Brigden’s destination – Washington – reflected the widening of the war.

During the remaining years of the Second World War the four devoted themselves to trying to shape as best they could the architecture of post-war international economic arrangements. In particular, they sought an international agreement to promote full-employment in the post-war period.

The immediate occasion of this struggle lay in the seemingly arcane matter of Article VII of the ‘Mutual Aid Agreement’. This agreement amounted to a commitment by the United States to assist other allied powers economically. The United States was determined that this aid be conditional on the beneficiary country removing discrimination against its imports in the post-war period. The substance of Article VII was the ‘consideration’, whereby Britain pledged itself to support the elimination of impediments to world trade in return for American military aid through the process of Lend-Lease. The Empire Preferences agreed at Ottawa in 1932 appeared to be the most irksome to the Americans. Keynes had spent many months in the United States during the second half of 1941 negotiating with his American counterparts on the conditions that Britain and other allied countries would have to meet in return for Lend-Lease.

Late in 1941 the Inter-departmental Committee on Economic Relations (the ICER) was established to formulate an Australian response to the American conditions. The F&E economists, under Giblin’s direction, concluded that Australia should support the American proposals, since the alternative to international economic cooperation – comprehensive restrictions on the international flow of goods, services and capital – would constitute a greater threat to Australia’s post-war prosperity than the non-discriminatory, multilateral approach that was foreshadowed in Article VII. This was the position adopted by the ICER in its recommendations to the government early in 1942.

By the middle of 1942, detailed work had commenced to identify what the signing of Article VII might mean for Australia. Again, the F&E took the initiative. And once more it was Giblin who commenced discussion. He prepared recommendations that were distributed to ministers in August.

The essence of Giblin’s report was a description of the difficulties associated with reconciling internal and external balance, when domestic policy was directed at maintaining high levels of aggregate demand. At the same time Australia was expected to fulfil its commitments in relation to Article VII. These commitments called for the dismantling of the Empire trade preferences and a general relaxation in trade, capital and exchange controls. Were Australia to adopt unilaterally a policy of full employment, imports would rise as domestic demand expanded, and exports would decline as local costs rose and resources flowed out of export industries into those catering to domestic demand. Consequently, Australia’s international economic policy should be to promote the full employment objective amongst the major world powers, above all, the United States. If countries such as the United States failed to pursue expansionary domestic policies, then Australia would have a good case for the adoption of restrictive international policies, such as import and exchange controls and exchange rate adjustment, as a means to preserve full employment at home.

Giblin’s report proposed that nations should enter into international agreements committing them to full employment. The agreements were to contain specific targets in relation to employment and unemployment, and penalties (import controls, exchange controls, devaluation, and the like) were to be imposed if the commitments were not met. Integral to these recommendations was the argument, devised by Firth and taken up by Giblin, Coombs and Melville, that the welfare gain arising from free trade was likely to be minor compared with the benefits that would arise from full employment. More especially, and in contrast to the view adopted by American officials, the report highlighted the claim that it would be difficult to achieve free trade unless domestic full employment was maintained (the American view, in contrast, was the exact reverse, that free trade would lead to full employment).^[50]

Giblin, strongly supported by Melville and Coombs, was responsible for formulating the ‘positive approach’, or the ‘full employment approach’. In a lecture he gave in mid-1943, Giblin set out the basis of the ‘positive approach’ as follows:

The ‘positive approach’ was clearly aimed at the United States, the most powerful economy in the world. If Australia could induce the Americans to maintain full employment in their domestic economy, there might be a good chance of avoiding an economic crisis of the kind experienced in the early 1930s. In his Report on economic conditions in the United Kingdom, United States and Canada to the government following his visit to these countries in 1944–45, Copland emphasised this point, declaring that the:

Australian delegates to all of the major international conferences from 1943 onwards sought to have commitments to full employment inserted in international agreements.^[51]

Roland Wilson had attended, as the sole Australian representative, the first international conference called to discuss post-war economic planning.^[52] This was a conference of officials from the British Commonwealth and India held in London in October and November 1942. Wilson was expressly instructed by Curtin and Chifley not to raise the ‘positive approach’, on the grounds that it had not yet been approved by ministers. But it is possible that he raised the full employment approach unofficially with Keynes, who had taken him to Cambridge during the conference for a ceremony at the Marshall Library to mark the centenary of Alfred Marshall’s birth. Giblin had briefed Keynes on Wilson: he was ‘the man who has the most complete confidence of Chifley and Curtin’ (KCLA LFG 3 October 1942).^[53] He added: ‘Wilson, I should say, on first contact is inwardly nervous, and apt to be frivolous or flippant, defensively’. Keynes was to write later to Giblin in glowing terms about Wilson’s performance at the conference, saying that he ‘took a prominent, indeed a leading part through all the discussions and played a major role in them with the greatest success. We had a great gathering of Whitehall officials, who came to feel the greatest respect for both his wisdom and for his pertinacity’ (quoted in Cornish 2002, p. 24).

Wilson was fortunate to survive the return journey. ‘Dr Wilson spent some time sitting on a reef off the coast of Fiji, clutching his dispatch case and his documents’. One engine of his plane ‘had caught fire and the aircraft had landed rather hazardously in shallow water on the reef, where the offending engine immediately dropped off’ (Hasluck 1954, p. 144).

