House of Representatives
2 July 1920

8th Parliament · 1st Session

Mr. Speaker (Hon. Sir Elliot Johnson) took the chair at 11 a.m., and read prayers.

page 2519




– In view of the high cost of fodder in New South Wales, will the Postmaster-General take into consideration the necessity of granting a fodder allowance to mail contractors in that State for the year 1920?

Postmaster-General · GIPPSLAND, VICTORIA · NAT

– Yes. I willconsider the matter.

Later :


– Has the Postmaster-General yet come to a definite arrangement for the granting of relief to mail contractors for the year 1920? I understand that relief was given up to the end of last year, and that the Department has under consideration the granting of assistance in respect of the current year.


– I informed the honorable member for Hunter (Mr. Charlton) a few minutes ago that I was considering the matter.


– I was not present when that statement was made..

page 2519



– Honorable members are doubtless aware that the New South Wales Government are’ issuing a loan, which, they state, will be free of Commonwealth and State income tax. In this morning’s newspapers a similar announcement is made with regard to a Victorian loan.

Mr Blundell:

– The South Australian Government are also floating a loan which it is said will be free of Commonwealth and State income tax.


– I desire to ask the Acting Treasurer whether, in view of the decision of the High Court in the case of d’Emden v. Pedder, it is competent for any State Government to issue a loan free of Commonwealth income tax?

Mr J H Catts:

– A State Government may undertake to pay the Federal tax on a State loan.


– I am aware of that, but I am anxious to ascertain whether the State Governments can give this assurance in view of the fact that these loans are largely subscribed by persons with big incomes which are subject to the higher rates of taxation. The exemption of such investments from Federal income tax is unfair to the rest of the community.

Minister for the Navy · PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– The position is–

Mr J H Catts:

– Are not Commonwealth loans free of State taxation?

Minister for the Navy · PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– They are, and State loans are free of Federal income tax. I confess that I was not aware of that fact until a few days ago. The question of whether or not incomes so derived are taxable has not yet been decided. It is a constitutional point, and until it has been determined, I cannot say whether they are taxable. Meantime no taxation is being collected in respect of income from State loans.

page 2520



Errorin Printed Report of Commission


– Is the Minister for Home and Territories aware that on page 4 of the printed report of the Royal Commission on the Northern Territory administration the name of an exMinister for Home and Territories (Mr. Glynn) is wrongly mentioned ? I was informed yesterday that the reference was intended to be, not to Mr. Glynn, but to another ex-Minister.

Minister for Home and Territories · GREY, SOUTH AUSTRALIA · NAT

– The report was printed in accordance with the text of the official report submitted, but I have ascertained on inquiry that, as the honorable member states, the name of Mr. Glynn appears in error. An effort is being made to have the error corrected.

page 2520




– Is the Prime Minister aware that Mr. J. B. Ronald presented a petition of grace to His Majesty the King praying for justice in connexion with what is known as the Ronald-Harper case, and was advised that the petition had been sent on to , the Commonwealth Government? Will the Government lay on the table of the House all the correspondence which has passed between them and His Majesty in regard to the Harper case?

Prime Minister · BENDIGO, VICTORIA · NAT

– There has been placed in my hands a newspaper extract stating that Mr. Ronald had approached the Colonial Office and had subsequently been advised to approach His Majesty by way of petition of grace, and that His Majesty had stated that he would communicate his answer, through the GovernorGeneral, to the Commonwealth Government. I am not aware whether His Majesty has done so, but will ascertain from the Governor-General ; and, if there is any correspondence, I shall ask His Excellency whether I may be permitted to lay it on the table of the House.

page 2520




– Will the Minister for Home and Territories state whether any charge or fee is made for the issue of passports to persons desirous of leaving the Commonwealth?


– A fee is charged.

Mr Considine:

– What is the fee?


– As I am always careful to supply accurate answers, I ask the honorable memberto give notice of his question.

page 2520




– I understand that the Acting Treasurer will shortly be delivering his Budget Statement. Will he avail himself of the opportunity to explain to the House exactly what he proposes to do in the way of providing moneys during the current financial year for carrying on the work of building the Federal Capital?

Minister for the Navy · PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I hope to explain what is proposed when the Budget statement is submitted.

page 2520


Minister for the Navy · PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

-(By leave).I had thought of making to-day a short statement regarding the new Commonwealth loan, but since the Prime Minister is, I understand, to lay on the table this morning the cable messages - which have been edited - that passed between the exTreasurer (Mr. Watt) and himself and proposes to deal with that very important matter, I fear that, from the point of view of publicity, it would be prejudicial to the loan itself if I were on the same day to make a statement with regard to it. I was wondering whether the House, in the peculiar circumstances in which we find ourselves, would think me wanting in my duty to it if, instead of making the statement to-day - and, after all, it will be only a short one - I were to publish it in the press on Monday next

Mr Tudor:

– Will the new loan differ in respect of the rate of interest and other conditions from any other which has been issued in the Commonwealth?

Minister for the Navy · PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Yes. The only question is whether I should make this statement side by side with the othervery important matter to which I have referred. I do not think it would be fair to the loan itself to do that. I should like the statement to go out when the public mind will not be occupied by other important matters.

Mr Tudor:

– The right honorable gentleman might state that he proposes to issue the loan on a certain date, and intimate the date on. which subscriptions will close.

Minister for the Navy · PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I am only anxious that the House should hot regard me as treating it with discourtesy by publishing the statement in the press before it is made to the House.

Mr Fenton:

– It is only fair to the House that the statement should first be made here.

Minister for the Navy · PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– If the House insists upon it, I shall make the statement to the House.

page 2521




– There are many wild rumours as to the mishap which occurred in connexion with the launching of the Commonwealth steamer Emita at Williamstown yesterday, and as to the damage done. Will the Minister in charge of Ship Construction make a statement as to the responsibility for the accident, and the extent of the damage, and so allay any public fears on the subject?


– I am not in a position at the present moment to make a statement. I have asked for a report, and may have it later in the day.

page 2521



– With reference to the proposal to lay on the table the cable correspondence between Mr. Watt and the Government, I understand that the Leader of the Opposition (Mr. Tudor) and the Leader of the Country party (Mr. McWilliams) have, with the Prime Minister, edited the correspondence, and that all are satisfied that, as edited, it should be published, and that Mr. Watt would not in any way be disadvantaged by its publication.

Mr McWilliams:

– Hear, hear.


– If the various parties are satisfied, I wish to ask whether there is any necessity to publish this correspondence until Mr. Watt has arrived in the Commonwealth?

Mr J H Catts:

– How can all parties be satisfied when we know nothing about it?


– I cannot deal with this matter by way of answer to a question, but may I say that I have my rights just as have other men ? I think it is only fair to say that as soon as Mr. Watt resigned it was assumed, as usual, by the press of this country, or of this State, at any rate, that I was in the wrong. I was not only blamed for being the cause of Mr. Watt’s resignation, but for not immediately accepting it, and for refraining from making a statement on the whole matter. . As honorable members know, I made a statement after consulting my colleagues, as any sensible man would have done in the circumstances, and that statement, to put it mildly, upset my critics more than a little. Of course, they withdrew nothing that they had said about me, but they suggested that they would wait until Mr. Watt came back before they said anything more. There the matter would have rested but for Mr. Watt himself, who suggested the unusual course of laying the correspondence between us on the table. If I had declined to do this, is it not obvious that my refusal would have been construed as an admission by me that the course suggested by Mr. Watt would prove him to be in the right and me in the wrong? In the circumstances, therefore, I have followed Mr. Watt’s suggestion. This House, and the people of the country are to act as a jury to try the case, and judge who is in the wrong. I have my reputation to consider, just as Mr. Watt has his. Mr. Watt has been my colleague, and I have never said, and do not propose to say, one word against him. He has, however, resigned, and I must show that his resignation was due to no act or fault of mine. The honorable member for Capricornia (Mr. Higgs) said that as the Leader of the Opposition and the Leader of the Country party are satisfied, after editing the cables that passed between Mr. Watt and the Government, Mr. Watt will be placed at no disadvantage by their publication, and that we should, therefore, not publish them at all. But the honorable member is under a misapprehension as to what the position is. All that those who edited the cables have done has been to excise those parts which have really no bearing on the point at issue, but are matters which, in the public interest, ought not to be published. They have not attempted to judge the merits of the case. Everything that relates to the resignation of Mr. Watt will be laid on the table. I am now appealing as a private member of the House, and I say to my fellow members that they have a right to hear me, because I have been assailed.

Mr Tudor:

– Let the honorable gentleman ask leave to make a statement, and do it now.


– I should not have taken the course of tabling the cablegrams if it had not been that Mr. Watt himself suggested the adoption of that course. He himself suggested it, and I do what he has asked, because if I did not do so it would be said that the cablegrams proved Mr. Watt’s case. It seems to me, therefore, that I have no option but to adopt Mr. Watt’s suggestion.


– Perhaps the right honorable gentleman had better obtain leave to make his statement at this stage.

Prime Minister and Attorney-General · Bendigo · NAT

– (By leave). - As I have said, the course proposed to be followed in connexion with this matter is a most unusual one. So far as I know, it is without precedent for a Government to table the secret correspondence that has passed between its various members in relation to public matters. But then the circumstances are unprecedented, too. Let me remind honorable members for a moment of what the position is. It is grave in the extreme. My late colleague went Home to deal with matters - to quote his own words - “of life and death.” The financial circumstances of the Commonwealth at present are most embarrassed. I need not dwell on them for they are well known. I refer honorable members to the statements made by the ex-Treasurer in Parliament and outside. He went Home because it was considered impossible to grapple with the situation from a distance. A man on the spot was called for, and he, by virtue of his position as Treasurer of the Commonwealth, was by all sections of the House considered the proper man to go to London to deal with it. The most important and pressing object of the mission related to finance.

In addition, there were other matters to be dealt with, not less important, although, perhaps, less urgent. Amongst these were mattersthat arise out of the Treaty of Peace - Mandates, League of Nations, and War Indemnity. There was also the re-organization of the High Commissioner’s Office in London, the question of a trade representation in England and elsewhere, and the question of immigration.

After the right honorable gentleman’s departurethe Allied Powers decided to hold two Conferences of the first importance, one at Brussels to deal with finance, and the other at Spa to consider, and, if necessary, to revise, the Versailles Treaty. Mr. Watt was appointed the sole representative of Australia to both these Conferences.

MELBOURNE, VICTORIA · ALP; FLP from 1931; ALP from 1936

– And deserted us.


– Yes; to-day we have neither any representative on these vitally important Conferences, nor any representative in London to deal with finance. Honorable members can readily appreciate what this involves. For example, the day before yesterday the time expired when it became necessary to find a huge sum of money in London. We had no one there to carry on the difficult and delicate . negotiations on the London money market, or to put our case to the British Government. The Brussels Finance Conference is coming on. We shall be unrepresented. The Spa Conference, at which the question of the war indemnity will be raised and important revisions of the Treaty of Versailles may be made, is shortly to be held. Australia will be without a representative to uphold her vital interests.

In the circumstances, therefore, the resignation of Mr. Watt creates a situation very different from that which would have arisen had he or I or any of my colleagues resigned in Australia. If a Minister resigns while in Australia he can be replaced. But by no effort is it possible for us to place a man 12,000 miles away in sufficient time to take up the threads of the mission with which Mr. Watt was intrusted. These considerations then, together with the request of Mr. Watt himself that the cables that passed between us should be published, are the reasons, or excuse, if honorable members prefer it, why I take this unprecedented course.

The cables that passed between Mr. Watt and myself were very numerous, and, in some cases, very lengthy. The whole of the file which the Leader of the Opposition (Mr. Tudor) asked yesterday should be published was laid before a Committee consisting of that honorable gentleman, the Leader of the Country party (Mr. McWilliams), and myself, and the cables were edited. There was no difference of opinion between us as to what should be excised. By general consent certain things were left out. I give the House and the country the assurance on behalf of myself, the Leader of the Opposition, and the Leader of the Country party, that nothing has been left out the omission of which could in any way affect Mr. Watt to his disadvantage or prejudice, and that all things left out have been omitted only in the public interests of the Commonwealth. I think it only proper to say further that Mr. Shepherd, the Secretary to the Prime Minister’s Department, who has charge of all these files, and through whose hands all these telegrams go and come, and who ciphers and deciphers them, was asked by me in the presence of the honorable member for Franklin (Mr. McWilliams) and the honorable member for Yarra (Mr. Tudor) whether this was the complete file, and he said that, with the exception of two telegrams sent by the Department of the Treasury, atMr. Watt’s request, to supply him with particulars about financial affairs in that Department, this was a complete file. The cablegrams referred to, I understand, were purely departmental, and have nothing whatever to do with the matter with which I am dealing. I have not got them here, and have not seen them, but I am prepared to show them to the honorable members to whom I have referred.

Minister for the Navy · PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– They were simply giving Mr. Watt information for which he asked.


– Just so; but I am prepared to show them to the honorable members for Yarra and Franklin, and if they think that there is anything in them that concerns this matter, I shall have them laid on the table. With this pre amble, I will, without further ado, read the correspondence: - [Radiogram sent by the Prime Minister to Mr. Watt, passenger per Konigin Luise, 25th March. 1919.]

All well. Gratuity Bill being discussed. Tariff introduced. Kindest regards. [Telegram received by the Prime Minister from Mr. Watt, Konigin Luise, Perth, dated 26th March.]

Glad know things going well. Trip slow, but so far enjoyable. Feeling better. Best wishes self and colleagues. [Radio message sent to Mr. Watt, Konigin Luise, by the Prime Minister, dated 31st March.]

Cabled High Commissioner to-day approving extension to 31st May of employment Voss, Acting Australian Commercial Agent, Paris. Glad if you will look into matter and favour with your views.

Hughes. [Radio message received by the Prime Minister from Mr. Watt, s.s. Konigin Luise, dated 31st March.]

Have been expecting a telegram giving news of Australia, but (?except) for your telegram March 26th nothing reached me. Please instruct Shepherd to send me cables sent High Commissioner, and also report the result New South Wales elections, also any cables from Secretary of State which you have received since I left with reference to Mandate, League of Nations, &c. Everything well with me. Hope that same in your case. Kind regards to yourself and Cabinet. [Radio message received by the Prime Minister from Mr. Watt, s.s. Konigin Luise, dated Colombo, 9th April.]

Urgent. Disappointed that you have not, according to promise and my last telegram request, sent me latest confidential information reference Peace Treaty, League of Nations, and Mandate. Unless I receive advice as to developments these questions, it will not be possible for me to effect anything, and I shall not task (attempt the task?). Three telegrams received from you in overthree weeks only’ deal with trade representation France and local Australian affairs. Regards. [Cablegram sent by the Prime Minister to Mr. Watt, s.s. Konigin Luise, Suez, on 15th April.]

