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Thursday, 22 September 1949

Mr CHIFLEY (MACQUARIE, NEW SOUTH WALES) (Prime Minister) - I do not know that any lengthy statement needs to be published to explain the position. We hold in reserve a certain quantity of gold. When the United Kingdom got into difficulties, we agreed to let it have all current gold production. The arrangement is not a. permanent one, but is renewable from time to time. The United Kingdom, of course, uses the gold as it thinks most suitable. Gold has to be paid for imports into the United Kingdom from Switzerland. Some of it, of course, has to be used to pay for our imports from Switzerland. Some gold has to be paid to Belgium. Australia has a very favorable trade balance with Belgium, but the United Kingdom has a very unfavorable one with it. We pool our resources. Whatever deficit remains has to be met with gold. Any hard currency Australia earns is paid into the Empire pool to assist Great Britain in its dealings in the hard currency area. Great Britain in turn assists us in the matter of dollars. I think I can answer the honorable gentleman in a simple way by saying that, although we provide the United Kingdom with our gold, we are credited with its dollar value in calculating our dollar deficit. I do not know that there are any papers that could be tabled to assist the honorable gentleman. Most of the arrangements were made some time ago. Many arrangements, such as that relating to the alteration of the exchange rate, have been made in telephone conversations. So that the honorable gentleman may know the position precisely I shall try to inform him of the exact position of current gold production. The gold is sold to the Bank of England, as the agent for the British Treasury.

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