He eventually arrived in Sydney feeling sceptical about the possibility of the United States endorsing an international treaty that would tie its hands in relation to domestic economic policy. He considered, correctly as it turned out, that it was most unlikely that the United States would ever agree to surrender its sovereignty in this way. Even if the United States Government were persuaded to do so, he doubted that any agreement of this nature would be ratified by the United States Senate. Wilson reported to the F&E that, while the Atlantic Charter and Article VII entailed general commitments to expansionary economic policies after the war, he very much doubted that the United States would sign an agreement that bound itself to particular domestic policies. Giblin, Melville and Coombs were more optimistic.^[54]

The first international arena in which the ‘positive approach’ was aired was the Food and Agricultural Conference at Hot Springs in June 1943 (Hasluck 1980, p. 9). This conference was a somewhat Wavian affair. Its provenance was mysterious, and seemingly lay in the fact that President Roosevelt ‘was anxious to have a conference although he found it hard to know what to have a conference about’ (Brigden 1948). The topic of food was chosen as suitably uncontroversial. 600 delegates duly arrived at Hot Springs, ‘a luxurious spa on the border of West Virginia’, and were surrounded by 200 military police. The Ethiopian delegate came bearing three boxes of gold. Iraq was represented by a ‘judge’ from Utah.

The Australian delegates were Brigden and Coombs. (‘No delegate excelled Coombs in exposition of the practical’, Brigden reported). The peg on which to hang their advocacy of the full-employment approach centred on discussions over the future International Monetary Fund (IMF). Brigden pushed the Australian position that a pledge to maintain full employment be incorporated into the Fund’s articles.

But the climax of the ‘full employment approach’ came not with the creation of the IMF at Bretton Woods but with the establishment of the United Nations at San Francisco. In long-running infighting at San Francisco in 1945 the delegates finally agreed to insert a ‘pledge’ to ‘joint action’ to achieve ‘full-employment’ into the UN’s Charter. In repeated sub-committee sorties Wilson and Brigden maintained the drive for the inclusion of the full-employment pledge in the face of the rearguard action by the United States delegation.

That both Wilson and Brigden were at San Francisco arose from the fact that the Australian delegation was a ‘freak show of a calf with two heads’ (Hasluck 1980, p. 191). It had two principals: the Deputy Prime Minister, Frank Forde, and the External Affairs Minister, H. V. Evatt. Evatt took a collection of negotiators/advisors from his Department, including Brigden. Forde declared to Curtin that he needed ‘a first class brain’ at San Francisco, and Wilson was supplied (Hasluck 1980, p. 153). The double-headed delegation stayed at the Sir Francis Drake Hotel: Forde’s half on the 10th floor and Evatt’s on the 17th. (Hasluck 1980, p. 153). They were there for the next 10 weeks, working 80 hours a week.

Before the conference, Chifley as Treasurer had briefed Wilson to be ‘in no doubt’ of the importance of ‘full employment’ in the Charter. In San Francisco, Brigden ‘backed Wilson strongly’ on this (Crisp 1965, p. 8). Brigden argued that ‘the time and circumstances were ripe to push the full-employment approach forward’. Roosevelt’s Fourth Inaugural Address had promoted full employment, and he (Brigden) ‘felt that three years of Australian propaganda in conference after conference had not been without effect’ (Crisp 1965, p. 8).

Wilson proposed the Australian delegation present the drafting committee these words:

Evatt took Wilson’s carefully worded draft and reduced it to a more speech-like phraseology:

Peculiar, unstable, and partly crazed, Evatt was sometimes liked, sometimes hated. But ‘Wilson himself was better equipped to handle a difficult minister than any minister was equipped to handle him. Wilson was quietly the master’ (Hasluck 1980, p. 193). He was indeed ‘the one public servant that could not be stared down by Evatt’ (Hudson 1993, p. 128). Wilson redrafted Evatt’s phrasing as: ‘All members pledge themselves to take separate and joint action and to cooperate with the organisation, and with each other, to achieve these purposes’ (Crisp 1965, p. 14).

But these evolutions deliberately let pass the sticking point - the word ‘pledge’. This word seemed to irk the US delegation. Perhaps its aversion was rooted in the fact that ‘pledge’ - unlike ‘to undertake’ (that is, ‘to take upon oneself’) - can be synonymous with ‘vow’ and ‘oath’.

Whatever the case, the dispute was not treated casually. John Foster Dulles warned Wilson that to insist on a pledge would wreck the charter (Crisp 1965, p. 16). Dulles appeared with Nelson Rockerfeller, the Assistant Secretary of State for Latin America, and gave ‘two speeches with overtones and even explicit statements highly offensive to Australia and not all strictly true. His manner and much of the substance of his speech were overbearing and even offensive in his overweening assertions of American superiority in wisdom and virtue … Wilson maintained perfect control of himself and in a cold, factual comment, once again insisted that the American proposal meant changes of substance’. This same witness recalled that one of his ‘most vivid conference memories is of the swollen, pulsing veins on Roland Wilson’s neck and temple as he strove to maintain composure during Dulles’ intemperate outburst’(Crisp 1965, p. 16).

Dulles had the relevant committee reverse its earlier approval of Wilson’s draft. Wilson refused to recognise the legitimacy of this procedure. Ultimately, it was Wilson’s doggedness that triumphed over Dulles’ bluster. The relevant article finally appeared in the Charter barely different from the one Wilson had drafted on May 22, and with the word ‘pledge’ intact.

The ‘pertinacity’ of Wilson that Keynes had noted in London in 1942 had been discovered by Dulles in 1945.^[55]