I.L.O. Report 30.

At midnight last night word was received that the State Department
would not consider any specific undertakings, and Miss Perkins has
been obliged to withdraw even the text which had previously been
agreed upon by the State Department officials. [2]

Late yesterday afternoon we were informed all would be well and
there is plenty of evidence that this is the direct result of
intervention by the British Embassy at Washington, particularly as
the arguments the State Department used were their arguments.

Firstly that employment agreement was out of place before other
Article 7 negotiations were completed, and secondly that the
I.L.O. was not the appropriate body to make such recommendation.

The United Kingdom Government emphatically do not want the I.L.O.

to put pressure on them in respect of any policy.

Whatever the reason the fact is the United States State Department
is not prepared to make employment obligation reciprocal to
monetary and commercial obligations at any rate at this stage. As
far as I can make out the matter was not referred to Hull. Even so
I feel that I must make a statement when the Americans submit
their draft which excludes all undertakings explaining once again
the employment approach and stating definitely dependent economies
cannot be expected to enter into obligations which restrict their
freedom of action unless the countries on whom they are dependent
are willing to enter into employment obligations.

I am not making any direct reference to Article 7 but merely
referring to two sides of the obligations in this way. I regret
there is no opportunity to consult you, but I am sure that you
would not wish me to avoid bringing this matter to a head now we
have gone so far. I have failed to obtain the agreement which in
retrospect was perhaps to be expected, but at least we have what
must be regarded as a public confession that the United States is
not prepared to carry out an obligation which we and other
countries must regard as fundamental to economic collaboration. I
have probably placed you in a difficult position with regard to
the monetary conference and other negotiations.

On the other hand I feel that you might be able to turn this to
good account.

The wisdom of raising these matters might be challenged. They were
matters being negotiated by officials between Governments. I do
not see, however, that any other course was open to us except to
be, passive observers particularly as the Americans put up their
proposals. If there had to be a showdown it is better now before
we have to sign other agreements. It would be unreal to argue that
the United States might have accepted the obligations as a result
of secret negotiations though I imagine the United Kingdom and the
United States will put that view having been caught off this mark
publicly as they were with the New Zealand agreement. [3]