has
accentuated the inflationary spiral. Because of the enormous volume
of exports, many goods are in short supply, and, with the abolition of
prices control, the American people are obliged to pay excessive prices
for them. We must examine the problem as realists. We desire to extend
to Britain all possible assistance, while striking a fair balance to ensure
that our own people do not make undue sacriefices. This course is to
be preferred to seizing every opportunity to sell our exports in the hard
currency and dollar area. Britain, which urgently needs these goods,
has been, and will -be, our greatest customer for decades. Are we to
ignore the plight of Britain because some temporary customer requires
these goods and is prepared to pay dollars for them? Are we to
deprive our greatest customer, friend and ally of those goods? We
must weigh all these factors realistically.
The Minister for Customs ( Senator Courtice) is deluged with
requests from other countries for Australian goods. Most of these
goods happen to be urgently required on the Australian market. The
International Food Council considers that Australia's exports of food
R hould be allocated in a fair proportion to the needs of the people who
require them. Britain is a party to the International Food Council.
Senator Courtice could readily find markets for our wheat in China,
for which we would receive payment in American dollars, or in
Switzerland, for which we would be paid in Swiss francs, and for other
goods in the Philippines or Panama. If we sold these goods and conmmodities
in China, Switzerland, the Philippines and Panama, the
people of Britain and Australia would not have adequate supplies.
Therefore. we must strike a balance. Senator Courtice has been
examining the subject very closely to ascertain whether we can export
goods without doing an injustice to Britain and disrupting our own
economy There is no mum. bo-jumbo about the dollar shortage. What i.
the real source of the trouble? The value of the goods which the United
States has exported is approximately three times, as much in dollars
s the value of the goods which it has imported. To that situation,
I
I'l

there can be only one answer. This formn of trade must have violent
repercussions. I do not condemn the United States. Had it not been
for the assistance of the United States in World War II., Australia
might have been conquered by the Japanese. When we begin to
examine this problem we discover there are many matters which must
be studied. If the value of the exports of a country are three times
the value of its imports, there can be only one result.
" The United States * has made great contributions to assist other
countries, and the maintenance of Japan to-day is costing an e normous
sum. America has poured out billions of dollars, and perhaps some
doubt may be expressed as to the wisdom of the way in which the
money was expended. However, this granting of assistance is a tribute
to the American Government, the Department of State and people who
have some appreciation of the enormous problems now confronting the
world. It would be easy for me to say that the only course which will
remedy the situation is for the American people to make the most
magnificent gesture that the world has ever seen. That idea is not
easy to sell to all the American people. When we are situated so far
away from America, it is easy for us to preach about lofty ideals, and
what the United States should do. It is not always easy to convince a
majority of the people of the right policy to adopt in relation to other
countries. That is one of the great difficulties which American statesmen
are facing to-day. I make no criticism of that. It is for the
Americans, as people living in a democracy, to choose the course which
they think fit.
It would not matter whether the Leader of the Opposition ( Mr.
Menzies) or any one else was in office at present. He would have to
face the reality that Australia could not get goods from the dollar area
without paying for them. The great industrial barons are not
philanthropists. They do not manufacture motor vehicles, cotton
textiles and tractors with the idea of presenting them to us free of
charge. The conditions attached to the Anglo-A-merican loan contained a
provision for convertibility of sterling balances. India, Egypt, Australia,
Southern Ireland, New Zealand, and South Africa had all
accumulated enormous sterling balances in London. They were all in
a position given good seasons such as we are now experiencing, to earn
a great amount of current sterling. That is also true of Argentina, a
country which was exporting goods to Britain and charging very high
prices for them. When the convertibility provision of the Anglo-
American loan commenced to operate, those countries immediately
rushed in to obtain dollars. A certain amount of that sort of thing
was done in Australia. Those who held lecters of credit demanded
dollars, irrespective of the strain placed on the British Tretu; ury, even
though, in some oases, their goods were still on the water. Betweeii the
time when this~ rush hogan and the time when the British Chancellor

