Mr. Speaker (Hon. Sir Elliot Johnson) took the chair at 2.30 p.m., and read prayers.
page 5788
QUESTION
RESIGNATION OF EXTREASURER
Mr WATT: Balaclava
.- I desire, by leave of the House, to make a statement concerning my resignation as a Minister, and my withdrawal from the mission to Great Britain.
Members of the Opposition. - Object!
Mr SPEAKER:
– There being an objection, the honorable member may not proceed.
Mr Blakeley:
– By way of personal explanation, I wish to say that I was reluctant to take the extreme step of objecting to a member of this House making a statement–
Mr SPEAKER:
– That cannot be the subject of a personal explanation.
Motion (by Mr. Hughes) put -
That so much of the Standing Orders be suspended as would preclude the right honorable member for Balaclava (Mr. Watt), the Prime Minister (Mr. Hughes), the Leader of the Opposition (Mr. Tudor), and the Leader of the Country party (Mr. Mc Williams) from making statements to the House.
Mr Blakeley:
– Get on with the censure motion.
The House divided.
AYES: 45
NOES: 11
Majority . . . . 34
AYES
NOES
Question so resolved in the affirmative.
Mr WATT: Balaclava
– I de sire to thank the Leader of the Government for the opportunity which his motion has afforded me of addressing the House. I do not presume to offer any opinion upon the objections raised by two honorable members. They probably had good and sufficient reasons for so doing.
Honorable members will .probably remember that in March last I left Australia on what was regarded as a mission of considerable public importance. They will doubtless also recollect that early in June I resigned from the Government in consequence of differences between the Cabinet and myself, and that on 2nd J uly the Prime Minister read in this House some cable correspondence which had passed between us, and explained %he situation from the point of view of the Government. The House is entitled and - I am led to believe - desires to hear the other side of the story, and my purpose to-day is to deliver it. I hope I shall be forgiven if the personal pronoun obtrudes itself somewhat in my remarks, but, in the peculiar circumstances, I fear that is unavoidable. I shall endeavour to unfold a plain, unvarnished tale, so that Parliament and the country may, if they wish, pronounce a considered judgment. At the outset, I will ask honorable members to cast from their minds one erroneous expectation which may have been implanted by unauthorized newspaper comments and predictions. I do not return to Australia to ventilate any personal or official grievance. Neither am I intent on pursuing a vendetta against the gentlemen with whom I have worked for three and a half years in more or less harmonious concert. Humanity, the world over, is moving, amid conditions of the utmost gravity, to the> stupendous difficulties that follow in the war. Australia has her.shave of those difficulties, as I thankfully believe she also has her share of new and wonderful opportunities. There is little enough time, however, for her. big tasks and none at all for quarrels between, individuals. In this mood I would willingly have accepted any disapprobation or even obloquy which some hasty or prejudiced persons may have attached to me; but it is my duty to explain the facts in justice alike to the public mind and to any political reputation that may linger around my past work. I am not here to appeal for sympathy or to lick my wounds. Neither am I here to indulge in intemperate language. But I shall speak very plainly, and I shall have occasion, if permitted by the indulgence of the House, to ain.plify not only matters in connexion with my recent mission to England, but those connected with the former Peace embassy, from which the Prime Minister (Mr. Hughes) and his colleague, the Treasurer (Sir Joseph Cook) emerged with merited distinction. I shall find it necessary to read some portions of the cable correspondence which were omitted from the published file, as well as to introduce new matter. I have carefully read the speech which the Prime Minister made in this House in July last. In a brief interview which I gave the press in London after my resignation, I said that if Mr. Hughes considered my remarks unfair or inaccurate I invited him to lay upon the table of this House the cables which had passed between us. I imagined that he would have done this, and would have allowed the correspondence to interpret itself. Instead, he employed all the strategy of a past master in his ex parte deliverance. Before reading the cablegrams he assumed an air of solicitude and fairmindedness which created an atmosphere of hostility to myself. With a running fire of comments during the recital of the more important documents, he intensified that feeling; and. in closing, he vigorously, if regretfully subjected me to a condemnation which was strangely at variance with his opening declaration. His words were, “ I have never said, and do not propose to say, one word against him.” The performance proved a victory for the Prime Minister - even if a pyrrhic one. I feel disposed to add at this stage only one thing. Give me the opportunity of uttering a chorus of criticism when reading my absent opponent’s letters, and I will easily prejudice him in the minds of my hearers.
