Foreign Relations of the United States: Diplomatic Papers, 1945, General: Political and Economic Matters, Volume II

800.504/2–1245

Memorandum of Conversation, by the Acting Secretary of State

Washington , February 16, 1945.

Participants:	British Ambassador, the Earl of Halifax;
	Australian Minister, Sir Frederic Eggleston;
	New Zealand Minister, Mr. C. A. Berendsen;
	Acting Secretary, Mr. Grew

The British Ambassador, the Australian Minister, and the Minister of New Zealand, with two secretaries, called on me this afternoon at their request and Sir Frederic Eggleston presented the views of his Government in favor of calling a conference on employment. As his oral presentation was read from a document, I asked him if he would not send me a copy of the paper so that I might have an accurate transcription of his statement. He said that he would have a clean copy made and send me one for our files. Lord Halifax supported Sir Frederic Eggleston’s presentation, as did also Mr. Berendsen, the Minister of New Zealand.

In reply, I said that we would, of course, give the Australian proposal most serious consideration and would communicate our views as soon as the necessary consultation had taken place within this Government. In advance of such consultation, I said, it would appear probable that our views would take the following form:

(1) The problem of full employment is inextricably linked with problems of exchange and trade, with the consequence that a separate conference on full employment or on employment policy could hardly produce any useful result.

(2) The holding of an employment conference in advance of a conference on trade, commodity, and cartel policy would be particularly unfruitful since the area of appropriate international cooperation for the attainment of full employment could not be determined in the absence of reasonably firm commitments with respect to trade, commodity, and cartel policy.

(3) Efforts to achieve full employment are likely to take the form of encouragement of uneconomic production or the imposition of positive barriers to international commerce, unless agreement is obtained with respect to these matters.

(4) There is no objection, however, to discussion of employment policy and to the exploration of essential areas of international cooperation in this field concurrently with the discussion of trade, commodity, and cartel policy. We would consider it appropriate and desirable to devote some time at a general conference to the discussion of employment problems and policies. The conference that we should like to have might well be called a conference on trade and employment.

Joseph C. Grew

[Enclosure]

Oral Statement Made by the Australian Minister ( Eggleston ) to the Acting Secretary of State

February 16, 1945.

The Government of Australia is grateful for the opportunity that you have given for the elaboration of the request that is made that an International Conference on the Full Employment Policy should be held.

We are grateful for the interview which has already taken place but we would like to emphasise the fact that the Australian Government attaches the very highest importance to the subject and hopes that it will not be rejected without the fullest consideration at the highest level.

I do not intend to argue the whole case as presented in our letter, but I want to stress two things; first, the international importance of full employment policies, and second, their relative importance when various international agreements are being considered.

The importance of the Full Employment Policies is fully realised, but the fact that they are of international concern is not so fully recognised. We are, however, bent on increasing our international trade and as we become committed to it, our investments, our labour force, and our capital organisations are directed to supplying foreign markets. Some are committed to this more than others. Australia is a large exporter of primary products. The prosperity of the countries to which we export is of vital concern to us and our position is compromised whenever there is large scale unemployment and demand falls. All countries are therefore dependent on the degree of employment in other countries and if employment can be assured, it will add greatly to the stability of the world economy. If, on the other hand, these high levels cannot be assured, then the economy of the exporting country becomes unbalanced; it may have to take internal steps to protect its balance of payments and its employment, and when all nations take these steps, the difficulties are greatly increased.

There are several agreements at present under discussion which deal with parts of the problem of international trade. In these agreements the various parties tie their hands and restrict their freedom.

These rights may well be given up as part of a general plan but we urge that the main features of a general plan should be the maintenance in each country of such levels of employment that the risks we fear may become small. In short, the tendency in times of difficulty and crisis is to adopt internal policies of restriction which intensify the crisis, unless there is a firm understanding that all great nations will carry out a positive policy which will keep up demand by maintaining employment.

The fact that various phases of economic policy are matters of international concern has been widely recognised. Mr. Morgenthau,⁵ in addressing a Chamber of Commerce the other day, said, “the underlying cause of failure to stabilise currencies during the last war was the view of each country that it was a problem of exclusive concern to each. The resultant instability must certainly be counted as a contributing cause of the great depression and the first phase of the present war.”

I contend that the same argument applies to the maintenance of employment. What the Australian Government want to emphasize is that these policies of full employment are basic, none of the other agreements work with efficiency unless full employment is secured.

I would further point out that United States occupies a key position because it has such a large mass of potential purchasing power, and that without their co-operation little can be done.

I do not intend, of course, to argue the whole question, all I want to do today is to stress the international importance of such an agreement and emphasize that it cannot be regarded as incidental to these other agreements. If there are other matters which have to be discussed, their position and significance will be a matter of consideration at the conference.

5. Henry Morgenthau, Jr., Secretary of the Treasury.