had to announce d a r Aol lar euies ismust end, there was an etiormifls
flow of dollars fromi' the 13lritish pool. The dralin was so severe
that it had to be stoiped, despite the provision in the termts of the
Anlglo-Anicrica n loan. Since then, the prices of goods in dollar aS.
and indeed akho in hard currency areas, have continued to rise so tha-t
British couintries are nowv unable to obtain, for-a given amount of doilitn
( urretl,-y, the same quentity of goods as they could obtain previously.
" The Britiqlh Government has used almost all of the Amierican
luau. ANi aniount of 400.000,000 dollars ivas held in the pool wheni dhe
eronvertibility provision eased to operate, and it remains frozen. ' Chat
reserve ma ' y he -Pleoscd iz, the result of negotiations associated with
the Marshall plan. I have had no official advice to that effect, but
I am hopeful that, it will be released. The British Government had
abuC600,' 000,000 sterling, in gold reserves when the crisis occurred.
It lhas had to draw extensively on those reserves. In adldition, it lias
had to lbori-jiv froin the World Bank and the International Montary
Fund. It ha,, s had to deprive it,, own pe~ ople of vital goods so that it
ra ig ! it tport ihos; e goods to o0ini dollars for the purchase of, not
luxtirie lo1t ' esris of i i for rhe 1h* i tish; p~ eople.
i. aW on d no0t Le 14151111lit f r n' 1193O V0' erunut 01r 01ny crvastircr to
be. tfteivl to 11i pose erslriiion: oni thw imiportation of goods wvhieh thu
people of Awotralia need. li 111: b1, v Ini-tanees. goods which have l'( en
banned zire 5zeiii-esseitia I, and4 otlier though n1ot I uxiries, represent
desi; rable u e. ni ties. for thle communifity. tiybo'v who thinks that i
gove) rilienit or a treiirlve t oni undertake a tas. k SIR li is that niercY,
because oif soie en price is verY fool Th is-Government tw ckled h
jioh oif restrieting imports onlly. with the tmost reluctance.
" I have mentioned the dIrain on British gold re-serves. Thi s
Gove rnjmen-. has agreed to sell Aus. tralia's current gold output to Britain.
In return, Aus! tralia will be credited in dollars with the value of that
grold. It istrue that the British Government requested that we should
live wvithin oui-dollar earnings. I told the Treasury in London at tihe
time that that iva an impossible task for Australia.
Last year, despite the restrictions this Government imposed, Australia
had to purchase 100,000,000 Canadian and American dollars from
the depleted Empire pool. This year, even though we have imposed
further restrictions on the use of dollars,_ the situation is still rapidly
deteriorating. Very reasonable supervision has been maintained over
the issuing of import licences for goods that involve dollar expenditure.
hut, owing increased prices and other reasons, we arc still importing
far larger quantities W dollar goodls than we could expect a country
which iq starved of dollars to sell to us. Those are the hard, cold facts.
I eannot at this moment say whe'hcr even the suggested res triction. s
that will lbe considered lvCabinet on Sth Decemtber. 1947, will be
su1ifilcient to mneet the denian'ls of the situation. I noticed a statement in
the British pres last week in which a very high tribute was paid to the
co-operation of the Niv; raliaii Government in saving dollars. That

statement declared that, if other countries had done as Britain and
Australia had done, Britain would by now have been much nearer than
it is to the top of the very steep hill to complete economic rehabilitation
which it is climbing.
" The Government is discussing problems associated with dollar
shortages with the various industries affected so that it may have the
considered views of everybody on the subject. We are anxious to cushion
the impact of restrictions so that industries may he kept operating as
much as possible and so that people employed in them shall suffer as
little as possible.
My final word is that we must guard against the exhaustion of
the British Empire dollar pool. Should the pool reach such a low ebb
that dollars cannot be released to us, then we must sharply cut off
imports of all things that we now hope to purchase with dollars drawn
from it. That would mean a sudden disruption of the national economy.
We want to avoid doing that and to continue to do justice to our own
people and to our great allies the people of Great Britain."
FINANCIAL POLICY-DOLLAR IMPORTS, CABINET
DECISIONS.
On 8th December, 1947, Mr. Chifley said-
"' The statement on the dollar situation tabled in the House of
CRpresentatives on 4th December, 1947, indicated that of the
œ A. 52,000,000 of dollar import licences recalled for review about
œ A. 35,000,000 were to be confirmed and about œ A. 17,000,000 were to
be cancelled. However, major items such as motor chassis and tobacco, involving
heavy dollar expenditure, were not included in the general review of
import licences. Cuts in these major items were made by Cabinet in
September, 1947, but the statement presented to Parliament pointed
out that further economies would be inescapable and that specific
proposals would be submitted to Cabinet for decision at its next
meeting. Afer a full review of the dollar position, Cabinet has now decided
to effect further economies in dollar expenditure on the following
iterrn-:-MOTOR VF\ in'cI. Cu(:'\ ss.-linllmports otf mtor vehicle chassis from North
Amn'ril. ; ile I, li uited to a value of œ A. 90,000,000 for the period of eighteen
npuithz erulilg :{ liih . Tune. 1940. Of this amount only œ A. 3,000,000 will be
lperi'itltd to lie imnlerted before 3Utlh June. 1948. An inter-departmental comrmittee
on whirlc the industry is represented will be responsible for recommending
thl illo-atio of tli,-la moitont among the \ arious iiakes and models of chassis.
TouA. t co LasE.--Purchases of American tohbacc, leaf for the current year
hiIve alr4: eady beeln umule and any further reduction in dollar expenditure ou
imports , of tobacco leaf cannot therefore be made effective until the financial
year 1948-49. Cabinet decided to reduce importa of American tobacco leaf in
1948-49 by approximately 50 per cent. This will involve a 10 per cent. reduction
in releases for consumption as from 1st January, 1948, combined with a reduction
in uresent stock holdings. I