I think I ought, at this stage, to read to the House an extract from a newspaper published in Melbourne dealing with the circumstances of which I propose to treat to-day. It is published in placard form, and is headed “ Which Hand?” The extract is as follows.- -
In the course of a few days William Alexander Watt, the quondam Treasurer of the Commonwealth, will reach these shores. Naturally, there is a certain section of the community hoping for political fireworks when he arrives. But they who look for fireworks will probably look in vain. If there is even a stick from a dead rocket, it will be more than surprising.
The whole situation with regard to Mr. Watt and his return is really that all the facts of the case have been placed before the country, and there is nothing more to say. Those who think there is something more to. reveal merely suggest that the Prime Minister is such a fool as to try to hide something when, obviously, “ the other fellow,” from the very nature of the mission with which he was entrusted, would know just as much as. he, and be in a position to let the cat out of the bag - if there were any cat dr any bag. And even the worst enemies of the Prime Minister would not suggest that he is a fool,, or lacking in shrewdness.
Mr. Watt is the one who has to face the music. He undertook an important mission on behalf of his country. That mission meant much to the. finances of Australia. It meant much to the future status of Australia among the nations of the world. Mr. Watt left his job at the crucial moment. That charge he has yet to answer. Mr. Watt has yet to explain why lie behaved in such a fashion.
Doubtless, when Mr. Watt returns, he will be given an opportunity of making his explanation, not only to. bis own party, but to the House and to his country as’ well. It is only fair to Mr. Watt that he should bc allowed to do this,, for his actions certainly seem to call for some explanation, and he alone can clear away the prejudice they have created. And, having given what must be, and only can be, ranked .as a personal explanation or a privileged statement, it will .be for Mr. Watt himself to decide whether he shall quietly take his seat in. the House or drop out of politics altogether.
When Mr. Watt returns, it will .be- a case of “Which hand will you have?” One hand may clasp the olive branch, but it would be just as well for him to ascertain .whether the other hand does, or docs not, grasp a bludgeon.
That is taken from the Melbourne Punch of 7th October. I am informed on good authority, that that paper was recently purchased by Mr. P. W. Hughes, a close personal friend of the Prime Minister. I shall not at this stage traverse the arguments contained in that placard, except to say that I am not to be deterred by any threats of bludgeons from following the track I have marked out for myself. I shall say what I have to say in this free Parliament - and I hope it is still free - disdaining the intimidation of press des- peradoes hired by the friends of the Prime Minister.
I think I am entitled to say that I did not seek this trip, but strongly recommended that another Minister should be despatched abroad. Eventually, after three discussions, extending over almost as many weeks, I yielded to the pressure of a unanimous- Cabinet that I should- undertake the task. “Unanimity is not usual in a Government, according to my experience, and. it is to me an interesting, and, shall I say, a cynical reflection that this Ministry have achieved it on at, least two occasions. First when they decided with many rich compliments that I should go away; and, second, when they confirmed the view of their Leader that -I was unworthy of trust in the duties which they had so- recently declared I was so well qualified to perform .
The problems assigned me for attention at the other end of the world were many and various. With the exception of those dealing with the affairs of Australia House they all involved important negotiations with the Imperial authorities. A few days after my arrival in London I was surprised to learn that the British Government had not been advised of my mission. This Parliament had been told by the Prime Minister in March that I was to sit as the representative of the. Commonwealth m the Imperial Cabinet; but no intimation to that effect had been sent to the British Government. I felt the awkwardness of the’ position, and cabled to the Prime Minister asking him to wire me full authority to sit. He afterwards informed me that he had sent a cablegram to the Secretary of State for the Colonies, giving the necessary authority. Meanwhile I was an emissary, charged with pressing and far-reaching, matters, and the Government with which I was to discuss them had not been made officially aware of my existence. When the matter was apparently attended to I dismissed it from my mind, and the uncomfortable remembrance only revived when other developments which -I shall describe began to link with it. I have no doubt that such a procedure for the time being, at least, materially prejudiced my status and impaired my usefulness. Although, afterwards, I was sent confidential Cabinet papers I was never, as a matter of fact, invited to a Cabinet meeting in London. It may just have been that the subjects discussed while 1 was there were not of a strictly Imperial character. I was, however treated wit. characteristic personal courtesy by Ministers, and have no complaint to make on that score.
Those who know London, and parlarly the White Hall and Westminster end, recognise the importance of status as an asset to a Dominion visitor. There are, I imagine, many who would describe this occurrence as an unfortunate blunder, and ,1 was so inclined .to consider it; but coming almost simultaneously with other events of a more serious nature, I could not, and cannot even now, adopt that view.