Settlement Barrier strike expected. Wales Labour Government formed - Storey, Premier. Parliament resumed yesterday. Hughes stated Government’s arbitration policy, also intimated would ask House express opinion paying travelling expenses Ministers. High Court case against Wool Committee and Prime Minister, Wool Sliping Company, dismissed. Thousand persons congregated Parliament House yesterday urging 50 per cent. cash war gratuity. Hughes refused. Queensland agreed amalgamate its Savings Bank with Commonwealth

Bank. Repatriation Bill introduced Representatives. Gratuity Bill Senate. Mr. Watt’s family all well. Mr. Reid’s family all well.

Hughes. [Extract from cablegram sent by the Prime Minister to Mr. Watt, s.s. Konigin Luise, Suez, on 16th April.]

Private. Your telegrams. Regret disappointing you, but as Shepherd sent you news cables, and I have had no further Mandate, Treaty, League of Nations telegrams since you left, I thought it best leave you enjoy your all-too-short rest in peace. I will, however, prepare and send you before arrival in London telegram setting out position, as I see it, on all these and other matters. Meantime, I hope you will not worry, for you have hard work . ahead. hughes. [Radio message received by the Prime Minister from Mr. Watt, s.s. Konigin Luise, dated Aden, 18th April.]

Cannot understand why you have not replied to my telegram April 9th. It is essential that I should receive, as you promised, prompt and full particulars concerning all communications between Imperial Government and you. Be good enough to inform me whether you intend do this.

Watt. [Cablegram sent by the Prime Minister to Mr. Watt, s.s. Konigin Luise, Suez, on 21st April.]

Among documents supplied to you by Shepherd when leaving Australia were telegram from Secretary of State for the Colonies, February 19th and March 6th, re International Conference to study financial crisis. Before departure, you minuted Treasury file to the effect that if Conference held during your stay Britain, you would attend on the receipt of telegram from me.

Cable now received from Secretary-General, League Nations, through Secretary of State, dated April 17th, stating Conference will be held Brussels about end May. Countries invited to send delegates include all British Dominions. United States also invited to send representative or be associated with work of Conference. Australia invited send not more than three delegates conversant public finance and banking, as well as with general economic questions. Council of League will nominate President of Conference and supply necessary personnel for Secretariat. - Exact date of meeting will be announced by SecretaryGeneral. In order to facilitate preparations for Conference, Council suggest that Commonwealth Government forward to SecretaryGeneral without delay any suggestions it may desire to submit to Conference for dealing with present financial difficulties, together with statement showing any action already taken to deal with situation.Proposed that general expenses in connexion with organization of Conference be met by League, and expenses and salaries of delegations by respective Governments.

Am advising League, through Secretary of State, that you will be Commonwealth Government’s sole representative at Conference. Cable me any action you think fit regarding submission to Secretary-General of suggestions referred to above.

Hughes. [Extract from cablegram received by the Prime Minister from Mr. Watt, s.s. Koningin Luise, dated Port Said, 26th April.]

Urgent. Thanks your telegrams April 8th, 21st, received Suez. Will await your telegram on Treaty matters. I disembark Naples next Saturday. You had better send it to High Commissioner, London. Please tell me same time if anything new re renewal Anglo- Japanese Treaty.

Will attend Finance Conference, Brussels. Do not think it advisable forward any suggestion to Secretary-General.

Glad to know things going well. Kindest regards, best wishes to you and brother Ministers.

Watt. [Extract from cablegram sent by the Prime Minister to Mr. Watt, s.s. Konigin Luise, Naples, on 30th April.]

Suggest that you take full advantage opportunity see Continent now as in all probability you will not have chance later. Fewdays’ delay reaching London should not cause any serious difficulty,and will give your health better chance.

Am sending cable London for you advising fully latest position re Brussels Financial Conference, Mandates, Anglo-Japanese Treaty, reopening of reparation question, &c.

Hughes. [Cablegram received by the Prime Minister from Mr. Watt, dated Naples, 2nd. May.]

Thanks your telegram 30th April. Expect arrive London 11th. Please telegraph me result Immigration Conference. All well. Regards to colleagues and yourself.

Watt. [Cablegram sent by the Prime Minister to Mr. Watt, London, on 4th May.]

As promised in my telegram to you at Naples, am giving you latest position following questions: -

Finance Conference, Brussels. - Secretary General, League Nations, telegraphed through Colonial Office, 22nd April, asking that answers be furnished not later than May 1st to series of questions relating to -

  1. Budget and Estimates for present financial year, particularly as to direct and indirect taxes, levies on capital, loans, recurring and nonrecurring expenditure, and debt service.
  2. National debt December 31st, 1918 and 1919, viz. - Domestic funded and unfunded, and foreign.
  3. Details of foreign trade.
  4. Statistics re gold and silver holding, circulation of home currency issues and bank notes.
  5. Laws, &c, regulating operations for foreign exchange.

Reply prepared by Treasury Department was sent yesterday, and Colonial Office has been asked to furnish you with copies of cables exchanged immediately you arrive London.

Mandate. - Only communication from British Government re Mandate since your departure is telegram from Secretary of State, March 18th, received here too late to catch you Fremantle, giving text of draft convention relating to mandate for German New Guinea and adjacent islands. Proposed provisions of mandate as therein set out are practically same, except in verbiage, as text shown on pages 2 and 3 of statement .prepared for you by Shepherd headed “ Mandates ‘for former German Pacific Possessions,” but the preamble is considerably amplified. Mandate not yet officially confirmed.

On April 30th I sent personal cable to Lloyd George strongly protesting against delay in issue mandate. 1 pointed out’ that nearly twelve months ‘ have elapsed since Treaty was signed, providing in plain terms, not only for these mandates, but for conditions under which each class to be exercised; that mandates for South Pacific Islands are specifically mentioned as being in class over which mandatory has same power make laws as over own territory, and that it was definitely agreed when this clause in Treaty ‘ was being discussed that Australia was to have mandate and have it on these terms. I added that Supreme Council subsequently conferred this mandate upon Australia on these terms, and that attitude of Japan, who alone objects to giving effect to provisions of Treaty and commitments of Supreme Council, was as well known when Treaty signed as it can be now,

And that Peace Conference decided against Japan. 1 insisted that Treaty must be given effect to, and urged that mandate be officially given to Australia without further delay.

Anglo-Japanese Alliance. - Sent cable Secretary of State, April 22nd, asking to he informed whether any negotiations or conversations had taken place re modification, termination, or extension of alliance, and stating Commonwealth Government desires opportunity discussing alliance, not only as it may affect questions now pending between Australia and Japan, but also as affecting general situation in Far East and, in particular, its bearing upon racial equality amendment of covenant. No reply yet received.

Reparation and Indemnity Question. - I sent personal telegram to Lloyd George, April 29th, stating it was reported in press that San Remo Conference of Allied Prime Ministers had decided re-open reparation question and contemplated reducing amount Germany has to pay under Treaty (o) by May, 1921, (5) subsequently. I stated I did not know what truth there was in these reports but wished, on behalf of Commonwealth, to protest most emphatically against any amendments of Treaty either affecting reparation or other important clauses, unless as result of duly summoned Conference at which Australia represented and that, in any case, Commonwealth could not agree to any reduction of amount of indemnity agreed upon in Versailles Treaty, this applying both to Germany’s payment by May, 1921, and subsequently.

I emphasized that it was not competent or proper for any Conference of Prime Ministers of Great . Powers to modify major terms .of solemn Treaty agreed upon and signed by all Powers at Versailles arid subsequently ratified by Parliaments of signatories and that this applied whether decisions of such Conference subsequently submitted to other signatories of Versailles Treaty for approval or not.

I reminded Lloyd George that in the case of the Conference preceding Armistice in 1918 Dominions were notified and asked to approve what was done, when neither disapproval nor protest of any avail, and I expressed the opinion that unless Versailles Treaty to be a scrap of paper it could only be modified as provided for in Treaty itself or by same representative Conference that made the Treaty.

Hughes.’ [Cablegram sent by the Prime Minister to Mr. Watt, London, on 9th May, 1920.]

Congratulations safe arrival. Hope both well. Please do not see Chancellor or Secretary of State for Colonies re finance or wool until receipt cable from me. Have been very unwell.

Hughes. [Extract from cablegram sent by the Prime Minister to Mr. Watt, London, on 11th May, 1920.]

Personal and Secret. - Finance: Wool.-* Mature reflection on financial position only confirm conclusion we both arrived at before your departure. Wool is key to solution. Very much depends upon way in which matter is put to British authorities. Am convinced that way we agreed upon is one to follow. Position is that Commonwealth Government owes British Government for war expenditure, say, £40,000,000. Britain is strongly pressing for payment of 8$ million pounds at once, and for assurances re balance. That is one side. Now for the other: British Government owes Commonwealth Government- not owes woolgrowers, mark, but owes Commonwealth Governmenthalf profits all civilian wool. What this amounts to we cannot ascertain, although we have pressed for information repeatedly, but in my opinion our share is not less than £40,000,000.

The position being thus stated suggestscourses to be followed, and I know no one so. well fitted to do so with complete success as you. You are Treasurer: You come home naturally very anxious to adjust our financial relations and being quite unable to understand reasons for Chancellor’s attitude. You cannot understand why British authorities have not long ago adjusted accounts. While admitting complexity and magnitude wool transactions, you cannot accept explanation that it has been impossible to pay over to us what is ours or even to’ present statement of accounts. And as a step precedent to all discussion upon finance, settlement of our half profits on wool must be made.

Honorable members will understand that the above is what I am suggesting that Mr. Watt, should say. Now I proceed to tell Mr.Watt of my conference with wool men in Sydney: -

As upon the satisfactory sale of the new wool clip depends to a very large extent our immediate future financial resources, and anticipating the failure of the Wool Committee’s scheme, I called a conference of leading men in Sydney last week, and put before them some facts relating to finance- Commonwealth and private - and the sale of the next clip. It was a small, but most representative, gathering. I put two schemes before them- one dealing with finance, the other relating to sale of new clip. I told them in strictest confidence of the purport of your mission, upon the success of which I said financial position of Commonwealth depended. I told them that the Commonwealth must have money. I explained effect the huge excess of exportsover imports must inevitably have upon Australian business.

Of course, British Government is not in any way concerned with all this. Under the agreement, Britain must divide profits with Commonwealth Government. What the Commonwealth does with these profits is between the growers and the Commonwealth Government, and has nothing at all to do with Britain. The great thing is for us to get them at once. That is your job.

Following is outline of. my proposals laid before meeting of wool-growers in Sydney: - “ How great the accumulation of Australian money in England is, and is likely to be during next twelve months, can be gathered from the following figures: -

I interrupt this statement of my proposals to the meeting in Sydney to emphasize that I underestimated that lastmentioned total by £10,000,000 deliberately in order to avoid exaggeration. My outlined proposition proceeds -

Of this, there may be, say, £40,000,000 to be paid in England for interest on loan money, public and private.

It thus appears that the accumulation of money in London by June, 1921, will have amounted to £135,000,000 over the amount of exchange to be provided by imports of the same volume as at present.

It is necessary that I should mention that, side by side with this credit on private account, there is an indebtedness to the British Government by the Commonwealth Government which has not been funded or in any way provided for, of some £40,000,000.

If Australian wool can be procured only in Australia, it will force British banks provide necessary credit, and ensure that sufficient buying ‘power is centred in Australia to lift 1920-1921 clip at present world’s parity ruling in London.

Further Government interference in the course of business is undesirable.

I want to help and not to interfere.–

Will honorable members please understand that this is still the precis of my remarks to the Sydney Conference, as I transmitted them to Mr. Watt, in order that he might be fully informed of everything that took place. And I continue, addressing the Conference, as follows: -

I desire to suggest for your consideration a scheme which calls merely for a little co-operation between growers and others interested, and for some negotiations with the British Government. These negotiations I am prepared to undertake if required, as I feel sure that the action contemplated will be in the best interest, not only of Australian wool-growers, but of Australia generally. This scheme calls for no further legislative nor administrative action by the Government. The present Proclamations with regard to the export of wool would simply remain in force until November 1st next. The rest of the scheme depends merely upon agreement between growers and Australian brokers to defer opening sales in Australia for some six weeks or so, and negotiation with the British Government to induce it to suspend sales in London while 1920-1921 clip is being sold in Australia.

As I have told you, Government of Australia must raise at least £40,000,000. This money must be raised.

In the scheme suggested,I have provided machinery both for this and for payment to growers of their share of profits in Australia in the only way that seems to me to be a practicable one.

In accepting Australian bonds for their share of profits, wool-growers will not be making any real sacrifice. I fully appreciate that many graziers are having bad time with drought, an.d they have my deepest sympathy. I sincerely hope this trouble will soon pass away, but I say that, apart from the drought, wool-growers are in unique position. No other section of community will have anything like sum of £30,000,000 payable to it in London. No other section has before it possibility of realizing during next year even fraction of amount that wool-growers are likely to get for new wool clip if it is handled properly.

Whatever wool-growers as a body do voluntarily, they will not be called upon to do again in connexion with any call that may have to be made in same direction upon general community.

In order to refresh your memory, I refer you to original telegrams from Secretary of State for the Colonies, 14th November, 1916, which preceded wool agreement, and upon which agreement is founded. You will observe from that telegram, copy of which you have with you, that agreement was -

Result of negotiations by me when in Britain in 1916 (see third paragraph) ; and

that half profits are between the two Governments (see third last paragraph), viz.: - “In the event of profit being realized from the sale of any surplus which might remain over after military requirements of British and Allied Armies have been satisfied, His Majesty’s Government would propose, after payment of all expenses, to share such profit with the Governments of Australia and New Zealand.”

Hope you arc quite well. I am . still most unwell.

Hughes. [Extract from cablegram sent by the Prime Minister’s Department to the High Commissioner for Australia, London (for Mr. Watt’s information) on 12th May, 1920.]

Ballot wool control resulted rejection scheme. Favour 74.88 per cent.; against 25.12. Wool Council consider total votes polled not warrant proceed scheme. Prime Minister has submitted new scheme disposal next year’s clip.

That is telling Mr. Watt again of this development. [Cablegram received by the Prime Minister from Mr. Watt, dated London, 12th May, 1920.]

Thanks your telegram 9th May. All well here. Regret learn your indisposition. Hope you have now recovered. Cordial regards you and all Ministers. Can wait two or three days before seeing Secretary of State for the Colonies and Chancellor, but it will be very embarrassing to postpone longer.

Watt. [Cablegram received by the Prime Minister from Mr. Watt, dated London, 13th May, 1920.]

Secret. Have just received your personal telegram of the 11th May.

