The Secretary to the Department of the Treasury has forwarded for advice the following memorandum:

I am directed to ask whether there will be sufficient power during the next two or three years to prohibit the export of gold and wheat (or flour) from the Commonwealth.

It is necessary for the welfare of Australia that considerable sums shall be held in gold so that, in the event of a shortage of exports (brought about, say, by a drought), the country will be in a position to pay its overseas debts by shipment of gold. Gold is required, also, as a legal backing for Australian Notes and, without such sufficient backing, public confidence in the safety of the issue and in the stability of the banks would be shaken.

The Wheat Pool is considered desirable because it prevents competition amongst growers and a consequent undue fall in the price of wheat (or flour). The Pool system also enables payments to be made to farmers before their wheat can be sold at fair prices. This is a great advantage to producers who are financially weak and encourages the extension of the wheat industry.

In the opinion of the Treasury, it would be detrimental to the interests of Australia to permit exports of any gold or any wheat at present, except under Government control, and it is likely that the necessity for that control will continue for a long time to come.

Section 112 (1) (b) of the Customs Act 1901-1916 provides that the Governor-General may, by proclamation, prohibit the exportation of any goods, the exportation of which would, in his opinion, be harmful to the Commonwealth.

If a proclamation is issued under that provision prohibiting the exportation of gold, wheat or flour the proclamation cannot, in my opinion, be successfully challenged (see Welsbach Light Co. of Australasia Ltd v. Commonwealth of Australia 22 C.L.R. 268).

[Vol. 16, p. 277]