228 Melville to Burton

Letter, SYDNEY, 18 May 1948

PERSONAL AND CONFIDENTIAL

1. I enclose a copy of the report of the Sub-Commission on Employment and Economic Stability prepared at its 2nd Session from 22nd March to 7th April, 1948. Most of the proceedings of the Sub-Commission are adequately covered by the report. The following additional comments may, however, be of interest.

2. All members were in general agreement with the description in the report of the consequences of open price inflation in countries such as France given on pages 20/3, paras. 4 to 12, and of inflationary pressure in controlled economies such as the United Kingdom and Australia given on pages 23/5, paras. 13 to 17. It was also generally agreed that anti-inflationary measures were amongst the remedies which could be applied to overcome the difficulties to which the report refers.

3. I myself (and in this I had the support of Professor Frisch) would have liked to have seen some stronger warning in the report to the effect that anti-inflationary measures should not be carried too far and that in our view depressions were likely to be best avoided if there were at all times some slight inflationary pressure kept in check by moderate controls. Some concession to our point of view was made in the report particularly on page 25 para. 17, but less than we should have liked.

[matter omitted]

7. After my experience at the last two sessions of the Sub-Commission I am satisfied that the Sub-Commission cannot fully perform the functions for which it seems to have been appointed. The Sub-Commission will meet in future once a year at a set time. It cannot, in these circumstances, report usefully on current world economic conditions and trends which might guide organs of the United Nations to make specific recommendations and help national governments to adopt correct economic policies. It seems to me that if there is to be reporting on trends, the United Nations Secretariat will have to be given the task. It is not possible for a body composed of people drawn from all over the world, meeting at rare intervals, to perform this type of work.

8. The work that the Sub-Commission can most usefully do is to produce reports that would set out agreed principles which might be of help to national governments in framing their own policies. There is, however, a great deal of work to be done in this field, and partly because of the composition of the Sub-Commission, partly because of the fact that the Sub-Commission can meet only at infrequent intervals, it will be a very long time before it will be able to cover any substantial part of the field. It seems to me that the work would be done more expeditiously if the Secretariat were instructed to produce and publish reports on these topics with the help of distinguished consulting economists. The reports might perhaps be referred to the Sub-Commission and the Commission for comment. This suggestion, of course, raises difficulties for the Secretariat which, in relation to the jobs requiring attention, is seriously understaffed. At the same time the overlapping and duplication of staff among international agencies generally is obvious to all; nor is there the degree of co-operation which is necessary if we are to have co-ordinated and timely action on world problems. It is, I believe, time that this issue was brought to the forefront.

9. Since I have suggested that so much of the work that has been referred to the Sub-Commission could be better done by the Secretariat, aided by distinguished consulting economists, the question arises whether the Sub-Commission has any function which it can fruitfully perform. I think the Sub-Commission can do useful work along lines parallel to those which I have suggested in paragraph 8 for the Secretariat enabling the whole task to be accomplished more rapidly. The reports of the Sub-Commission might also be accepted as more authoritative than the reports of the Secretariat and, since the consulting economists would almost inevitably have to be found in North America, or possibly Europe, the existence of the Sub-Commission would enable the view-points of economists from a wider geographical area to influence the reports and recommendations. The Sub-Commission might, to some extent, review the reports of the Secretariat.

10. If good results are to be expected from consultation between UNO committees and outside consultants, then there must, I believe, be the opportunity for fairly frequent meetings, personal contacts, and time for reflection. The atmosphere of a short session, the difficulties of accommodation and travel and so forth, all militate against considered judgment. Representatives cannot be brought together from the four corners of the earth for a fortnight and be expected to distil wisdom. Inevitably, I feel there will have to be geographical concentration of advisers to work with the Secretariat or other agencies. This raises the difficulty that members of UNO may, as a result, regard membership in the Sub-Commission more politically than they have done in the past. This would be a pity. It may be that we should explore the possibility of associating some European economists with some UNO body working in Europe. The point is, as I have said, that somehow we must provide means for frequent consultation, informal discussion and adequate reflection. No man can do these things satisfactorily in committee room, hotel or airliner.

11. In addition, it would be useful to keep the Sub-Commission in being, in order to consider the kinds of international action which are likely to be feasible and of assistance in maintaining economic stability and full employment. Any action of this kind, of course, can be made effective only by domestic policies, but there is clearly a function for a Sub-Commission of fairly authoritative standing and internationally representative to make periodic surveys and bring the issues before the court of world opinion.

12. I am, however, sure that the programme of work which was set before the Sub-Commission is much too ambitious and that it is futile to expect it adequately to cover the whole of the ground.[1]

[1] For Melville's report on the third session, see Document 234.

[AA : A1838, 701/8/1/1A]