Schemes outlined will have my early consideration, and I shall advise you my views tomorrow or Friday. Meantime I must say I am astonished that you should have expounded a scheme to outsiders, portion of which vitally affects my mission, without prior consultation with me. Times to-day publishes telegram from Sydney, dated 11th’ May, outlining whole ( ?) scheme) which, it says, has caused consternation in wool circles, and this publicity a gravely embarrassing fact. You must see that it is impossible run business on these lines.

Hope you are better. My reception here all that could be desired. All well.

Watt. [Extract from cablegram sent by the Prime Minister to Mr. Watt, London, on 14th May, 1920.]

Wool. Secretary of State for Colonics in telegram dated 11th May, in reply to mine 19th March, copy of which you have, states British Government hopes shortly after your arrival satisfy you that it has no respect departed from stipulations of wool purchase contract and is ready now as ever to agree to any arrangements proposed by us within terms of contract which can be shown to be practically possible. ‘ Secretary of State adds that it is not true that British Government has up to present had immediate use large profits on sales wool since Armistice, and says no cash surpluses had accrued up to two months ago. Minister of Munitions, he says, is ready to discuss with you time and manner of placing at our disposal proportion of share of such cash surpluses as now arc beginning to result from sales wool.

That is my precis of the cable from the Secretary of State. My comment on it is -

This, of course, is not correct. I do not want any more trouble, but we must have the money, and at once.

Hughes. [Cablegram received by the Prime Minister from Mr. Watt, London, 16th May, 1920.]

Secret. In conversation with Secretary of State for Colonies yesterday, he politely introduced fact that he had not been officially advised that I would represent Australia in Imperial Cabinet. I have no complaint about the nature or manner of suggestion, but would be well if you would send me at once telegram that I can show him giving me Australian’ Government’s full authority to sit in Imperial Cabinet. All well.


I now come to two cablegrams - one to Mr. Watt and the other to the Secretary of State.. Mr. Watt has made the complaint that the cable sent to him differed in form and substance from that which I forwarded to the Secretary of State. I do not think I am’ justified in laying the official cable to the Secretary of State on the table, but I may inform honorable members that the honorable member for Yarra (Mr. Tudor) and the honorable member for Franklin (Mr. McWilliams) have seen the two cablegrams. They, as well as all my colleagues in the Cabinet, have compared them, and I think I am authorized to say, on their behalf, that Mr. Watt’s complaint is unfounded, and that, both in form and substance, the cable sent to him was identical with that sent to the Secretary of State. Although I do not propose to lay the official cablegram to the Secretary of State on the table of the House, I shall be very glad to show it to honorable members privately. There is no reason why I should not do so, but, being an official cable to the Secretary of State, and marked “ most secret,” I cannot lay it on the table without his permission. It contains nothing that is not in the cable which I shall read. I give honorable members my assurance on this point, but, if they so desire, they may confirm my statement by perusing the official cable. The two messages were sent on the same day - [Cablegram sent by the Prime Minister to Mr. Watt, London, dated 20th May, 1920.]

Secret. Wool Scheme. Your telegram 13th May re mine 11th May. First suggestion of scheme came from section of wool trade while you were on the water. I worked up whole thing, and subsequently, as already advised you, placed complete scheme privately before conference of leading men in Sydney on 27th April. You will recognise that, in the circumstances, it was impossible for me to have advised you earlier than I did, and but for the premature publication of scheme, the embarrassment of which you complain would not have resulted.

Wool-growers having summoned special conference to consider proposals, met me to-day in order to convey their views. After lengthy discussion, they adopted my proposals in regard to new clip, and authorized me to conduct negotiations with the British Government accordingly. I have, therefore, despatched to the Secretary ofState for the Colonics the following telegram: - “Wool. Sale of 1920-21 clip. Conference of growers, after most careful consideration of whole question, have adopted following proposals for marketing new clip, and have asked me to request the co-operation of British Government in order to give effect to them: -

  1. No export of new 1920-21 clip from Australia prior to 1st October, 1920.
  2. No auction sales of Australian wool in London after 30th September, 1920, until 1st May, 1921.
  3. Earliest notification of this to be given, so that buyers will know that Australian wool will be procurable only in Australia between the dates mentioned.
  4. No auction sales of wool to be held in Australia until 1st October next.

From this date on, Australian wool-brokers would auction 1920- 21 clip on owners’ account and proceed with the auctions without interruption up to 1st May, 1921, from which date onwards normal conditions could prevail, viz., British Government would resume selling its left-over wool, and auctions could be held concurrently in Australia of any small quantity that might then be left of the 1920-21 clip.

I shall beglad to have assurance that His Majesty’s Government will so arrange matters as to give effect to above proposals by suspending sales in Britain from 1st October, 1920, until 1st May, 1921. Matter is, of course, one of great urgency, and a very early replyis requested.”

Referring to Mr.Watt, I stated -

I shall be glad if you will strongly support proposals and urge British Government to suspend its sales, in order that the scheme may be given effect to.

For your own information, I may say Conference was most representative one, and composed of representatives of all States of Commonwealth, and it was practically unanimous in its support of the scheme.

I have also informed Secretary of State that specially summoned joint conference of Australian Wool-growers Council and National Council of Wool Selling Brokers of Australia yesterday requested me to urge that a definite statement be made without delay as to the amount due to Commonwealth on behalf of the growers, in connexion with profits on wool sold for civilian purposes to date, and that this should be paid forthwith.

Hughes. [Cablegram sent by the Prime Minister to Mr. Watt, 21st May, 1920.]

Lloyd George has sent me cable, through Secretary of State, dated 12th May, stating British Government have been considering question of representation of Dominion interests in connexion with forthcoming meeting with German Government at Spa, which is now expected to take place towards end June. Primary purpose of Conference is to ask Germans for explanation of past infractions of Treaty, and make arrangements for its future. At the same time, a serious attempt will be made to fix Germany’s liabilities under the head of reparation. Germans are almost certain to raise other questions, such as increase in military strength allowed by Peace Treaty. Lloyd George states British Government very anxious that, if possible, Governments of Dominions should appoint some plenipotentiary to attend meetings of a British Empire delegation to discuss these questions. British Government does not see any other way in which effective consultation can take place except to make use of the same machinery which existed during the war and Peace Conference, and which it was decided at one of later meetings of the Imperial War Cabinet to maintain in existence in case Dominions wished to avail themselves of it.

May I interpolate here that this is in reply to my earlier cable to the Prime Minister of Great Britain, protesting most emphaticallyagainst any alteration in the Treaty except by the same method as that by which it was made, namely, by consulting the Dominions, and in this cablegram Mr. Lloyd George suggests a way by which the Dominions shall be consulted. My cablegram to Mr. Watt continued -

It is clearly impossible, Lloyd George contends, for the Allied Governments to refer all their decisions for confirmation of all signatories of Peace Treaty before they can come into effect, and in present unsettled and distressed state of Europe, delay in arriving at conclusions would bring about chaos. In opinion of British Government, therefore, only practical method is to reconstitute in some form British Empire delegation and that Dominions should accredit plenipotentiary in London to represent their views and watch over their interests during discussions.

Lloyd George asks whether I agree to this course, and adds that this should present no difficulty in view of your presence in England. I am informing him that I agree, and that you will be Australia’s plenipotentiary.

Please obtain from Secretary of State full copy of Lloyd George’s telegram.

Do not agree to any amendment of Treaty affecting Australia, either indemnity, islands, economic or financial clauses, without consulting me. [Cablegram sent by the Prime Minister to Mr. Watt, London, 21st May, 1920.]

Your telegram May 16th. Have to-day sent Secretary of State for the Colonies telegram stating that during your stay England you will act as representative of Commonwealth Government on Imperial Cabinet. [Cablegram received by the Prime Minister from Mr. Watt, dated London, 21st May, 1290.]

With reference to telegram May 15th from Secretary of State for Colonies to GovernorGeneral re Brussels Conference,I am in communication with Secretary of State in regard to matter raised, and I will supply him with the information asked for. [Cablegram received by the Prime Minister from Mr. W. A. Watt, dated London, 21st May, 1920.]

Secret. Prime Minister unwell–

That is the British Prime Minister - absent from London. Expect to see him next week. Have seen many other Ministers, including Chamberlain, Milner, andInverforth. Reception quite satisfactory everywhere.

Re wool. Have been waiting reply my telegram, and have therefore not attempted answer yours re new scheme–

I wish honorable members to notice that point, because my cables re wool had reached them long before that -

That part of scheme which deals with next clip only interesting to Government authorities here in so far as it proposes postponement of sales old stock for portion of 1921. I see difficulty in long postponement you suggest, but believe from conversations with Inverforth and Goldfinch that we will be able to make reasonable arrangements. Can pursue this later when matter ripens.

Whether your new scheme adopted or notI see no real objection in the Commonwealth’ using whole or portion interim dividend and’ paying Australian growers in the special bonds if you can persuade growers. Such bonds would necessarily be non-negotiable for certain period, otherwise war gratuity holders would object.

Have had long, interesting conversation Inverforth, Goldfinch. Observed some irritation arising out of your recent remarks, which I succeeded in allaying.

Following are figures of profits tentatively given by Goldfinch. You must treat them as strictly confidential for the present. I promised this.

Here followed the figures, which are strictly confidential–

We agreed, in the public interest, that we were not at liberty to disclose the figures, because they had been given as confidential

Generally I am well satisfied with result negotiations. Are you? [Extract from cablegram received by -the Prime Minister from Mr. Watt, dated London, 21st May, 1920.].

Re Governor-General. Secretary of State has asked me to discuss question successor with him next week. What views do you wish expressed ? [Extract from cablegram received by the Prime Minister from Mr. Watt, dated London, 21st May, 1920.]

Re Brussels. Conference. Date not yet fixed; expect open about middle June. [Extract from cablegram received by the Prime Minister from Mr. Watt, dated London, 21st May, 1920.]

Following for Cook. Re finance. Have discussed situation with Chancellor of Exchequer, Nivison, and bankers.

If I succeed getting eight and threequarter millions from wool July 1st, I hope persuade Chamberlain to accept half of that sum in lieu of eight and three-quarter millions he is pressing for. That would leave nearly four and a half millions for temporary use by Treasury, and would carry us on for one and a half months. Of course, whether I adopt some such expedient, or actually raise money on the market here, our great difficulty is to shift the money from London to Australia. Am specially considering this problem, and hope to acquaint you with my proposals next week. Hope you are better. Regards to all. All well.

That is a very important cable. It shows, along with the other cables, that the exTreasurer was quite in favour of bonds, that be was not opposed to the new scheme for selling the wool clip, that he thought, although we could not get all we asked for, he could come to some reasonable arrangement, and that he intended to take £8,750,000, paying £4,500,000 to the

Chancellor of the Exchequer in part payment of the debt we owe, while keeping the remainder for us. Then he recognised the great difficulty of getting the money from London to Australia, and that, as I said in that long statement I made, is one of the great problems that confronts us. [Extract from cablegram sent by the Prime Minister’s Department to Mr. Watt, 25th May, 1920.]

Growers and brokers accepted Prime Minister’s plan control and sale wool.

Growers and exporters meat conferred Prime Minister Thursday re meat contract.

page 2530


Now we come to the cables that led up to the ex-Treasurer’s resignation - [Cablegram received by the- Prime Minister from Mr. Watt, dated London, 27th May, 1920.]

Urgent. I have received your telegram dated May 720th re wool, and May 21st re Spa Conference.

The wool telegram surprised me beyond measure, and has made my position here quite impossible. Let me refresh your mind by recital of essential facts.

I undertook this mission very reluctantly, and only in response to strong pressure of unanimous Cabinet. Its objectives were announced by you in Parliament, and included, inter alia, the whole problem of past wool sales, profits, and dividends. On solution this problem, as your own telegrams declare, depends the satisfactory arrangement of our huge and pressing financial difficulties. While I was on the water you discussed this and intimately related and important questions of finance with number of men outside Government, and developed scheme without my knowledge.

Embarrassment of such procedure is obvious, and this was intensified by premature disclosure in Australian and British press. Although I was aware that my influence here was distinctly prejudiced by such methods, and press controversy that supervened, I pushed on with my investigations and negotiations, as indicated in my telegram May 21st, and had made considerable headway. Then followed your telegram of May 20th, which reached me after despatch of mine of May 21st. In former you give what purports to be your telegram to Secretary of State, formally outlining your new wool scheme. In passing let me say that telegram received by Secretary of State, copy of which had been handed to me, was not the same in form or manner of presentation as your advices indicate-

That point has been quite definitely settled by the honorable members who acted with me on the Committee and all my colleagues -

When latter was forwarded by Secretary of State to Minister of Munitions, I received from him the polite but clear intimation that British Wool Administration could not conduct discussion with me in person and with you by wire.- That situation was inevitable, and ought to have been foreseen and prevented, and certainly not created by you. I do not blame the Wool Administration here. I think in circumstances their attitude is natural, and merely reflects business prudence. That closed the door in ray face, and I shall not in present conditions attempt to re-open it.

In passing to other matters, I ought to say that had I imagined that you would attempt to complicate my task by framing new scheme and demands without reference to me, I would never have left Australia.

Now re Governor-General. I was placed in most invidious position yesterday. As indicated in my telegram of May 21gt, Secretary of State thought it advisable to discuss with me question of successor in tentative way, and for his guidance in further considering matter. He completely surprised me by reading your wires and his replies of last week, of which 1 was entirely ignorant. In this connexion I direct your attention to my cable of April 18 th.

Such happenings, on top of your omission to advise British Government in any way of my representation of Australia in the Imperial Cabinet until 1 wired for it, has made the position for me untenable I am, of course, appreciative of your nomination of me as Australia’s plenipotentiary in Empire Delegation preliminary to approaching Spa Conference, but your concluding paragraph shows you do not propose that I should act as plenipotentiary, but merely as channel of communication between British Ministers and yourself, As I read Lloyd George’s telegram, he seeks prompt decisions on vital issues, and it would be incongruous for me to wear the garb of a plenipotentiary and the mind of a telegraph messenger.

I do not know whether Cabinet or you is responsible for the situation which I have described, but I am determined that it cannot longer continue. I have therefore decided to proceed no further with work of mission until my position is defined. If you want me to do good work here, you must leave matters confided to my care entirely in my hands, and trust my judgment as to whether I should consult you or decide them here

You must also request Secretary of State to send me copies of all cable correspondence both ways about other matters. If you are not prepared to do-this, kindly say so at once, and I will take course I think necessary and proper.

Watt. [Extract from cablegram sent by the Prime Minister to Mr. Watt, 28th May, .1920.] Finance Conference, Brussels. Your telegram 21st May. I am’ formally advising Secretary of State that you will furnish information required by Secretary-General League Nations. hughes.

That was sent before I had received the ex-Treasurer’s cable, as also was the following : - [Extract from cablegram sent by the Prime Minister to Mr. Watt, London, 29th May, 1920.]

Most secret. Your telegram 21st May, regret delay in replying which is due to Premiers Conference arid arrival of Prince >£ Wales.

