Your telegram 101, repeated New Zealand 80. [2]

1. We note the position of Commonwealth Government in relation to
statement of principles for International Monetary Fund and the
views expressed. Arrangements for proposed International Monetary
Conference are still indefinite and we shall telegraph further in
reply to paragraph 5 of your telegram as soon as possible.

2. As regards paragraph 4 of your telegram we instructed our
Representatives at Washington to sound United States Treasury and
State Department in consultation with Sir Owen Dixon in regard to
the suggestion that employment policy should be included in the
agenda of any conference on the monetary plan and to say that we
shared the view of the Commonwealth Government that this would be
extremely useful. The approach was made on these lines but our
Representatives found that the United States officials hold very
strongly the view that it would not be appropriate or desirable to
discuss the draft employment agreement [3] at the Monetary
Conference. Their reasons are briefly as follows-
(a) Problem of employment is more than a question of monetary
policy and it would be a mistake to create impression that
solution could be found by monetary means alone which they thought
would be inevitable result of including employment policy in
agenda of Monetary Conference.

(b) Such a proposal would enlarge Monetary Conference and destroy
its present design of drafting more detailed proposals on monetary
arrangements.

(c) Political difficulties would arise in United States if
opponents of international monetary arrangements were presented
with opportunity of raising cry of deficit financing which they
assuredly would do if employment policy and monetary proposal were
discussed at same Conference.

3. American officials agree that question of employment policy
properly belongs to Article VII discussions but think that best
approach to problem of employment is to begin with a Monetary
Conference.

4. Meanwhile we note that Australian Government Delegate at I.L.O.

Conference at Philadelphia has put forward proposals reference
International Employment Agreement. [4] We shall be glad to keep
in touch with Commonwealth Government on the matter but it appears
there is no further step we could usefully take at the present
time.