48
NEWSPRINT FOR THE NEWSPAPER INDUSTRY.-Cabinet approved a reduction
in total newsprint consumption ( Australian and imported) to 90,000 tons per
annum as from 1st January, 1948. This makes the average cut on pre-war
consumption 51 per cent.
PETROL.-Cabinet decided to effect a further 10 per cent. reduction in total
licensed gallonage. The cut will be applied uniformly to all classes of
consumers. FILM REMrTTANCES.-Under decisions previously announced the film companies
are permitted to remit to their principals in the United States 70 per
cent. of the amount of their remittances in the base year ( 1946). Cabinet
decided that as from 1st January, 1948, remittances should be limited to 50 per
cent. of the base year quota, earnings in excess of that figure to be retained in
Australia. " After allowing for the effect of these decisions and the decisions
announced earlier by the Government, total imports from the United
I States and Canada in 1947-48 will still be about œ A. 90,000,000, compared
with actual imports in 1946-47 of just over œ A. 60,000,000. It is
anticipated, however, that the measures taken by the Government will
reduce the rate of importation in the calendar year 1948 to one which
is practicable in the light of the assessment of the dollar situation at
present available.
" Cabinet discussed the possibility of reducing the size of Australia's
dollar deficit by adopting measures to increase Australian exports to
the dollar area. It was recognized that the possibilities were limited
because of existing commitments to Britain and because many of the
items which could be sold for dollars are in short supply in Australia.
The Minister for Commerce and Agriculture ( Mr. Pollard) was
authorized to take. steps within the framework of existing export
controls to divert a greater proportion of Australian produced goods to
dollar export markets. Any measures adopted will be taken after consultation
with other interested Commonwealth departments and with
the industries affected."
( For earlier references, please see No. 123, page 19; No. 128, page 34;
No. 129, page 27; No. 130, page 9.)
MIGRATION.
GOVERNMENT POLICY-MINISTER'S STATEMENT,
NOVEMBER, 1947.
In Parliament.-On 28th November, 1947, the Minister for Immigration
( Mr. Calwell) said-
I am able to inform the House that, when 1947-the first full year
of large-scale, planned immigration-has run. its course, Australia will
have received 30,000 permanent arrivals, in spite of the desperate postwar
shipping shortage, which is afflicting Britain so grievously, which
i all nations suffer in common and which is one of the main obstacles to
the achievement of our target figure of 70,000 immigrants a year.
These 30,000 new arrivals represent all of the three main streams of
immigrants-British, American and European-on which Australia
must rely for the new life blood it so urgently needs.
i f

I.,
49
In Britain to-day over 400,000 people are anxious to settle in
Australia. Of the 30,000 permanent new arrivals we shall have gained
by the end of 1947, the vast majority will be from Britain.
It is not a healthy condition to have an over-populated Britain
and under-populated dominions, and conversely it is mutually beneficial
to have all the Dominions of the British Commonwealth increasing in
strength from year to year. Britain therefore must help Australia so
that Australia may help Britain and the Blritish Commonwealth of
Nations. I hope that the British authorities will -understand our need
as we press for more and more ships to carry more and more people to
this country. We have no wish to embarrass the British Government by
seeking large numbers of specialists who are in short supply. Aus
tralia's man-power requirements cover such a wide range in every field
of primary, secondary and tertiary industry that we are not obliged to
seek workers for only a few particular occupations. We can, therefore,
readily absorb a cross-section of British people without detriment to
Britain's economic structure but with material advantage to both
countries. We have always been prepared to accept this fair crosssection.
The Government realizes that the provision of Shipping is the
key to immigration plans and has examined every possibility of
obtaining additional transport for British migrants. The results will
be demonstrated in 1948 when the migrant lift will be substantially
greater than has been possible in 1947. The shipping position is one
which will show progressive improvement over the next two or three
years, even thought that improvement is not as fast as we would like.
Nevertheless, I am confident that we shall obtain transport for at least
25.000 free and assisted passage British migrants in 1948. This number
is, of course, additional to the total of full fare paying passengers.
" During the war years, many thousands of American servicemen
visited Australia. Already, 10,000 applications have been received in
the United States, repres'e'nting about 20,000 potential migrants. To
deal with these applications and to select migrants wh-o will be of the
g4reatest benefit to our economy, trained immigration officers with knowledge
of Australian industrial requirements have been attached to the
Austialian Consulates-General at New York and San Francisco. The
first party of 70 United States migrants to benefit from the scheme
arrived in Australia in September, 1947, and further parties have
brought the total to 206. While this is a useful start, it is obvious that
wve will not increase our population by any substantial number while
wec depend on the very limuited passenger shipping at present plying
between America and Australia. I took action while in America
recently to institute negotiations with the Matson Line for two additional
vessels to be put on the San Francisco-Sydney run with the aid
of a subsidy by the Commonwealth Government against loss on
operation. These negotiations are still proceeding, -and if rnutna-ily