Re wool. Estimate of our half-share tallies with my own estimate, but I am inclined to think if market does not break we should do even better. Quite understand Inverforth’s and Goldfinch’s attitude. Until question got into press and you were on spot to insist upon payment they would do nothing; now they profess willingness to meet us.

Re new clip arrangements. You will see by my wire which crossed yours that growers have adopted it. Please support strongly.

Re financial side half profits. I postponed further consideration this until we know definitely what Australia’s share was. As soon as you are in position to give me this information, I will call growers together and endeavour arrange for them to accept our bonds. Most important that no hint be given press at either end before I meet growers to discuss this point. As to carry-over, I think Director’s estimate exaggerated. Quite agree that, subject to growers’ acceptance of bonds, results your negotiations satisfactory.

Re Brussels Conference. Please see my telegram May 28th.

Re Spa Conference. I have already dealt with this. Please do not forget that (1) we have ear-marked indemnity payable next May, and must have money, and (2) re ships, that at Versailles Conference, I claimed 300,000 tons, which is about twice as much as tonnage of twenty-two enemy ships we already have. Stand fast on this.

Re Governor-General. I suggest you leave this matter for Secretary of State to discuss direct with me. I shall, of course, keep you fully posted on negotiations.

Re finance. Cook has your telegram, and willfurnish reply. I have also noted it very carefully. I quite agree with you we must have money, but if we can come to a satisfactory arrangement with wool-growers, our position ought to be materially improved. Please keep me posted up to date. The necessity for your visit to London is more than ever obvious.

Greene laid up these last three weeks; will not be available for another month. Groom also ill for some time. Am a little better, but not fit.

You are doing splendidly. . Kindest regards from self and colleagues.


Now I come to the reply which. I sent to the ex-Treasurer’s cable on the 2nd June, 1920-

Secret. Your telegram 27th May. Special Cabinet called to consider: all members present except Greene, who is ill. I read your telegram, as well as all other telegrams that had passed between us since your departure. The whole position was reviewed most carefully and discussed at great length. Your colleagues are unanimous in being unable to understand your point of view, and all regret the tone of your cable. Personally, I was most seriously disturbed by it, and I think that upon reflection and careful review of the whole of the facts you will see that I have reason to be so. I am perhaps better able to appreciate than other members of the Cabinet just how highly-strung men, like you and I are, feel in the most difficult environment in the world - London - charged with a high and important mission, and I put myself in your place, and so, while I do not think your cable was justified, I can nevertheless understand it. Let me, however, deal with the complaints in your cable. You say -

that you have not received full information on points relating to your mission;

that, owing to action at this end by me, your mission has been hampered;

that your authority at the Spa Conference, while nominally that of a plenipotentiary, is really that ofa telegraph messenger;

that you were kept in entire ignorance of cables exchanged re appointment of Governor-General;

that formal notification that you were to act as Government representative on Imperial Cabinet was not given at the proper time;

that you were not supplied with copies of all cables.

These, I think, are the principal complaints. I will take them in order.

Let me remind you, first of all, how your mission to England originated. As Treasurer, you made a most important statement to Cabinet dealing with finance, and stated that your mature opinion was that the position was such, that a Minister ought to go oversea forthwith to deal with the matter, which could not be settled from this end. Your colleagues entirely concurred. You suggested Millen should go. I thought, as the matter related to finance, and so fell peculiarly within your province, and you were in every respect best fitted to deal with it, that you should go. This you consented to do, at the request of myself and your colleagues, who all agreed you were the best man to go.

In your statement on finance made to Cabinet, the question of wool was not mentioned by you; it was brought up by me later at the same or at a subsequent Cabinet. Being much impressed with the gravity of the financial position of the Commonwealth as set out by you, I ventured the opinion that our half-share of the profits was so considerable that, if we could obtain it, it would materially help us.’ It was then agreed that you should, when in London, not only deal with finance generally, but that you should also endeavour to get a statement of accounts and payment of the half profits. Then it was decided you should endeavour to organize immigration. I was to persuade the States at this end to agree, but, if this were not possible, then, as I stated a* Bendigo, Commonwealth would act independently. That was the third point of your mission. Then you were asked to look into and re-organize Australia House. You were also to press upon the British Government the necessity for immediate confirmation of the Mandate, and to insure payment of the indemnity in May, 1921. These were the main heads of your mission. Primarily it was one relating to finance: if it had not been for that and your statements in regard to it, no Minister would have gone to London.

You say I have interfered with you and embarrassed you. Cabinet has looked most carefully through all the cables which have passed between you and me, and into those between

British authorities and Commonwealth since your departure, and has considered my actions here in all their bearings, and, as I have said, they do not think your complaints justified.

Before dealing with your complaints in detail, let me remind you that, long before you reached London, and before I had even thought of discussing anything with the pastoralists here, you sent a telegram from Colombo, dated 9th April, in which you said you were disappointed I had not sent latest confidential information with reference to Peace Treaty, League of Nations, and Mandates. You stated that, unless you received advice as to develop- ments these questions, it would not be. possible for you to effect anything, and that you would not attempt the task. I regarded the peremptory tone of your cable as an indication that you had not received some of the telegrams that had been sent, that you were still far from well and suffering from strain of overwork. As I told you subsequently in my wire of 16th April, I had no further information in regard to Mandates, Treaty, and League of Nations since you left, but would prepare and send you before arrival in London full statement on these and other matters. And this I did, as you know.

Now let me deal with your complaints in detail. First as to wool. You complain that I met the growers and discussed certain matters with them while you were on the water. I certainly did, and it was imperative that I should do so. Time was the essence of the contract. I saw them on two matters, neither of which permitted of delay. One related to a matter outside your mission entirely - I mean the sale of the new clip. That had to be settled at once, for, clearly, delay in a matter that had to be determined in a few weeks was, on the face of it, impossible. You can hardly saythat this embarrassed your mission in any way. The second point I discussed dealt with the half profits due to growers, about which they had had no information, and about which they were much concerned. This had relation to your mission, but, so far from embarrassing you, the discussion and subsequent action could only have the very opposite effect, because, although technically the half share of profits belongs to the Commonwealth Government, we are only trustees for the growers, to whom the money belongs and to whom, in default of an agreement, it must be handed over. As your mission to London was primarily to raise money which would be available for the Commonwealth to pay Commonwealth debts, it would not help us in any way if the half share of the profits were paid to the growers and retained by them. And, of course, deliberately withholding the money from the growers by compulsion was out of the question. There was, and is, no way of obtaining it except by arrangement with the growers. All this needs no argument. If you got the whole of the 40 millions which we estimated is due to the growers in London to-morrow, how would it help the Commonwealth if we had to hand it over immediately to the growers? The consent of the grower to such an arrangement which would enable the Commonwealth to have the use of that money in London was essential to thesuccess of your mission. You could not negotiate with the grower, who was here.

Negotiations had to be carried on here, which I did. I remind you I did it on the suggestion of a section of the industry itself. So much for that.

As I told you, the pastoralists have agreed to my proposals re the sale of the clip, and I hope and Believe they will agree to the bonds, thus leaving you able to adjust Commonwealth finances with the Chancellor. You speak about obtaining the 81/2 millions, paying 41/2 millions to Chancellor, and making balance available to our Treasury. May I remind you that, without growers’ consent, you cannot retain a farthing of this 81/2 millions?

Now I come to another point. You say I have been communicating with the British authorities by wire, in regard to payment of half profits and wool clip, while you were on your way to and in London. That is quite true. As to my telegrams re sale of next clip, you recognise that is outside your mission, although I asked you before, and do so again now, to support it with British Government. As to wires re payment of half profits, I sent those while you were en route,in order to prepare the way for you. I am sorry if you think I ought to have left you without any support from this end in a matter which concerns us so vitally, but I think you will find, quite apart from this, the real objection from Inver forthand Company is not the cables I have sent, but the press reports, which have obtained such wide publicity, of the debates in House of Representatives on motion of adjournment by Rodgers, and a grossly inaccurate statement in the press by Inverforth himself, to which I was compelled to reply. However, I quite see your point and shall not send any further wires in reference to payment of half profits except to you.

You say, further, that I ought not to have entered into any negotiations with growers while you were on the water. I do not agree with you. Let me remind you what you did while I was on the water. While I, as Prime Minister of the Commonwealth, accompanied by Minister for Navy, was on my way to England, you entered into negotiations with. British Government for an extension of wool contract and sold the wool for the war and one year thereafter. Not only did you not consult me, but you did not even notify me when you had completed the negotiations. I learned of it only through the press, and subsequently from Secretary of State. So much for that.

I would remind honorable members that this is a matter which I originated, it was in my Department, and those who recommended Mr. Watt to sell knew that if I had been here I would never have agreed to extend the agreement for longer than the period of the war. Yet I was not even notified of the transaction when completed, let alone consulted, although this could easily have been done.

You complain that I communicated with British authorities. Let me remind you of your own practice while I acted as representative of Australia in London. I could mention many cases in which you did this on matters relating to my mission, but one will suffice. In November, 1918, you advised Secretary of State of Government’s approval of principles of clearing scheme of settlement of pre-war debts, merely notifying me of the action taken. This was clearly a matter on which I might have been consulted at all events.

For months, you communicated on many matters with the Secretary of State direct, without notifying me at all. I only learned of them from the Secretary of State himself and was thus frequently placed in a most embarrassing position in my discussions with him. It was not until I asked the Prime Minister that copies of all cables from and to Australia should be shown to me after arrival and despatch that I was kept reasonably well informed of what was being done. I have only to add that, on 11th May, I sent you a cable setting out in the fullest detail, both in relation to sale and finance, the proposals I had put before the wool-growers.

I must say that your statement that I sent you a cable which differed in form and substance from that sent Secretary of State on same matter is absolutely amazing. The whole of members of Cabinet had opportunity of comparing them, and all agree that for all practical purposes they are identical in form and precisely the same in substance. So much for that.

Re Representation at Spa Conference. - You complain that, while nominally given the powers of a plenipotentiary, you are so restricted by instructions from here that you are in effect only a telegraph messenger. Surely, if you will cast your mind back to the time when you were Acting Prime Minister and I was in London, you will see the position of which you complain is one in which I myself was placed. I was never given a free hand, but was compelled to act on definite instructions from Melbourne. Not once, but on many occasions, you told me in plain terms that I must not commit the Government; that I must not act in a certain way. For example, in November, 1918, you told me that I must not press for representation of Dominions, as such, either at Versailles Council or Peace Conference, that it was not reasonable and could not be supported by Cabinet. You said - “ We feel we are not justified in letting you go straight ahead on the course you nave marked out without Baying even more plainly than in my previous cables what our opinions are. I personally earnestly trust that you will give due weight to them, and advise me result.”

Then, again, in regard to sale of wheat, which was one of the matters specifically intrusted to me, I was placed in a most invidious and unfortunate position by being hampered continuously by contradictory instructions from Melbourne, which compelled me to perform a ‘volte face with British Government and Royal Wheat Commission. Again, in connexion with appointment of a Naval Member and Commodore, after having made arrangements withHalsey and guaranteeing a certain salary, Cook was compelled to cancel the appointment. There was also the question of Nauru. When I strongly urged that we should stand firm and resist attempt of British Government to compel us to share this with Britain, I was told Cabinet did not agree, and I had to withdraw from a position I could have maintained to the lasting advantage of Australia. Then, again, in connexion with sale of Austral ships, in March and May, 1919, you said proper procedure was to obtain definite authority from Cabinet, and that I should carefully observe this rule. Then, in May, 1918, re finance, you said I must do nothing involving finance on large scale without consulting you.

I could multiply these instances ad lib., but these are sufficient. They amply demonstrate that the opinion of the Government was then, and is now, that it is impossible to give an absolutely free hand to representatives overseas, and that the Government is, and must remain, in Melbourne. You will not forget this rule applied even when I, as Prime Minister, along with Ministers for Navy and Defence, was in London, and Cook and I were, in widest sense of term, plenipotentiaries.

Having said so much, let me say this further to you: I am merely following the rule which you yourself so strongly insisted upon. You will admit, I think, that the rule is a sound one. It certainly applies to Lloyd George himself; it applied to him right through Peace Conference. On several occasions he found himself overruled by his colleagues. It happened to Orlando and Clemenceau. Wilson was in a different position, but what is the result? His Parliament refuses to indorse what he did. I want to say, however, that I know how embarrassing and irritating the application of this rule must be. I felt it so a hundred times, and had I said exactly what I felt I should no doubt have sent you many telegrams which would not have differed much from yours. So, speaking from the depth of my experience, I quite understand your attitude, but hope that you will look at the matter as I did, and do the best you can. Believe me, I shall not embarrass you, but will do everything to help you and keep you informed. I shall not communicate direct with Secretary of State re wool half profits or finance, excepting at your request. In regard to Spa Conference, the only restrictions upon your freedom of action are in relation to those matters upon which overwhelming bulk of Australians have fixed opinions.

Further, I put it to you, as one man to another, that as Prime Minister I may fairly claim to be consulted before any variation is made in Peace Treaty with which I had so much to do, and with the details of which you cannot be as familiar as I am myself. Reference to cable files shows that in every stage of the Peace discussions, I acted in fullest concert with the Cabinet, and took no important step without first obtaining their views.

Re appointment of Governor-General. - Your colleagues are unanimously of opinion that it is clearly a matter that can be settled only by Government in Australia. I think on reflection you will agree it was not mentioned in your mission, and is obviously a matter that must be settled by Government.

Re failure to notify your appointment as representative on Imperial Cabinet. - As it was not contemplated when you departed that formal meetings of Imperial Cabinet would take place, official notification of your authority to sit did not precede your arrival. This I regret, but could not foresee the circumstances. I regret if you have been embarrassed, but I think I have put this matter in order, and you will have no further complaints. All I ask is that you will keep me posted on what is done.

As requested, I am asking Secretary of State to supply you with copies of all cables both ways. I was under the impression that this had already been done, but find it was limited, through an office misconception, to cables relating to Brussels Conference.

I need hardly say that this telegram has been read to, and unanimously approved by, all your colleagues at Cabinet to-day.

Now for a final ‘word. I have endeavoured to cover the points raised in your cable, and put matter quite clearly. I understand, I think, just how you feel, and I want to assure you that you have no reason whatever for the belief that anything is being done, or will be done, at this end to impede your mission. On the other hand, everything will be done, whether by silence or ‘ action at your request, to further it. We want you to succeed. We both have the same object in view, viz., the welfare of Australia. I want to do everything I can to help or support you; if it appears to you otherwise, I ask you to accept my assurance that you are absolutely mistaken.

Hughes. [Cablegram from the Prime Minister to Mr. Watt, dated 4th June, 1920.]