But I pass on. The most urgent and important subject I was sent home to handle was finance. The problems were big and. pressing, and they demanded and received first attention. While I was in London money was scarcer and dearer there and in other world markets than in- the blackest days of the war. It was impossible for any over -sea borrower to go on to the open market and .gather any. I had been given a triple financial puzzle to solve. First, I was to get new loan money for repatriation-; second, I had to arrange for the discharge of our heavy indebtedness to the British Government ; and, third, I had to square up wool accounts and moneys, and gather some of the cash owing to our growers. The more I studied the whole subject before and after leaving Australia, the more it became plain that wool money was the only key that would open the other two doors. With a proper settlement of that matter, I could devise propositions which would satisfy the Imperial Exchequer and help our own Treasury over its immediate difficulties. Everything depended, therefore, on the delicate and tactful handling of the wool problem. Skill and prudence would lead us to probable success, clumsiness to certain failure. Let us see what happened.
While I waa on the water, the Prime Minister was approached by what he called in his cable of 20th May “ a section of the wool trade ‘ ‘ to propound a new wool scheme embracing past and present clips. I have a shrewd idea who that section was, but I will let that pass for the present. According to the same cable, he “ worked up the whole thing,” to use his own phrase, and subsequently placed “ a complete scheme “ - again using his own words - (before a private meeting in Sydney on 27th April. I ask honorable members particularly to note that date. All the time he was being approached and was working up and propounding this scheme to outsiders, he was in frequent telegraphic touch with me, as his published cables of 15th April, 16th April, 21st April, 30th April, and 4th May show. Yet he did not mention one word of -this to une. Before I left Melbourne, he and I agreed that wool was the pivot of finance in Britain. Yet here was a new set of important proposals, concerning the most important part of the mission, being dealt with in secret, and I was kept in entire ignorance of the intrigue.
I landed at Naples on 1st May, and received the Prime Minister’s cable of the 30th April, suggesting that I should not hasten to London, but should see the Continent. I thought this strange, since my arrangement with him was that I should go with all possible despatch to London; but I put it down to fraternal solicitude for my health and welfare, and did not appreciate the inwardness of things till later. I arrived in London on 10th May, and two days later received the Prime Minister’s cablegram asking me not to see Ministers about finance or wool until further advised by him I was still unaware of any new proposals, although, as the Prime Minister said in one of his later cables, the matter admitted of no delay. I replied to his cable the day I received it, 12th May, that I could wait two or three days, but any further postponement would be awkward. The next day, 13th May, the London Times published the Prime Minister’s wool scheme, which, for the first time, I saw in the press. Later on the same day I received from the Prime Minister a long cable, dated 11th May, containing his scheme, and also containing much that was unnecessary, because it was well known to me, and much that was laughably erroneous so far as finance and trade were concerned. Honorable members may recall the fact that the Prime Minister, in that cable, indulged in quite a lot of arithmetic. He went so far as to express his belief that by June, 1921 - that is next June - there would be lying in London, to the credit of various Australian public and private accounts, £135,000,000. Five months have elapsed since he uttered that opinion, and the conditions have changed so rapidly that a substantial premium is now asked for the purchase of sterling in London. However, this is. an excursion. I noted in the Prime Minister’s cable of 11th May that wool men, bankers, and other financial authorities, politicians, and journalists, had been consulted about his new scheme, but not one word of information had been furnished to, or consultation sought from me. In fact, I appeared then to be about the only man interested who knew nothing at all about the matter. I afterwards learned, however, that the Central Wool Committee had also been kept in the dark. The more I thought of the ready-made scheme sent to me, the more I feared its effect on wool interests- here and in Great Britain; and Australia’s unhappy experience since the wool sales opened, has, I believe, now convinced many others of its weakness. I was shocked by the Prime Minister’s methods revealed in this message, and I made my first protest in the cable of 13th May. Even then the idea that this was done deliberately to thwart my mission did not occur to me. I merely thought that this section of the wool trade had, to use a vulgarism, simply “ pulled “ the Prime Minister’s “leg,” and that his worst crimes, apart from this, were his failure to see the situation clearly, and his more than usual lack of frankness. I believed that the Prime Minister had committed his final mistake, and would then leave the matter to me to straighten out. If he had done so. any difficulty would have been between himself and myself, and the subsequent outside complications would have been avoided. So I swallowed hard, and went to work. I saw the Chancellor of the Exchequer, and provisionally discussed the payments due by the Commonwealth. I told him that before presenting a scheme of settlement of our debts I should have to investigate the wool accounts, and see how much money was due to and procurable for Australia . Mr. Chamberlain cheerfully assented to that procedure, and intimated his willingness to sympathetically consider my proposals, and help as far as he could. I then entered into consultation with the Minister for Munitions, Lord Inverforth, and the Director-General of Raw Materials, Sir Arthur Goldfinch. It was quite clear from the first touch with’ these gentlemen that the criticism which had fallen upon the British end of the Wool Pool from certain Australian pens and lips had not rendered a settlement any easier. I explained this in a cable to the Prime Minister. However, ere long that feeling was happily brushed aside, and we got down to business. At my request, the Ministry gave Mr. Collins, the Secretary to the Commonwealth Treasury, free access to all accounts and documents, and placed him in intimate daily touch with the accountants and auditors; in fact, they gave him the “ free run of the office.” This presented me with the opportunity of checking the vital figures of profits and the surplus cash in hand. After several days’ investigation, the Minister of Munitions and I arrived at important conclusions. These were embodied in mv cable of 21st May, which the Prime Minister, _ I think with propriety, treated as confidential.