satisfactory arrangements can be made, each ship will be able to carry
3,900 United States migrants a year, based on 650 passengers a voyage,
and a round voyage every two months.
To-day, there are in Germany some 850,000 displaced persons,
mainly of Baltic, Polish and Yugo-Slav origin. Their occupations
include agriculturalists, hospital workers, shipwrights, light manufacturing
workers, building workers, engineers, dentists, doctors and other
professional men. These persons, whose normal standards of living
have been compatible with our own, and who even now do not, in a large
proportion of cases, consist of depressed classes, represent an ideal
source of migrants who will fit smoothly into our way of life and who
will help to meet Australia's labour shortages in the fields of industry
and agriculture. Initially it was decided that 12,000 displaced persons
should be brought to Australia annually under the agreement, but the
Commonwealth is willing to increase this number to 20,000 a year. To
implement this agreement, an Australian selection team, including
doctors, has been appointed, and operates under the aegis of the head
of the Australian Military Mission at Berlin. Migrants are selected
on the basis of their suitability for employment and absorption into
our Australian community.
The Commonwealth Government has entered into an agreement
with ! he Netherlands Emigration Foundation for the migration to
Australia of Dutch national.. Initially, it is proposed to bring to
Australia farm workers at the rate of 50 per month. When the employment
situation in Holland permits, consideration will he given to the
extension of the scheme to other categories of workers.
" During 1946. the record nimrber of 7,126 certificates of naturalization
was issued to persons of 41 different nationalities. For the first
half of 1947, 1,654 certificates were issued comprising 33 different
nationalities. In previous years, the number of certificates issued rarely
exceeded 1,500 in any one year. The granting of naturalization is one
of the most effective means of facilitating the assimilntion of the non-
SBritish members of our population.
" I have said that the present procedure connected with the taking
II of the Oath of Allegiance by applicants for naturalization left much
to be desired. The Commonwealth Immigration Advisory Council
considered this matter, and has recommended that the administration
of the oath should be conducted in open court, accompanied by an
appropriate and dignified induction ceremony, which should include
the delivery of an address to the applicants by the presiding judge or
magistrate An appropriate form of oath of allegiance, and suitable
arrangements for induction ceremonies are now under consideration.
1 The council has also recommended that the Department of Immigration
should issue a pamphlet for the guidance of prospective citizens, which
would describe to them in simple language our historical background,
i 1