Following are details relating more important proposals placed by me before Premiers’ Conference: -

  1. Immigration. - My proposals were Commonwealth to have full control overseas. Agents-General to form Consultative Committee. Commonwealth to be financially and otherwise responsible for overseas organizations and transport arrangements for bringing immigrants to Australia. Primary object settlement on land. Preference British exservice men. States to be responsible for immigrants on arrival Australia. Agreement to be entered into definitely defining respective responsibilities Commonwealth and States regarding provision land and other assistance. Shipping question vital. Murray waters scheme and uniform gauge important factors in providing employment. Commonwealth and States to co-operate as to number immigrants that can be absorbed and classes required. Commonwealth to consider question assisting States by way of loans for approved land settlement and public works. Conference approved outline scheme and Premiers undertook submit proposals their respective Cabinets.
  2. Uniform Gauge. - I urged action be immediately commenced to connect State capitals from Brisbane to Perth with 4-ft. 81/2 in. gauge. Mainland States to contribute cost on per capita basis. Commonwealth to contribute quota. Work to be placed under Commission consisting one Commonwealth two States Commissioners. Commonwealth to make arrangements for raising money by nonnegotiable bonds for fixed periods. States to pay interest on their respective quotas and to redeem bonds at maturity. Conference inquired what proportionate amount Commonwealth would contribute (a) on main lines between capitals; (b) for general conversion. I pointed out impossible fix Commonwealth contribution as cost not known. Said Commonwealth would pay definite proportion. If States, for instance, said one-sixth fair thing, Commonwealth would be satisfied. Following agreement was reached: -

    1. Affirm necessity and urgency of uniform gauge to connect State capitals, including conversion of Victorian system.
    2. Affirm principle of allocation of cost.
    3. Affirm principle of appointment of Commission - working in cooperation with Railway Commissioners in States.
    4. Railway experts to meet and submit report re cost, &c, before 26th June.
    5. To be subject to approval of respective State Governments.
    6. To be further discussed on 26th June, and an interim report to be presented.
  3. Murray Waters. - Work to be greatly expedited. Commonwealth’s liability be increased from £1,000,000 to one-fourth total cost. Scope, powers Commission to be greatly widened. Power be given to Commission resume all land affected by scheme at any time during progress scheme, and five years “thereafter, at present value plus 10 per cent. Scheme be utilized providing employment immigrants. First preference Australian soldiers. Commonwealth and States to pass necessary legislation for increased expenditure and otherwise giving effect scheme. Conference adopted report of a sub-Committee which substantially agreed with our proposals.
  4. Aviation. - To be regulated by Commonwealth legislation, not by individual States. Conference agreed introduce State legislation referring necessary powers to Commonwealth, but so as to retain to each State (a) right to own and/or use State aircraft for Government purposes within State; (b) police powers. Conference also agreed introduce State legislation providing uniform action by States pending passage of Federal legislation.
  5. Industrial Legislation.- Suggested States refer to Commonwealth Parliament powers for following purposes : - (a) Establishment Commonwealth Industrial Court with roster of Commonwealth and State Judges; (b) to give Court jurisdiction over disputes which extend to more than one State and which, while confined one State, affect whole community; (c) creation Industrial Boards whose functions shall extend over same parts of industrial field; (d) creation Industrial Councils representative employers and employees, to bring about agreement as to industrial conditions, including General Industrial Council for whole Commonwealth; (e) provision for collective bargaining by industrial agreements binding both parties; (/) prevention strikes, at least until after procedure which insures that strike is deliberate will of majority after every effort at settlement exhausted; (g) giving effect basic wage; (h) enabling common rule be estab- lished in an industry. Agreement was found to be impossible all sorts of objections raised, and I said that we would act as we thought fit and remit to people.
  6. Finance. - In relation (a) borrowing; (b) collection taxation; (c) per capita payments. Proposed Commonwealth sole borrower. Suggested one tax-gatherer for land and income taxes Commonwealth and States, failing which one common return of assessment for Commonwealth and State Taxation. Asked States to adjust their finances upon assumption that per capita payment will be reduced as set out by Mr. Watt at last year’s Conference.

Following agreement was reached in regard to borrowing: -

  1. Affirm the principle of agreement regarding borrowing, making the Commonwealth the sole borrowing authority. An agreement based on the principles of the previous agreement to be prepared. Details to be settled later.
  2. Commonwealth Treasurer to submit definite proposals.
  3. State Treasurers to prepare memoranda of loan requirements for three (3) years.
  4. Commonwealth and State representatives to meet at an early date to settle details and confirm this arrangement.
  5. To be further discussed on 26th June. Question collection taxation to be further discussed 26th June.

Hughes. [Cablegram from the Prime Minister to Mr. Watt, on 5th June, 1920.]

See telegrams loth and 21st May from Secretary of State re division of enemy tonnage among Allies. Have informed him you will represent Commonwealth at discussion with Shipping Controller, on 8th June, as to division of British Empire share, and that you may desire attendance Larkin and Captain Turing in advisory capacity.

Please insist, as I did, upon retention of exenemy ships at present under Commonwealth control as matter beyond argument, and strongly urge for others up to total of at least 300,000 tons deadweight capacity, emphasizing in support of claim serious loss sustained by Commonwealth by diminution shipping facilities enjoyed prior to war, Commonwealth’s dependence on such facilities, and urgent need for supplementing tonnage at present available both for oversea and local requirements.

Re financial side of question, please take up same position as I did re ex-enemy ships now in Commonwealth hands and captured by us, namely, that as regards these we do not admit that our share of indemnity should be debited with value of these vessels, any more than has been the case with those seized and retained by the United States of America and Brazil.

As to balance of 300,000 tons which we claim, please insist that sum to be paid or debited should be based on pre-war value and not on present market value.

As you know, I made strong claim for 300,000 tons at Versailles Conference. In pressing this on Lloyd George in letter dated 7th March, 1919, I pointed out that Commonwealth Government Line was then operating nineteen ex-enemy ships of total tonnage of about 134,000, and had previously been operating nine others of total tonnage of about 56,000, but of latter five had been submarined, one wrecked, two taken over by Indian Government, and one employed carrying mails northwest coast Australia; that many of these ships had been specially built for, and had at outbreak of war been engaged in, Australian trade, and that to bring total tonnage exenemy ships in Australian trade up to 300,000, although it would in some measure relieve great hardships suffered by Australian producers during war and at present as consequences of loss of tonnage and diversion of ships to other trade, would still leave us far short of our pre-war tonnage. I stressed industrial and economic disadvantages to Australia under war conditions resulting from her geographical position, also huge sacrifices made by her in voluntarily surrendering to Great Britain fifty-three coastal steamers, of gross tonnage of nearly 200,000 tons, and depriving herself of seventy-nine other steamers, of gross tonnage of nearly 400,000 tons, which she requisitioned and handed over to Britain. I reminded him that Australia was an island continent with 12,000 miles of coastline, relying on sea-carriage for bulk of her InterState trade, and whole of her trade with other countries. I compared serious decline in Australia’s exports and imports during war period with great increases in case of other countries, particularly Canada and United States; and I drew attention to disastrous effects on prices of raw materials, on marketing of which Australia lives. Finally, I pointed out that war necessities which had been held to justify this treatment of Australian trade no longer operated, and that every consideration of justice required its immediate alleviation.

In subsequent letter to Lloyd George, dated 12th March, 1919, I again directed attention to urgency of Australia’s needs. Owing to lack of shipping, millions of tons of wheat, food products, and other raw materials, were lying in Australia awaiting shipment. The world was hungry for this food. It had also been said that Europe must be fed and clad. If so, it is surely necessary to safeguard Australian interests and not to permit America and Japan obtain at once carrying trade and market for goods produced outside Empire. Ex-German shipping belongs by every right to Empire for this purpose. To pay America, or any other country, with Germany’s very best asset, at expense of all her other creditors, leaving Australia without ships to send her goods to world’s markets, would be to inflict great, perhaps irreparable, injury upon Australia and Empire.

Hughes. [Cablegram received by the Prime Minister from Mr. Watt, dated London, 7th June, 1920.] (Received 8th June, 1920.)

Urgent. Your telegram 3rd June. Fully appreciate spirit of the consideration it expresses to me personally; but I ought to add that your implied diagnosis of nerves is wrong. I am quite well.

Now, let me traverse your telegram. First, I do not think that representations of views by absent Minister to his leader and colleague should be labelled complaints; but I pass that by.

Second, as to the origin and heads of mission. I do not quarrel with your statement of them, except that it is incomplete,’ unless you draw inference that wool accounts and dividends are secondary importance, because I did not deal with them in my first statement on finance in Cabinet. I did not then know how far you bad advanced matters by your cables, and I only dealt with revenue and loan moneys from Treasury stand-point. At later stages of the debate, it became clear that wool moneys was the pivot of our whole scheme concerning our British indebtedness and prospective early loan operations here or in Australia.

Third, you speak of a peremptory telegram dated 9th April, apparently overlooking telegram of 31st March, appealing for news from Australia, and respecting subjects of mission from England, to which you did not favour me with reply.

I did. However, that is by the way.

Fourth, as to my treatment of you when you were absent from Australia. Here you have advantage over me, for I have not all the cables of that period with me. However, after perusing few I have, and reviving my memory, I have no hesitation in saying that your statement totally, although probably unintentionally, misrepresents real facts.

  1. You asked me to send you copies all telegrams exchanged with Secretary of State. I explained that, to save expense, you ought to got them from the Secretary of State. This you said you would do. So that you knew all that was going on. I do not, therefore, understand your assertion that I communicated for months with Secretary ofState without notifying you.

For six months I never saw a cablegram except those from this end to the British authorities, which were shown to me by the Secretary of State.

  1. It is true wool was sold, without consulting you, after careful consideration by Central Wool Committee, and with full previous authority of the Cabinet. You have not informed me whether the same procedure re Committee and Cabinet has been followed in the present case.

This matter, the sale of the new clips, had nothing whateverto do with the Central Wool Committee. As regards the half profits, the Committee has had two years in which to get the money, and has not succeeded. It was time some one got some of it. I have tried to do so. Because the Central Wool Committee failed to get the money, the Treasurer went Home to get it.

  1. Pre-war debts clearing scheme was authorized by Cabinet, on advice of Minister of Customs.

As to that I say nothing except that it is not an answer to what I said in my cable. I was never consulted on the matter which was a vita] part of my mission.

  1. Wheat was controlled by Russell, who always submitted question to Cabinet.
  2. Naval Member whs similarly dealt with by Poynton. For confirmation of last three points, ask the three Ministers named, and when you have done so, kindly lift blame from my shoulders.

He blames Cabinet in order to exonerate himself : but he does not deny that the facts are as stated.

  1. It is quite true that, as Treasurer, I prudently requested you not to undertake anything involving large sums without consulting me, and you at once agreed.
  2. I also asked you to observe proper procedure about selling ships, ‘for none of your Ministers considered that within scope of your Peace mission.
  3. Your reference to Nauru astounded me. My recollection is that we sent you, for presentation to Imperial Cabinet, strongest telegrams of support.

I have shown the honorable member for Franklin (Mr. McWilliams) and the Leader of the Opposition (Mr. Tudor) my Nauru telegram, in which. I advised a certain course of action. It is a long story; but I say deliberately that, had I been supported, Australia would have been in a very much better position in regard to Nauru. If these gentlemen who have seen the cablegram say that the Treasurer’s reply to me supported my attitude, I have nothing further to add.

  1. Generally, while you were away, with exception of one brief period, all my telegrams either asked for information or gave you solid backing, the latter mostly in response to your special requests.
  2. The exception was the armistice break, and if you will re-read my telegrams now, I feel sure that your judgment, mellowed by time, will approve their tone and terms.

That is where I am told that I must not ask for the representation of the Commonwealth of Australia at the Peace Conference at Versailles.

  1. To say you were compelled to act on definite instructions from Melbourne is - to put it mildly - joking with facts. You properly acted throughout as a plenipotentiary, and most of principles of the Peace Treaty you agreed to or decided, including reparation, practically without one word of information to, or approval from, your Cabinet. I say “properly,” because that was the job you were sent to look after. Notwithstanding all this, which I would not have referred to if you had not introduced matter, I admit and fancy I was the first to proclaim that general worrying must function where it lives. There can be no other way. More in sorrow than in anger, let me say I vividly remember how often youtried to break the rule which you now glorify.

I did; but I was never allowed to do it. However, I knuckled down. I saw the thing through.

Fifth, it is, however, a different thing when Cabinet delegates to a Minister a special task abroad, involving acquaintance with facts usually not within the knowledge of other Ministers, and asks him to do work often entailing swift decision on a chain 12,000 miles long. Your references, therefore, to Lloyd George and Clemenceau do not apply. I speak respectfully, but plainly, what (? when) I say that I cannot do finance part of my job if I have to await directions from headquarters, or am to be interfered with without consultation or knowledge in discharge of it.

With regard to immigration, re-organization of High Commissioner’s Office, trade representation, Treaty matters, including mandates and reparation, it is quite a different thing. Some Ministers know some such matters better than I do; others quite as well as I. Consultation on these is practicable and wise, and I should certainly have conducted it. But with finance it is impossible. If I had imagined that you did not recognise this, I would certainly not have undertaken mission.

Sixth, re your actions re wool, I admit, of course, that question of next clip is a matter for Government. You say you acted because it was urgent. I do not agree that it was as urgent as you suggest. My answer, however, is that you could have got me by wireless, and had reply in two or three days–

Of course, they could have got me by wireless. I was on the s.s. Niagara. and, as your scheme dovetailed into vital part of my work, such a consultation ought to have been attempted’. If your motive was to strengthen my hands, it has certainly weakened them. You must surely see the baffling situation created. I had entered into my negotiations, and when I saw enough of facts I made certain propositions. They were assented to. On top of that comes your telegram making widely ( ?different) and, I think, impossible demands. You are the head of the Government and I a subordinate Minister. The wool authorities did the only thing open to them - politely, but clearly, they turned me down. Even now, while promising not to communicate direct with Secretary of State about wool finance again, you have apparently no intention to put me right with Government here, by stating to them that this matter is entirely in myhands. Until such an intimation is sent, I should only humiliate myself by knocking at door again. I repeat that your telegram to Secretary of State was different in form and manner of presentation to what I was advised; but I see no good arguing on difference, in view of what you say is Cabinet opinion.

Re Spa. - If you think I am fool enough to agree to any amendment of matters on which Australians have strong convictions without consultation, I am neither fit to be plenipotentiary nor messenger. Nevertheless, I cannot masquerade as a plenipotentiary and know that I am bound hand and foot. In this connexion, is there any special reason why High Commissioner should have been directed to sign Hungarian Peace Treaty and Nauru agreement while I was in London?

In view of decision registered in every line of your telegram, I do not know whether it is worth while dealing with some matters you have referred to. Perhaps I should say, re Governor-General, I was brought into it by Secretary of State, and only conversed with him at his special request, and he quite understood that I could not deal with question. I told him he should telegraph to you.

