10 Commonwealth Government to Cranborne

Cablegram 13 CANBERRA, 15 January 1945

IMMEDIATE SECRET

Reference paragraph 2 my immediately preceding telegram. [1] Following is summary:

Begins.

The main purpose of international economic collaboration is to achieve freedom from want. Many declarations have emphasised the importance of employment in this connection. Without full employment, production and consumption must remain continuously short of the levels that are technically and economically practicable, and many wage earners and others are deprived of the purchasing power to demand the goods and services they need. The achievement of a high and stable level of employment in all countries is, therefore, one of the main objectives of international collaboration. Specific reference is made to this in such instruments as the Final Act of the United Nations Conference on Food and Agriculture and the 'Philadelphia Charter' of the International Labour Organisation. President Roosevelt has given endorsement to the objective of full employment.

Despite the general acceptance in principle of high levels of employment as an objective, discussions on practical arrangements for international collaboration have been concentrated primarily on the mechanism of international trade and finance and matters of general welfare such as food and agriculture. The Australian Government has been for some time convinced, however, that proposals for international welfare collaboration will not get very far unless they are accompanied by a more direct attack on the problem of maintaining high levels of employment throughout the world. For this reason Australia has suggested that in addition to the monetary and other agreements there should be 'An international agreement by which subscribing countries would bind themselves to pursue domestic policies aimed at full employment'.

The achievement of high and stable levels of employment throughout the world is a matter of international concern. The growth of unemployment in any major industrial country or group of countries depresses the export incomes and economic activity of other countries, and makes it extremely difficult for them to maintain high employment. Any individual country that persists in a high employment policy in the face of declining employment elsewhere would soon find that its balance of payments is adversely affected.

It is then faced with the choice of either abandoning its own domestic policy of high employment or of turning away from international collaboration towards import restrictions, export subsidies or exchange depreciation. In other words, if other countries fail to maintain high employment any country may find international economic collaboration incompatible with the maintenance of its own employment.

If the international economic collaboration is to be effective and lasting, the nations must undertake to provide the fundamental conditions that make such collaboration practicable and consistently advantageous. These conditions can only be provided if all major countries are prepared to take whatever domestic measures are necessary to achieve a high and stable level of employment in their own countries, as well as collaborating with other like-minded nations.

It is therefore proposed that as many countries as possible should adhere to an international employment agreement as the necessary complement of the various United Nations Agreements that are being negotiated. It is also suggested that all such other international agreements should include among their purposes the maintenance of high levels of employment throughout the world.

1 Document 9.

[AA:A1066, ER45/2/3/2]