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Wednesday, 6 July 1949

Mr FALSTEIN (WATSON, NEW SOUTH WALES) - Can the Treasurer say in how many, and in what countries, there has been an official evaluation or devaluation of the currency since the ratification of the Bretton "Woods Agreement ? What has been the impact of such manipulation on the economy of those countries ? Has their experience shown that an economy, sick from the lack of reciprocal trade, can be resuscitated by resort to mere artificiality?

Mr CHIFLEY - A lengthy reply would be necessary if I were to cover all aspects of the important matters that the honorable member has raised. We have watched with interest the results of the devaluation or appreciation of various currencies in recent years. I believe that the devaluation of the French franc resulted in a great improvement in the economic stability of France. That is true also of the devaluation of the Italian lira. On the other hand, I am sure that certain European countries which appreciated the value of their currency now realize that they made a mistake in so doing. To determine whether devaluation or appreciation of currency is wise, one has to consider the peculiar circumstances of the country concerned. I should not like to be dogmatic on the matter. Amongst the countries that ratified the Bretton Woods Agreement, the most striking example of devaluation is France, where there was considerable argument about the introduction of what was called the "double franc ". There was similar speculation in Italy about the " double lira ". These matters are of grave import to the world at the moment. Although considerable attention is being devoted to political, strategic and military problems the real cancer that is eating at the heart of the world is the inhibition of the free movement of goods by currency difficulties. Countries in which certain commodities are produced in excess of local requirements are unable to send those goods to the people of other nations who require them urgently. That, I consider, is one of the greatest disorders affecting the world to-day. I have made that quite clear in this House on previous occasions. I shall have a short statement prepared covering some of the matters that the honorable member has raised in his question.

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