Your treatment of these last three questions indicates that you misapprehended my intentions. Boiled down, your determination appears to be that I must touch nothing except the things on my list, and, even on these, decide nothing without referring to you. I cannot accept that position, which is that of an official, and not a Minister.

I have most carefully reviewed the whole situation many times, and I say regretfully, but finally, that I cannot alter the view I have expressed. You say that Cabinet is unable to understand, and regrets my attitude, and that it unanimously approved’ your answering telegram. It is clear that I’ am at variance with my colleagues on important issues, and I must take the only course open to me. I therefore tender my resignation as Minister, and ask you to submit it forthwith for acceptance to Governor-General. I shall hand all official documents in my hands to the Secretary to the Treasurer, and as soon as my resignation operates pay my own expenses.


Sitting suspended from 1 to 2.15 p.m.


– Following on Mr. Watt’s cablegram, which ended with a definite intimation that he resigned, and in which he asked me to place his resignation in the hands of His Excellency the Governor-General forthwith, I sent the following message : -

Personal and secret. Your telegram reached me yesterday morning. Yesterday afternoon, press received cable message from London announcing resignation, and giving reasons therefor. I have summoned Cabinet for earliest possible date. Ministers scattered all over continent. We meet next Tuesday in Sydney. Meanwhile, may I ask you not to give anything further to the press ? I shall decline say one word. In haste.

To this I received from Mr.Watt the following reply: -

Your telegram 10th June received. As I am not a member of the Government now, I am not concerned about the meetings of Cabinet.

On Monday, 7th June, I telegraphed you my resignation, and asked you to forward it to the Governor-General forthwith. As you have apparently not done so, I have sent it to-day direct to His Excellency.

I note that you urge me to press silence. Since first announcement I have abstained, but cable reports utterances in Australia by some of your colleagues.

On 15th June I sent the following cablegram to Mr. Watt : -

Cabinet met to-day; all members present. After full discussion, Cabinet decided no course open but to accept your resignation. I therefore communicated with His Excellency, intimating that you had resigned, and recommended that he accept your resignation, which he has done.

This completes the cable communications that have passed between Mr. Watt and myself, and covers also all those references that have been made to the British Government in relation to the matters concerning his mission. I invite honorable members and the citizens of the Commonwealth carefully to peruse the communications sent by mo to Mr. Watt. I ask honorable members to note particularly not only the matter of those cables, but the tone of them. 1 ask any honorable member here, and I ask any citizen of the Commonwealth, whether he or she sees anything in them at which a reasonable person could take offence? I say unhesitatingly that the tone of those cables leaves nothing to be desired. They are obviously not conciliatory cables sent in the face of some provocation to the contrary, for many of Mr. Watt’s cables to me were peremptory in tone. They are cables sent with a desire to remove all reasons for complaint, and to assist Mr. Watt in his mission. I ask every honorable member to contrast the tone of my cables to Mr. Watt on this mission of his to London with the tone of the cables he sent to me while I was acting as representative of the Commonwealth at the Peace Conference and on the Imperial Cabinet in 1918 and 1919. I invite all honorable members to note that the principle of consultation with the Cabinet, and acceptance by the plenipotentiary or representative of the Government abroad of the decisions of the Cabinet in Australia, has been well established and definitely settled. In order to show to what extent this has gone, I shall read two or three cables, extracts from some of which I have already given, in proof of my contention : -

Watt to Hughes, 14th March, 1919-

Very surprised contents your cable 12th March. Government proposes deliberate next week on policy with regard to existing Commonwealth ships and proposals for future, and to consult you by cable. It may be that this sale is advantageous in view of all the circumstances, but I strongly feel that such important action should not be taken in anticipation of Cabinet approval. As to buying more up-to-date ships with proceeds this sale, you must delay until Cabinet has had chance of considering proposal. Garran will advise you of requirements of Constitution and Audit Act in relation to such financial transactions. As, however, you appear to have committed yourself in the matter of the sale, will make all arrangements with Customs, &c, as requested. . . .

Watt to Hughes, 17th May -

Eva advises you have sold Australfield. Have re-read cables both ways between us on sale of ships, and think proper procedure is to get definite authority from Cabinet for all such transactions before arranging them ; otherwise Government here compelled to confirm business already completed. This is not criticism of merits of either sale, which really appears advantageous, but expresses desire that procedure should be put on regular basis for future. Think you should carefully observe this rule.

Watt to Hughes, 24th January, 1919- . . but I suggest for your earnest consideration wisdom and necessity of communicating with Cabinet and securing its concurrence before any policy pledging Government is announced. Even’ in cases where immediate action is necessary, we should surely be apprised of facts and reasons. This is my strong personal view, which I have abstained from putting before colleagues, and I urge it on your attention as the only possible working basis.

Then note what Mr. Watt claims in his cablegram to me of 27th May, 1920 -

I do not know whether Cabinet or you is responsible for the situation which I have described, but I am determined that it cannot longer continue. I have, therefore, decided to proceed no further with the work of the mission until my position is defined. If you want me to do good work here, you must leave matters confided to my care entirely in my hands, and trust my judgment as to whether I should consult you or decide them here.

I ask honorable members and my fellow citizens throughout the Commonwealth to contrast Mr. Watt’s ultimatum with the position clearly laid down, not once, but many times, by Mr. Watt, when Acting Prim© Minister, that Cabinet must be consulted, and that nothing must be done unless Cabinet has approved it. I ask honorable members and my fellow citizens also to contrast the tone of Mr. Watt’s cables to me, both when I was in England and France, on my mission as a representative of the Commonwealth, with the tone of those sent when I was at the head of the Government here during Mr. Watt’s mission. Mr. Watt said over and over again that I must do or not do certain things, and while on this mission the tone of his cables is the same. He said, “ Kindly, inform me whether you intend to do this; if it is not done I will not go on.” And again - “Unless you are prepared to leave to my discretion whether I should consult you or not, I will not carry on.” He said that he was asked to assume “ the garb of a plenipotentiary with the mind of a telegraph messenger “ in relation to the Spa Conference, when all I asked him to do was what I think every honorable member will agree that the Government had a perfect right to ask him to do - that he should not, on questions involving the policy of the White Australia, the open door, indemnity, and the mandates for the Pacific Islands, alter the existing policy without consulting the Government. Will any man say for one moment that that was an improper limitation upon the powers of a representative of the Commonwealth? I ask them to contrast that with my position in London, when I was told that I must not even ask that Australia - this great Commonwealth that made such tremendous sacrifices for the Empire during the war - should be represented at the Peace Conference at Versailles, and that he could not allow me to go straight on. I must quote his exact words, which were -

We feel we are not justified in letting you go straight on the course you have marked out without seeing more plainly the contents of previous cables as to what our opinions are. I personally and earnestly trust you will give due heed to them, and advise the results.

I ask honorable members to say what would have happened to the Commonwealth if I had acted as Mr. Watt has done, and had left Australia without representation at the Peace Conference at Versailles. What would have happened? Australia would not have had any representation on matters of ‘ ‘ life and death,” for it would have been quite impossible for another representative to have reached Europe to submit the views of the Commonwealth in connexion with the mandates over the Pacific Islands and the White Australia policy. I say deliberately that had I given Mr. Watt every cause for irritation and resentment, as he was the representative of the Commonwealth on a mission which meant life or death to us, he ought not to have abandoned his post. Had I been in his place, and he in mine - although, perhaps, what I would have thought could not be expressed here owing to the rules of the House - I would have remained, and when I returned would have said exactly what I thought. I have no doubt that is the feeling in the minds of nine out of every ten people in the Commonwealth. Mr. Watt has left us now without a representative in London at one of the most critical junctures in our history. I invite honorable members to note those acts of omission which he said irritated him. I invite them to note that I did what he asked at the earliest possible moment. I notified the British Government of the fact that he had been appointed as our representative on the Imperial Cabinet. He asked me to see that he received copies of cables to and from the Secretary of State for the Colonies, and I* directed that that should be done. I said, further, that, whilst I did not admit for a moment that his complaints were justified, I understood his position, and I would in future be silent, or I would speak as he desired. I said that I would despatch no more cables apart from those he wished me to send to support him. I invite honorable members to note the tone of my last cable, the concluding paragraph of which reads -

Having said so much, let me say this further to you. I am merely following the rule which you yourself so strongly insisted upon. You will admit, I think, that the rule is a sound one…….. I want to say, however, that I know how embarrassing and irritating the application of this rule must be. I felt it so a hundred times, and had I said exactly what I felt I should no doubt have sent you many telegrams which would not have differed much from yours. So, speaking from the depth of my experience, I quite understand your attitude, but hope that you will look at the matter as I did, and do the best you can. Believe me, I shall not embarrass you, but will do everything to help you and keep you informed. I shall not communicate direct with Secretary of State re wool half profits or finance, excepting at your request. In regard to Spa Conference, the only restrictions upon your freedom of action are in relation to those matters upon which overwhelming bulk of Australians have fixed opinions. ……. Now for a final word. I. have endeavoured to cover the points raised in your cable, and put matter quite clearly. I understand, I think, just how you feel, and I want to assure you that you have no reason whatever for the belief that anything is being done, pr will be done, at this end to impede your mission. On the other hand, everything will be done, whether by silence or action at your request, to further it. We want you to succeed. We both have the same object in view, viz., the welfare of Australia. I want to do everything I can to help or support you ; if it appears to you otherwise, I ask you to accept my assurance that you are absolutely mistaken.

I confess, Mr. Speaker, that I am utterly at a loss to understand the reason for Mr. Watt’s resignation. I have had feuds with honorable members in this House, but if any man here had sent me a letter concluding with such an assurance, I would have wiped away everything that had passed, and shaken him by the hand. But Mr. Watt overlooked all these attempts at conciliation, which were couched in not merely studied moderation of tone, but such language as from a man like me, at any rate, might have assured him that I was most anxious that he should realize that I desired his co-operation, and wanted him to go on,. Yet despite every effort to conciliate him he persisted in his resignation.

Mr. Watt’s resignation reached me at 9 o’clock on the morning on which it appeared in the press. It is true it arrived where I was staying at 11 o’clock on the previous night - or rather the last four lines relating to his actual resignation reached me - the whole telegram was not then deciphered, and it did not come to hand until the next day. I was in bed at the time, and if that be a crime I plead guilty. I read the message the next morning. The press had the information before me, and their representatives came out 20 miles from Wagga, at midnight. I declined to say anything of a definite character. No one knows better than Mr. Watt that it is absolutely without precedent for a Minister to communicate his resignation to the press before it had been received and acknowledged by the Prime Minister. Yet Mr. Watt did not allow me even to communicate with my colleagues before he

Mr. Hughes. announced his resignation to the press.

What would have been said of me if I had accepted it, even though it had been, announced in the press, without consulting my colleagues ? Does any one blame me for calling my colleagues together when it was a matter of life or death to the Commonwealth? I did what any sensible man would have done in my place, and said nothing. 1 was censured by the press for refusing to speak before I had consulted my fellow Ministers. In the meantime, Mr. Watt, not satisfied with taking this unprecedented course, forwarded his resignation direct to His Excellency the GovernorGeneral - again a step without precedent. The Governor-General had no more to do with it - less in fact - than any citizen in the street. The GovernorGeneral could no more act on it than could a resident of, say, New Zealand, as His Excellency can act only on the advice of his Ministers. !No one knew that better than Mr. Watt.

In the face of all this, there was no course open to us but to accept the resignation of a man who had slammed the door on every effort on our part at conciliation or reconciliation. The Government have, therefore, with the utmost regret, accepted his resignation. I .am very sorry. I have endeavoured to understand why he resigned, and I do not even now know the reason. I have looked through the files, and I can find nothing to justify it. I ask honorable members to recollect that the only thing I did in reference to the half profits on sales of wool were things that, in the very nature of things, had to be done, and had to be done in Australia. Mr. Watt could not negotiate with the growers, neither could he retain one penny of the money unless the growers ‘ assented. The growers were in Australia. I was the man to meet the growers, and I did so. For some reason or other Mr. Watt took umbrage at this, although I notified him at the earliest opportunity of what T had done. I communicated direct with Mr. Watt. But he acted in a very different manner towards me, for he sold the wool when I. was tin the water without even notifying me of the sale. He states that his ship had wireless, so had mine; and, although I was at Auckland for a week, at Suva for a day, at Honolulu for a similar period, and was four weeks in America, I did not hear one word concerning the sale of the wool. Yet, although I was surprised and strongly objected to what he had done, I went on with my mission.

I have endeavoured to put “the matter quite fairly. I am naturally much disturbed at what has happened. I am disturbed personally, because it has broken the intimate relations that have existed between Mr. Watt and myself during three or four of the most trying years in the history of the Commonwealth. But I am more disturbed because of the consequences to Australia. She is unrepresented now, when she is in urgent need of representation by a competent man. Our finances are in a very delicate and embarrassing position, and “matters of life and . death “ require attention by a man on the spot, yet we have no representative in London or elsewhere to endeavour to adjust them.

Mr. Watt has resigned. I have explained the circumstances under which he has done so; I think I should add that this is the third time that he has sent in his resignation since my return from England. Mr. Watt then met me at Fremantle, and accompanied me across the continent. His health was at that time giving him, his family, and his friends grave concern. We discussed together the position as it then stood and the future as we saw it reflected in the mirror of the present. He told me - I give the substance of our conversations, because I cannot remember the actual words - that he could not continue in office, that he had merely held on during my absence, but would now have to resign. On my side, I said what honorable members know to be true, that I had had five or six years ‘of incessant struggle. Those who’ know me best know what a wrench the cataclysm that divided the Labour party in 1916 was to me. I had returned from a mission in regard to which I might fairly claim that the reputation of Australia had not suffered at my hands. I had done that which I was sent to do. There were many reasons why I should retire- I shall not speak of the opportunities laid before me in England on which I turned my back, but it can be understood that returning as I did, and being received as T was received, I could not have selected a more propitious moment for temporarily withdrawing, at any rate, from my position. -I had had enough. Therefore, I said to Mr. Watt, “ If you retire, I shall retire also. I shall not carry on.” To that he replied that he would think the matter over, and let me know his decision. Subsequently he said that he would carry on, and honorable members will recall that that decision was publicly announced. I told him that as his health was such as to preclude him from doing much electioneering work, in the event of an election he could remain in Melbourne, and I would do the greater part of the electioneering. That promise was kept. Subsequently, however, Mr. Watt twice resigned, definitely and in writing. In each case I persuaded him to withdraw his resignation.