51
our mode of government and the responsibilities and privileges of
Australian citizenship. I have approved this recommendation and the
preparation of the pamphlet is now in hand as part of a campaign
designed accelerate the assimilation of the alien newcomers.,"
CIVIL AVIATION.
INTERNAL ROUITES--GOVERNMENT CONTROL, AIRIINES
COMMISSION ACT, AMENDING BILL.
In Parliament.-On 3rd December, 1947, the Minister for Air
( Mr. Drakeford) introduced the Australian National Airlines Bill.
Mr. Drakeford said-
" The primary purpose of this bill is to authorize the Australian
National Airlines Commission to undertake and develop intra-state air
services. Under the existing act, the commission may engage in intrastate
services only to the extent that such services are incidental to
the safe, efficient and economical operation of interstate territorial and
international services. As one step towards the development of intrastate
services, it is proposed that section 19 be amplified so as to
authorize expressly the transport of mail within any State. While
section 22 of the existing act refers to the promotion of the carriage
of mails this section is not expressly linked with section 19. The
Commonwealth Parliament has unquestionable power to provide air
transport, whether interstate or intra-state, for postal purposes, and it
is now considered desirable that the commission should be clearly
authorized to carry mails intra-state so as to be able to implement any
agreement for the carriage of mails authorized under section 22. The
commission will then be able to carry passengers and freight within
any State as incidental to the postal service, provided that the primary
purpose of a particular service is the carriage of mail.
" It is proposed that provision be made for the adoption of the
powers in relation to air transport referred to the Commonwealth in
1943 under the Commonwealth Powers Acts of the various States
except Victoria and Tasmania. Queensland and New South Wales have
referred to this Parliament the matter of air transport and South
Australia and Western Australia the matter of the regulation of air
transport. These references remain effective and cannot be revoked by
ordinary legislative process until 2nd September, 1950, so that until
that date the Commonwealth Parliament may make laws in respect of
air transport within the States which have made the references. As
yet these special and additional powers referred by the States have not
been invoked.
" During the recent conference of Commonwealth and State
Ministers, the Premier of Queensland indicated that his Government
desired the Commonwealth to authorize the commission to establish and
operate intra-state services in Queensland on condition that the commission
pays the same rate of tax as that imposed by that State on
privately operated airlines. The Government considers that it will be i

of direct benefit, not only to Queensland, but to the Commonwealth as a
whole, if the commission develops intra-state services within Queensland
and other States, even though it is possible that these services, in view of
their developmental nature, may he unprofitable in the beginning. It
has decided to accept the invitation of the Queensland Government to
engage in this new sphere of air service operations.
The provision in the bill implementing State references authorizes
the establishment, maintenance and operation of air services within any
State which has made the necessary references so that fresh legislation
will not be necessary as and when it is decided to take advantage of the
reference in any particular State. Although there is no legal necessity
to impose any limitation, the bill provides that the commission shall
not establish any service unless the Premier of the State in which the
service is to be established has notified the Prime Minister in writing
that he consents to the establishment of the service. This will ensure
that the powers which have already been referred by four States will
not be exercised without the express cons-ent of the States concerned.
In addition, a further sub-clause imposes an obligation on the commission
to pay from time to time amounts equivalent to the licence fees
which would be payable under the law of the State if the service were
operated by a person other than the commission. This provision has
the effect of requiring the commission to pay the same licence-fees as
private operators and meets the condition stipulated by the Premier
of Queensland at the Premiers' Conference.
" Another clause amends section 48 which provides that the commission
must give 30 days' notice of intention to establish a service.
territorial airline licences applied for by Trans-Australia Airlines in
circumstances which will bring into operation section 46 of the act and
thereby render inoperative any airline licence held by any other person
by reason of the fact that the commission is providing an adequate
service. The remaining clauses are mainly concerned with matters of drafting
and in particular repeal those sections of the act declared invalid
by the High Court in the Australian National Airways case."
[ The bill was passed.
HEALTH.
QUARANTINE ACT-FURTHER BILL INTRODUCED.
In -Parliament On 3rd December, 1947, the Minister for Health
( Senator McKenna) introduced the Quarantine Bill.
[ The bill was passed.
( For earlier reference, please see No. 126, page 8.)
WORLD ORGANIZATION-BILL INTRODUCED.
In Parliament.-On 3rd December, 1947, Senator McKenna introduced
the World Health Organization BiUl. [ The bill was passed.
( For earlier reference, please see No. 126, page 8.)

AUSTRALIAN MILITARY FORCES.
On 4th December, 1947, the Governor-General announced the
following awards
Military Cross.-Captain A. EM. Forbes.
Military Medal.-Corporal W. J. T. Oakley, Privates C. Coulam,
W. A. Jarmyn, A. R. Muigrave. AMERICA.
VISIT OF UNITED STATES TASK FORCE, JANUARY, 1948.
On 5th December, 1947, the Prime Minister ( Mr. Chifley) said-
" Elements of the United States Navy Pacific Fleet Task Force 38
will pay a visit to Australia at the end of January, 1948. The force
will consist of one fleet carrier, U. S. Valley Forge, flying the flag of the
Task Force Commander ( Rear-Admiral H. M. Martin), four destroyers
and one fleet tanker.
The force will proceed to Sydney, arriving there on 30th January,
where the ships will stay until 4th February."
CHRISTMAS CARDS.
On 5th December, 1947, the Prime Minister ( Mr. Chifley) said-
" To conserve paper, and with a view to avoiding expenditure on
items regarded as non-essential, there will be no issue of Christmas
cards by Commonwealth administrations for 1947."
By Authority: L. F. JOHNSTON, Commonwealth Government Printer, Canberra.