In order to illustrate how far the negotiations had gone, I now propose to accept the responsibility of giving those conclusions to honorable members. I shall read the words of the cable, and honorable members can themselves connect them with the cables already laid before them. Here is the part that has not yet been published -
Australia’s share of profits year ending 31st March, 1918, £1,900,000. This you already know -
I ask honorable members to remember that we are working up to the end through four yearly rests. The 31st March being the end of the financial year of the British Administration, we take 1918 as the first, then 1919, then 1920, and a date at the end of the scheme whenever it is cleared up -
Our share year ending 31st March, 1919, £4,’500,000. Draft balance-sheet for this period now in my hands will be finalized in, say, three weeks. Rough estimate of our share profits year ending 31st March, 1920, £20,000,000-
That had expired by the time I was speaking about, in May, 1920 -
Expect many months elapse before this balancesheet available. Meantime take it at conjectural value. Still more rough guess at our share profits when all stocks cleaned up another £13,500,000. Total of above approximately £40,000,000 as Australia’s share profits. I should mention that all these figures of profits are based upon valuation of stocks at cost. Now as to surplus cash -
As I explained to the Prime Minister in one of the cables, there is a vital difference between profits and surplus cash -
You, of course, understand that, so far, practically all profits have been absorbed in paying for stocks. After much argument I secured statement from Minister and Director that by 30th June, 1920, cash in hand would total about £19,000,000. I said that we must have our share then, and they eventually agreed to hand me £8,750,000. That is about our proportion of £19,000,000, and is sum we have contracted pay British Government. Need not stress this point further now. I then pressed for another substantial payment before I leave Britain, say, in September. They agreed, hut we could not decide amount at the moment. I am, however, hopeful that I can get between ten and twenty millions as second dividend before returning. Directors estimate of carryover next September between three-quarters and one million bales, mostly cross-bred medium to low grades. .Generally I am well satisfied with result of negotiations. Are you?
I may say that, so far as I remember, the Prime Minister never answered that inquiry
Mr Hughes:
– Yes, I did.
Mr WATT:
– All this was the result of about a week’s work, and I was naturally gratified at it. Honorable members will remember that the Prime Minister said that he and the Central Wool Committee had been trying for two years to get as far. On the spot I had been able to get there in seven days. I was satisfied that by the 30th: June I would lift £8,750,000, and by 30th September at least another £15,000,000, and very possibly £20,000,000. The figures are, of course, gravely lower than that, but that I shall discuss at another stage. In accordance with my arrangement with! Mr. Chamberlain, I then set about shaping my scheme for .the
Exchequer, when a sudden change came o’er the scene. When next I met the Minister for Munitions I was shown a cable which the Prime Minister (Mr. Hughes) had sent direct to the British Government, containing three things in this order: First, a demand for a definite statement without delay of the amount due to the wool-growers of the Commonwealth ; second, a demand for payment forthwith for all wool sold to date; and, third, proposals for the new clip. The cable concluded by asking for an immediate reply. This had been sent straight to the British Government, as if I were not in London, and no mention was made of the fact thai I had been sent to Great Britain to discuss and settle the first two matters. I, of course, never contended that I had been asked to deal with the new clip. I said so in my cable to the Prime Minister. The new clip was intimately connected with my mission, but it was not part of it. I had certainly been nonplussed when I heard from the press that the Prime Minister had been developing problems so intimately connected with my mission without my knowledge. I was deeply concerned when I found “rom his telegram how far his proposals reached into my scheme, but never for a moment did I imagine that he would communicate those proposals direct to the British Government, and ignore the presence in London of the man who had been sent there to deal with them. ITo Minister can have any o’bjection to receiving the views of his Leader if they are sent direct to him, whether they agree with his own or not, but the position is quite different when his back is broken by that leader’s views being communicated direct to the people” with whom the Minister is in negotiation. The Minister for Munitions told me that he felt gravely embarrassed by the situation. He had arrived at certain important understandings with me, in the belief that I was fully accredited, but on the top of them he had received straight from the head of my Government demands of a totally different character. It was impossible, he said, to do