Honorable members now have all the facts before them. These show clearly that I did everything in my power in this instance as I did on other occasions topersuade Mr. Watt to remain in the Government. The cablegrams prove conclusively that there would have been no sufficient reason for his resignation had he been in Melbourne, and had I spoken to him in the terms in which I wrote to him. No one would dream of resigning a portfolio on that account. I have been in a Ministry with the honorable member for Yarra (Mr. Tudor), and he, like other members who have held office, know that at Cabinet meetings there are frequently differences of opinion expressed, and that after discussion the will of the majority must prevail, and the Minister holding a contrary view must either fall in with his colleagues or resign. I do not say that there are not circumstances which justify resignation if the Minister is on the spot; but during a long Ministerial career I can now recall only one instance in which I felt so strongly on a matter that I would have resigned had it been decided adversely to my view. The matter to which I refer had nothing whatever^ to do with conscription. The honorable member for Yarra was one of my colleagues at the time, and he and I decided to resign unless effect were given to a certain policy. Effect was given to it, and we did not resign. Had we resigned, however, our resignation would not have embarrassed the Commonwealth. But when men are sent 12,000 miles overseas on a mission of vital importance to the country, there is imposed on them a sacred obligation which they cannot evade, and I cannot conceive of anything that would justify their resignation. Certainly there is nothing in the cablegrams that I have read to justify Mr. Watt’s resignation. I have sat at Cabinet meetings at which hard things have been said, I will not say worse than anything I wrote to Mr. Watt, because I wish that every one would speak to me as I wrote to him, and no doubt others would like me to speak to them always as I wrote to him. I cannot conceive of anything that would justify the abandonment of a mission so vitally important to the Commonwealth as that of Mr. Watt. I regret the right honorable gentleman’s resignation; I regret the loss of the man himself, and, above all, I regret the consequences of the resignation to the Commonwealth.

There is one other cablegram which I have not mentioned. It was sent . in code by the Central Wool Committee to a similar body in England, and this is a decode of it. The address was, “Dirawmat, London,” and the cablegram was dated the 21st May last. It reads as follows : -

page 2542

No. 1217

The following appears in this morning’s press - quotation begins: -


“Mr. HUGHES’ PROPOSALS. “ GROWERS AND BROKERS ACCEPT. “ As the result of a Conference of Pastoralists and Woolbrokers recently held in Melbourne to consider the scheme proposed by the Prime Minister for the disposal of the 1920-21 wool clip and for the distribution of the profits that have accrued in London from the disposal of the wool sold to the British Government representatives of the Conference had a long interview with Mr. Hughes on Wednesday afternoon. “ It was explained by the Chairman of the Wool Council that the proposal to deal with the new clip and the other proposal submitted by Mr. Hughes relating to the surplus from the London sales had been considered separately, and that it had been decided to accept the Prime Minister’s proposals as a basis for the sale of the forthcoming clip, and to authorize him to put his proposals before the British Government as follow: - “ 1. No export of the new 1920-1921 clip from Australia prior to 1st October, 1920. “ 2. No auction sales of Australian wool in London after September 30th, 1920, until May 1st, 1921. “ 3. The earliest notification of this to be given so that buyers will know that Australian wool will be procurable only in Australia between the dates mentioned. “ 4. No auction sales to be held in Australia until October 1st next. From this date on Australian woolbrokers would auction the 1920-1921 clip on owners’ account and proceed with the auctions without interruption until May 1st, 1921, from which date onwards normal conditions would prevail, viz., the British Government would resume selling its left-over wool and auctions could be held concurrently in Australia of any small quantity that might then be left of the 1920-1921 clip.

Mr. Hughes explained that in formulating his proposals and laying the item before growers, he had been offering advice which he felt assured was in their best interests. It would not only be against the interest of growers, but a disaster also to Australia to allow the coming clip to be sold anywhere hut in Australia. He would not be a party to compulsion. “Representatives of the growers indicated that Government control in any form, regarding the management of the realization of the new clip, would not be acceptable. Mr. Hughes again emphasized his determination to have nothing to do with control. “ Reference was made by Mr. Hughes to the drought difficulties in many parts of Australia, and he expressed the hope that the British authorities would, without further delay, make a statement of accounts as to the amount of money that already stood to the credit of the Pool. The presence of the Treasurer in London would, he felt sure, be helpful in obtaining a proper statement, and also in securing an immediate payment of the amount due to Australian growers. “As the amount to be made available from accrued profits was uncertain, it was agreed to leave the consideration of the Prime Minister’s financial proposals to a later date, pending receipt of replies to his cable communications to the Secretary of State and to Mr. Watt. “ In order to allow carcass butchers, sheepskin buyers and fellmongers to be unhampered, in their operations, and also to safeguard the interests of the fat stock and sheep-skin markets, it was indicated that special arrangements would have to be made whereby skin wools could be realized, thereby preventing an undue amount of money being locked up. Permission to sell privately through selling brokers during the period from July 1st to October 1st, would, it was held, no doubt meet the difficulty. “It was announced that an executive had been appointed to be known as the Australian Wool Council. This body will be available to receive all communications from, and discuss all matters with, the Prime Minister in connexion with his negotiations.”

Quotation ends.

Central Wool Committee have not at any time been consulted by Prime Minister, or invited to attend conferences with regard to proposed new arrangements.

Central Wool Committee

I did not see that cablegram until the 7th June, and when I had seen it . I directed the Secretary to the Prime Minister’s Department to send the following letter to the Secretary of the Central Wool Committee: -

Prime Minister’s Department,

Melbourne, 7th June, 1920

Memorandum for:

The Secretary

Central Wool Committee

I am directed to inquire on what authority the cable described in the margin - [Cablegram No. 1217, dated 21st May, 1920, to Dirawmat, London, re wool control] - was despatched without having first been submitted to the Prime Minister, seeing that the matter has nothing whatever to do with the sale of the clip, andwas based merely on a newspaper paragraph.

Mr. Hughes considers that the matter is outside the scope of the Central Wool Committee’s province, and is one purely of Government policy, and that any comments thereon should have been submitted to him for transmission, if deemed necessary.

  1. L. Shepherd,


To that the following reply was received : -

Commonwealth of Australia

page 2543



Central Wool Committee, 113 William Street,

Melbourne,11th June, 1920

The Secretary,

Prime Minister’s Department,


Adverting to your memorandum of 7th June, with reference to Cablegram No. 1217, dated 21.5.20 addressed by the Central Wool Committee to Dirawmat, London, by direction, I have to say that such cablegram was forwarded on the authority of the Central Wool Committee.

The Central Wool Committee forward all matters which they consider of interest to the wool authorities in London, and as the only information which the Central Wool Committee had on the proposed scheme was that appearing in the public newspapers, they cabled the press statement.

  1. M. Balfour,


I have laid all the papers on the table, and they will appear in the Hansard re port of my speech. Thus they will become public property, and honorable members and their fellow citizens can peruse them at their leisure. That, for the time being, at any rate, closes an incident which is much to be regretted.


.- (By leave). - Yesterday I asked whether the cablegrams that had passed between the Prime Minister (Mr. Hughes) and Mr. Watt, or between the Prime Minister and any other Minister and the British Government would be laid on the table, and the Prime Minister replied that they would be laid on the table, with the exception of such parts of them as had nothing to do with Mr. Watt’s resignation or contained statements which, in the interests of the public, should not be disclosed. He suggested that I and the honorable member for Franklin (Mr. McWilliams) should go through the file with him, and determine what might properly be kept back from publication. The file of correspondence was submitted to us, and we were assured by the Secretary to the Prime Minister’s Department that it contained the whole of the cablegrams that had passed. The Prime Minister’s suggestion was that we should edit this file; but we acted rather as censors, our work being to cut out what was not material to the case, or what, in the public interest, should not be disclosed. We were not asked to take sides, and I do not intend to do so. By way of illustrating the omissions that we sanctioned, I might say that one of the cablegrams sent by Mr. Watt contained certain confidential figures. He said, “ I have obtained these figures in confidence.” That information was, therefore, kept back from publication. Then on another matter the Secretary of State for the Colonies sent a cablegram to the Prime Minister marked “ most secret.” Honorable members, no doubt, are aware that there are “ confidential “ cablegrams, “secret” cablegrams, and “most secret ‘ ‘ cablegrams. A cablegram marked “ most secret “ could not be published without the permission of the sender, and therefore that cablegram, together with the Prime Minister’s reply to it, has been withheld. We were not asked to indorse or confirm any of the statements in the cablegrams; that was not our business. All we were asked to do was to make sure that the material facts were given to the House. In the file there are statements that are not material to the resignation of Mr. Watt - criticisms of persons and Governments, which have nothing to do with the case - and the publication of some of which might injure the Commonwealth. We agreed that such statements should not be made public. Possibly any member who desired to see the whole file could do so; but that is a matter for the Prime Minister and the Cabinet. I assure the House, however, that, in my opinion, everything on the file that is material to the case, and that could properly be published, has been made public by the Prime Minister.


. - (By leave). - I wish to inform the House that all the correspondence was placed before the honorable member for Yarra (Mr. Tudor) and myself, and that we went through it without any interference or suggestion by anyone, and I think everything that was material to the dispute between the Prime Minister (Mr. Hughes) and the ex-Treasurer (Mr. Watt) has been made public. What we struck out was either matter that did not meet the case, or matter that we thought should not, in the public interest, be disclosed. May I add that I deeply regret what has occurred. Personally, I shall refrain from expressing any opinion on the case, either publicly or privately, until Mr. Watt is present, and has put his position before the House. That seems to me to be the fair course to take.

page 2544



Sheep Dip


asked the Minister for Trade and Customs, upon notice -

  1. Whether embargoes are still being placed on the importation of any goods from abroad?
  2. If so, on what goods?
  3. Has the embargo on the importation of sheep dip been rescinded?
  4. If so, when, and for what reason?
  5. For what period was the embargo enforced?
  6. Is it not a fact that some of the Australian manufacturers of sheep dip publicly stated that they did not desire the embargo?
  7. Was the embargo placed on the importation of sheep dip in the interests of the woolgrower?
  8. When is it the intention of the Minister to remove the embargoes which have been placed on goods for the purpose of encouraging Australian manufactures?
Minister for Trade and Customs · RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

– The answers to the honorable member’s questions are as follow : -

  1. Yes.
  2. Goods from ex-enemy countries; dyes, at the request of the Imperial Government; sugar, as the Government is the sole importer; citrus fruits and potatoes, from countries in which disease is known to exist, thus safeguarding the interests of the primary producers.
  3. Yes.
  4. On the 19th May last, because the Tariff has no longer rendered it necessary.
  5. From 26th March, 1919, to 19th May, 1920.
  6. I have no information on that point.
  7. Yes.
  8. In accordance with my definite announcement when introducing the Tariff, all embargoes, with the exception of those mentioned in answer to No. 2, have been removed.

page 2544




asked the Prime Minister, upon notice -

  1. Whether the Economies Commission, before presenting their report, took evidence from the permanent heads of the Departments concerned before arriving at the published conclusions?
  2. Have the permanent heads of the Departments concerned been asked to reply and report on the Commissioner’s report?
  3. Will the Government lay such replies on the table of the House?
Minister for the Navy · PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– The answer to the three questions is “Yes.”

page 2544



Bruce Rock to Korbel Line


asked the PostmasterGeneral, upon notice -

  1. Whether it is a fact that the erection of a telephone from Bruce Rock to Korbel, Western Australia, a distance of 101/4 miles, exclusive of the cost of the erection of poles, cost, approximately, £500?
  2. Will the Minister lay on the table the details of this expenditure?
  3. Is it not possible for the Department to inaugurate some cheaper method of providing telephonic facilities in country districts?
  4. Where the residents erect their own wires for telephonic purposes, will the Minister approve of wires being laid on trees, fences, under roads, or in any manner suitable to those constructing it, providing they take all responsibility?

– The answers to the honorable member’s questions are as follow : -

  1. I am making inquiries in the matter.
  2. Yes, when they are to hand.
  3. Telephone lines in country districts are at present erected as cheaply as efficient telephonic service and low maintenance costs will allow.
  4. Part XVIII. of the Telephone Regulations already provides for the erection of such lines by residents under the conditions the honorable member mentions, the only restriction being that permission shall not be granted for the erection of any such line along any public road, railway, or track unless the Deputy Postmaster-General is satisfied that it is in every respect unobjectionable, and that the consent of the railway and local authorities, where necessary, has been obtained.

page 2545



Returned Soldiers in Federal Territories.

for Mr. Hector Lamond

asked the Minister representing the Minister for Repatriation, upon notice -

  1. Whether it is a fact that returned soldiers resident in the Northern Territory are denied the benefits of repatriation?
  2. Are returned soldiers resident in other Territories also excluded from such benefits?

– The answers to the honorable member’s questions are as follow: -

  1. No; an officer of the Repatriation Department left Sydney this week for Darwin with authority to deal with all minor cases, and instructions to report on all important cases to the Commissioners.
  2. No. Arrangements have been made for dealing with returned men from the Federal

Capital Territory. The matter of dealing with returned men from Papua and Norfolk Island is now receiving the attention of the Commissioners.

page 2545




asked the Prime Minister, upon notice -

  1. Whether an agreement is in existence between the Commonwealth and the Associated Smelters Proprietary Limited relating to the smelting and sale of silver-lead and zinc ores?
  2. If so, will the Prime Minister lay upon the table of the House a copy of the agreement?
Minister for the Navy · PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– The answers to the honorable member’s questions are as follow: -

  1. No.
  2. See answer to No. 1.

page 2545




asked the Minister for Trade and Customs, upon notice -

Whether he will make a statement to the House as to when there is likely to be a plentiful supply of sugar for Australian consumers?

Minister for Trade and Customs · RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

– The local crop is now being harvested, and as soon as the raw sugar reaches the refineries ample supplies will be available for some time to come.

page 2545




asked the Acting Treasurer, upon notice -

Whether the Treasurer has arrived at a decision in reference to a recent amendment of the Queensland Income Tax Act, whereby investors in various issues of Commonwealth loans, which were declared free from taxation, have been required to furnish particulars of interest received, and have been called upon to pay taxation on a higher scale?

Minister for the Navy · PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– The matter has been placed in the hands of the Crown Solicitor to take the necessary action to have the provisions of the Queensland Income Tax Act declared ultravires.

page 2545



Congestion of Business


asked the AttorneyGeneral, upon notice -

  1. Whether the Commonwealth Arbitration Court is at present in recess?
  2. If so, for what period?
  3. Does congestion of cases listed for hearing still exist?
  4. If so, what are the intentions of the Government to overcome the same, and to expedite the hearing of cases?

Mr. GROOM (for Mr. Hughes).The answers to the honorable member’s questions are as follow: - 1 and 2. The four weeks’ winter vacation of the Court began on Saturday, 26th June. The Deputy President is, however, sitting in vacation.

  1. Yes.
  2. An announcement will be made on this subject very shortly.

page 2546




asked the PostmasterGeneral, upon notice -

Whether, before taking steps to close any more country post-offices, notice will be given, at least one month prior to closing the same, to the member representing the district in which the office is situated, and not after it has been closed, as at present?

