3. The Minister of Finance said that recent requests from the gold mining indus­try for additional help had taken two forms: (a) that the government permit the export sale of gold at premium prices under a scheme analogous to that now in effect in South Africa and (b) that assistance under the Emergency Gold Mining Assistance Act be calculated on production in excess of 45 or 50 per cent of base year production instead of in excess of 66 2/3 per cent as at present.

Sales at premium prices would be of concern to the International Monetary Fund but it would be difficult for the Fund to refuse permission as long as the arrange­ment was allowed for South Africa. There was strong evidence that a large part of South African sales went into the "hoarding" markets. The Fund's objection to such sales were principally that they involved a loss of gold to central monetary reserves where the gold could meet the needs of legitimate trade and secondly, that they were in effect exchange transactions at rates different from the agreed parities and constituted a threat to exchange stability. There was doubt as to how much gold could be sold at the premium rates.

The Fund would also be interested in any plan for an increase in direct payments to the gold mines since this would suggest that aid was being established on a more or less permanent basis. The U.S. Treasury was interested in both proposals and wished to be sure there would be discussion with them before any decisions were taken.

An explanatory document was circulated.

(Minister's memorandum, undated and attached appendix Cab. Doc. 4651.)fi

4. Mr. Abbott felt that, if some assistance were considered necessary, the proposal for premium sales seemed to be the one that should be adopted. Any increase in subsidy payments would be only the first of many increases that would have to be made if, as seemed probable, costs continued to rise.

5. The Minister of Trade and Commerce thought the premium sales were not likely to prove of much assistance. If anything effective was to be done it was probable that changes in direct measures of assistance would be necessary.

6. The Cabinet, after considerable discussion, agreed that:

(a) the Assistant to the Governor of the Bank of Canada (Mr. Rasminsky) be authorized to ascertain from the International Monetary Fund whether there would be opposition to action by Canada to permit export sales of gold at premium prices under a scheme analogous to that in effect in South Africa;

(b) he should at the same time inform the U.S. Treasury of the approach the government had in mind making to the International Monetary Fund; and,

(c) further consideration of the desirability of altering the basis of assistance under the Emergency Gold Mining Assistance Act be deferred pending information as to the position of the Fund on premium sales.