Mr.WISE. - Yes. I understand that no office is now closed without prior notice being given through the Federal member to the persons concerned.

page 2546




asked the Acting Treasurer, upon notice -

Whether the Government will give effect to an increase to the old-age and invalid pension, in accordance with the increased cost of living?

Minister for the Navy · PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– As I stated to a deputation a few days ago, I am submitting the question for the consideration of the Cabinet.

page 2546




asked the Acting Treasurer, upon notice -

Whether he will make available for members the regulations governing the employment of persons in the Commonwealth Bank, such as tellers, cashiers, and other officers of the Bank?

Minister for the Navy · PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– The conditions of employment in the Commonwealth Bank are entirely in the hands of the Governor of the Bank, and are not covered by regulations.

page 2546




asked the Minister in Charge of Shipbuilding, upon notice -

Will he state why the Government are not proceeding with shipbuilding at Cockatoo Island?

Minister for the Navy · PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– The work is proceeding; but just at present the actual construction of the larger vessels which are to be built at Cockatoo Island is held up pending the arrival of the necessary material from England, where the order was placed some months ago. The material was not obtainable in the Commonwealth.

page 2546




asked the Prime Minister, upon notice -

Whether, in view of the drought having broken in New South Wales, and many graziers being without funds, the Government will see that dividends out of the Wool Fool are paid in cash, and not in bonds, so that graziers may restock their holdings?

Minister for the Navy · PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– The Prime Minister has arranged to discuss the matter with representatives of the wool-growers this afternoon.

page 2546




asked the Minister for Home and Territories, upon notice -

Whether it is the intention of the Government to increase the pension paid to dependants of soldiers who enlisted in the Australian Imperial Force, making the amount equal to that paid before the passing of the Repatriation Act 1920?


– I have not an answer to this question, but a reply to a later one on the notice-paper, in the name of the honorable member for Flinders (Mr. Bruce) covers the subject of the honorable member’s inquiry, as well as other matters related to it..

page 2546



Embargo on Imports.


asked the Minister for Trade and Customs, upon notice -

  1. Whether he will inform the House what reasons he has for preventing the importation of New Zealand potatoes into Australia, seeing the great shortage of potatoes in the Commonwealth, and the high prices that are being charged to the consumers owing to the shortage at the present moment?
  2. Has he received any communication from New Zealand in respect of this matter?
  3. If so, what is the nature of the communication ?
Minister for Trade and Customs · RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

– The answers are as follow : -

  1. The importation of potatoes from New Zealand for food purposes under special conditions was stopped in February last, owing to the presence in New Zealand of the destructive disease powdery scab (Spongospora subterranea). This action was taken with the view of protecting the potato industry of Australia, as the planting of such potatoes after admission, with consequent spread of the disease, could not be prevented.
  2. Yes.
  3. The Prime Minister of New Zealand suggested that the Government send a Commonwealth officer to New Zealand to inspect pota- toes available for shipment, the consignments passed by this officer to be allowed entry into Australia. As this proposal was not an effective way of overcoming the difficulty, it was not accepted.

page 2547




asked the Minister for the Navy, upon notice -

Is it the intention of the Commonwealth Government to hand over the control of the Australian Navy to the British Government?

Minister for the Navy · PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– The answer is, “ No, certainly not.”

page 2547



Allowances to Widowed Mothers and Orphans


asked the Minister representing the Minister for Repatriation, upon notice -

  1. Whether it is a fact that the Crown Law authorities have advised that under the Australian Soldiers’ Repatriation Act 1920 there is no power to pay allowances in supplement of pensions to widowed mothers and orphans of deceased soldiers as heretofore?
  2. If so, in consequence of this decision, will the total amounts payable to many widowed mothers and orphans be decreased upon the coming into operation of the Act referred to?
  3. Is it proposed to take any steps to avoid a reduction in the payments to such widowed mothers and orphans being brought about by the operation of the Australian Soldiers’ Repatriation Act 1920?

– The Commission advises -

  1. The Crown Law authorities have advised that under the Australian Soldiers’ Repatriation Act 1920 it has no power to pay any allowances in the nature of or supplementary to pensions. 2 and 3. The Minister has made arrangements with the honorable the Treasurer for a special vote to continue living allowances for a short period, pending investigation and review of all relative cases.

page 2547



Sale to British Government


asked the Minister for Trade and Customs, upon notice -

  1. Is the Minister in possession of full particulars of the reported sale of Australian butter to the British Government at 240s. per cwt.?
  2. Is it proposed to make a compulsory “ pool “ for the purpose of carrying out the new contract?
  3. Is it a fact that Messrs. H. W. Osborne and H. Sinclair were sent to London to negotiate the contract at a conference of representatives of all co-operative factories throughout Australia?
Minister for Trade and Customs · RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

– The answers are as follow : -

  1. The following cable has been received from the High Commissioner : - “ Referring to your telegram 1st April, next season’s butter, Osborne and Sinclair have signed on behalf of Commonwealth Dairy Produce Pool contract with Ministry of Pood, terms as follows: - Price, £12 per cwt. f.o.b. for butter grading 90 points, with 1s. per cwt. more for each point from 91 to 95 inclusive, and1s. per cwt. less for each point under 90 points, and extra 3s. per cwt. for unsalted, which is not to exceed 25 per cent. of the whole, the Government to pay storage charges after an average of six weeks, the Australian committee to have the right to supply butter not exceeding 50 tons per month to South Africa, the period contract to be from 1st September, 1920, to 31st March, 1921, and to include butter delivered at cool stores Australia till the last-mentioned date. Financial arrangements and other conditions to be the same as under the existing contract. Purchase of cheese under consideration.”
  2. The nature of the arrangements (if any) necessary to give effect to the contract are at present under consideration.
  3. The conference to which the honorable member alludes included delegates in the election of whom all the co-operative butter and cheese factories throughout Australia had a vote. The proprietary factories had separate representation. It was unanimously decided at that conference that in event of Great Britain deciding to retain control of dairy produce, delegates be sent to England to arrange a sale of our surplus production on the best terms possible, and that the selection of these delegates bo left in the hands of the Dairy Produce Pool Committee. The British Government decided to retain control. Messrs. Osborne and Sinclair were selected and sent to England, with the result indicated in answer to question No. 1.

page 2547



Statement by Sir John Monash.


asked the Prime Minister, upon notice -

  1. Did Sir John Monash speak on behalf of the Government at the British Empire League’s luncheon when he said, “ That a proposal would shortly be made to Parliament to provide for active and elaborate preparations for maintaining a huge Army in Australia “ ?
  2. If so, does the Prime Minister consider it consistent with his responsibility, as head of the Government in Australia, to allow such an important statement of Government policy to be made by a military officer?
Minister for the Navy · PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I have no answer to this question supplied by the Prime Minister, but I take leave to say, upon my own responsibility, that not for one instant has any such authority been given to Sir John Monash.

page 2548


PostmasterGeneral · Gippsland · NAT

– I move -

That in the opinion of this House it is expedient to carry out the following proposed work: - Provision of an automatic telephone exchange at Collingwood, Victoria.

This and two other similar works were referred to the Parliamentary Standing Committee on Public Works in 1915, and were approved of. This work was unanimously approved of by the Committee in that year. One of the other works has been carried out, and the other is in course of completion at the present time. This particular work has not been touched because of the difficulty of securing material and the inability of the Treasurer in the state of the finances to provide the necessary funds. I am glad to say that this year the Treasurer is able to provide sufficient funds for the work to be carried out during the present year. In anticipation of the consent of the House being given to this work I have obtained tenders for the switchboard, but I received an intimation that unless the tender is . accepted by the 30th June the prices quoted in it will be re-adjusted. Knowing that the House would not re-assemble until yesterday, and that consent to proceeding with the work could not be secured until to-day, I was able to induce the tenderers to agree to an extension of the time for the acceptance of their tender to the 7th July. If we do not proceed with the matter now we are informed that the prices quoted will be likely to be increased. The work is absolutely necessary. I may say that there are three other automatic exchanges which it is proposed to submit to inquiry by the Public Works Committee.

Mr Mahony:

– Where are they to be established ?


– I cannot say at the present moment.

Mr Mahony:

– Perhaps the honorable gentleman will say in which State they will be established?


– I cannot tell the honorable member at the present moment in which State they are to be established. The work referred to in my motion is estimated to cost £123,000, and it is anticipated that about £100,000 of that amount will be spent during the present year if the construction of the proposed exchange is approved of. It is very badly wanted. Our telephone services have become terribly congested throughout the whole of Australia through the inability of the Department to carry out necessary works during the years of the war. We have now to pull up the consequent arrears, and the sooner we do so the better. I confidently ask the House to carry this motion.

South Sydney

– I had the honour to be chairman of the Public Works Committee when this proposed work was referred to that body. I say that it is very urgently necessary that it should be carried out.

Minister for the Navy · PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Did the honorable member approve of this expenditure in Melbourne?


– Yes.

Mr Tudor:

– Who signed the report of the Public Works Committee on the proposed work?


– I did. The Public Works Committee recommended that this work should be carried out. The members of the Committee went into all the details, and it is a matter for regret that the establishment of the exchange has been delayed so long. I hope that the PostmasterGeneral (Mr. Wise) will do all that he can to extend postal and telephonic facilities throughout the Commonwealth. I can assure him that if he proposes to do so the members of this House will not be likely to grumble about being asked to support proposals of this kind.

Question resolved in the affirmative.

page 2548


Commonwealth Finances - Order of Business - Federal Capital

Minister for the Navy · PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– After the interesting events of the day it is too late now to start on fresh business. In moving -

That the House do now adjourn,

I should like to convey to honorable members a piece of pleasant information concerning the financial transactions of the year, which ended on the 30th June. To my way of thinking the year’s operations have ended satisfactorily in every way. Our revenues have increased remarkably; from Customs and Excise we received this year £4,000,000 in excess of the Budget Estimate. I have always believed that the Budget Estimates were on the conservative side, the anticipated receipts being nearly always exceeded; I have rarely known them in my twenty years’ esperience in this House to be overestimated.

Mr Tudor:

– The receipts have never been so great as they were last year.

Minister for the Navy · PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– They have never reached anything like the colossal proportions of last year’s figures. We received last year, in Customs and Excise revenue, £21,640,000, or £3,890,000 in excess of the Budget Estimate. No doubt the new Tariff accounts, in some measure, for that increase, but high prices are, I think, largely expressed in the figures. I am glad to be able to announce that the income tax receipts for the year totalled £12,850,000. We anticipated receiving from that source only £10,500,000, so that the increase over the Budget figures was £2,350,000. Many arrears from past years have been paid into revenue. That speaks volumes for the spirit of our people, who, notwithstanding the ravaging drought which has raged over a large part of the continent, have stood up to their responsibilities in this way, and paid amounts that were due from former years. No doubt high prices have again helped, and I apprehend that we may look forward to continued high prices for primary products for some time to come.

Mr.Riley. - I hope the Acting Treasurer is wrong.

Minister for the Navy · PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I know of some honorable members in the Comer here who hope that I am right. When we hear of butter being sold in London at 240s. per cwt., we can still anticipate a distinct rise in the prices of some things. The reason is that, to-day, the world is still hungry, and many coun tries are in want of those thingswhich we, in this happy land, have in abundance. I think we should congratulate ourselves, not only upon our attainments during the lastfinancial year, but upon the prospects for the future. Of course, the expenditure also was greatly in excess of the Budget anticipations. That was due largely to big increases in the war pensions and old-age pensions, but notwithstanding these heavy advances in expenditure, we anticipate that the year’s transactions will disclose a credit balance of about £2,000,000. We commenced the financial year with an accumulated surplus of £3,476,478. There is unavoidable delay in completing the accounts for the year, owing to the fact that there are in London huge accounts to be balanced, the final figures of which do not reach us for several days after the financial year has terminated. For that reason the figures I am quoting are only approximate. But we anticipatethat whenall accounts have been balanced we shall have an accumulated surplus of between £5,000;000 and £6,000,000. I am looking forward to the appropriation of that sum in connexion with next year’s account towards meeting the heavy expenditure to which we are still liable in consequence of the war. At this moment our attitude should be one of gratification for the manner in which the people have respondedto their liabilities, and particularly for the factthat we live in a country that isso happily circumstanced.


.-We were all delighted to hear the Acting Treasurer’s statement, particularly as it followed upon the somewhat dismal picture that was painted during the reading of correspondence earlier in the sitting. I am glad that the financial outlook is improving. As I stated when speaking on the Tariff last night, I am concerned with the Tariff, less as a revenue producer, except in regard to Excise duties, and import duties on beer, spirits, and narcotics, than as a means of giving advantages to Australia’s industries. Perhaps one of the causes of the ‘big increase in Customs revenue are the high prices which are operating at the present time, and which, unfortunately, the people have to pay. I am hoping for the time when prices will decrease,but I candidly admit that those persons who are in the best position to judge do not anticipate any material decrease in the near future. I should like the Acting Treasurer to inform the House of the order of business for next week. Honorable members should know whether we are to proceed with the Tariff or with the Navigation Bill and the Passports Bill, so that they may come prepared accordingly.


– I wish to impress upon the Acting Treasurer (Sir Joseph Cook) the necessity for making some adequate provision in the forthcoming Estimates for the construction of the Federal Capital. At Canberra theCommonwealth possesses one of the richest properties in Australia, and it is calling aloud for development. The development already carried out there has been immensely profitable, and by the expenditure of the money necessary to honour the bond entered into with the State of New South Wales at the time of Federation, the Commonwealth would be able to develop there a rich revenueproducing asset; The honouring of that contract is long overdue, and I hope that the Estimates for the current year will disclose that the Government are determined to keep faith with New South Wales. There is abundant evidence on every hand that this is not a National Parliament in the fullest sense, and that it cannot be so while it continues to sit in the capital city of one of the States.

South Sydney

.- When I interviewed the Prime Minister in Sydney concerning the prospects of proceeding with the Federal Capital, Mr. Hughes informed me that the question of finance was the difficulty in the way. We are now informed, however, of a surplus of some £6,000,000. In view of that happy state of affairs, I hope the Government will make a full statement to Parliament next week regarding the Capital. New South Wales has endeavoured to carry out her share of the obligations entered into with the various States under the Constitution, and she should no longer be denied her own rights. I look to the Government to honour the agreement, and I believe this House will heartily support the proposal to complete the Capital at Canberra.

Minister for the Navy · PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

.- The first item of business for next week will have to do with the second reading of the Science and Industry Bill. After that, honorable members will probably he asked to consider the Navigation Bill, and following upon that item there should he an opportunity to further consider the Tariff.

Question resolved in the affirmative.

House adjourned at 3.33 p.m.

Cite as: Australia, House of Representatives, Debates, 2 July 1920, viewed 22 October 2017, <>.