business with me while the Prime Minister was trying to do it direct by cable. I was politely bowed out of the office, and the door which I had so successfully opened was closed behind me. On 27th May I tabled to the Prime Minister setting out tie position, and saying that I could proceed no further until my position was defined. In his answering cablegram of 2nd June the Prime Minister raised a smoke-screen of verbal irrelevancies. He was studiously courteous, but he rejected by evasion the only conditions on which 1 said and knew, and still know, I could do good work in London, and on the 7th June I resigned. The Prime Minister, in hi3 speech in this House on the 2nd July, expressed wonder that the very politeness of his telegram had not pacified me. I recognised and marvelled at this unusual exhibition of suavity on his part. In point of tone the cable was a jewel, but principle is more than tone, and instead of accepting the principle for which I was rightly contending, he indulged in long recriminatory recollections of my treatment of him when he was abroad, all of which I shall to-day duly answer. Right through this urbane cablegram there runs the assertion that he was right in submitting proposals direct to the British Government which cancelled the ones I had been authorized to make aud conclude. He was apparently careless or oblivious of the fact that his intervention had superseded me. Whatever else honorable members may forget that is important in this conflict, I hope they will remember that the crucial step in the- destruction of my mission was taken by the Prime Minister when he went over my head to the Imperial Government and inflicted damage that was beyond repair. The king pin of the mission was wrenched from my hands, and I was absolutely powerless to proceed. My authority had been withdrawn by the hand that gave it. My tentative and highly advantageous settlement had been rudely torn up, and I was removed from the arena of negotiation. Surely no more staggering blow was ever dealt a trusting colleague, but I shall not dwell upon that phrase; others may if they are sufficiently interested. There are some people who, not understanding the position, have said that I should have put my self-respect in my pocket, gone on with my work, and fought the issue with the Prime Minister when I returned. Difficult as that would have been, I would have done it if I could have rendered useful service to Australia. But my principal had intervened, and I was no longer a factor in the discussion. British Ministers are not fools, whatever the Prime Minister may think or suggest, and the ones concerned with the wool problem properly felt that it was unwise, unsafe, and impossible to negotiate and make arrangements with a subordinate Minister when his leader did not recognise him, and, with his conflicting demands, repudiated the line of settlement already agreed upon. Their courtesy was unfailing, but their meaning unmistakable. I observe that in his, July speech in this House the Prime Minister suggested that I had abandoned my position wantonly, and left the Commonwealth stranded and helpless, apparently heedless of, or subtly hiding, the fact that the situation was the direct and inevitable result of his own deliberate acts. Even when animated by fraternal motives, the Prime Minister’s mischievous ubiquity surrounds his ‘colleagues with difficulty. He is evidently obsessed with the idea that no man con do “good work but himself, and he cannot keep his finger out of any pie. I could have completed this business in a short time if given fair play and a reasonable chance, but it is impossible to do business in London under the conditions he created. Throw doubt on the credentials of an envoy in Britain and he might as well leave. Failure to notify my mission to the British Government cast doubt on. my authority. Direct and contradictory negotiations while I was there, and after I had arrived at agreements confirmed that doubt. In the circumstances, I could do no good for the Commonwealth, and so I decided to withdraw. And I say plainly, after four months of further reflection, that I would do precisely the same again if confronted with similar circumstances. The Prime Minister contended that he was trying to support me. The support he gave me was the support which the rope gives to the condemned man. My understanding with him in regard to finance and related matters was that I should be untrammelled. In the pressure he brought to bear upon me to undertake this work he flattered me with the suggestion that I understood these subjects better than any one else. He admitted that he knew nothing about finance, and he de- clared that Parliament and the people trusted ray knowledge and judgment. He knew then, as he knows now, that I would never have left Australia if I had imagined that in this delicate and special financial work, I would have been so grossly tampered with.
Now I come to another phase of the subject. The Prime Minister dwelt impressively upon the wrong my resignation had inflicted upon Australia in leaving it unrepresented at the Brussels and .Spa Conferences. He described those gatherings as being vitally important to our people. The first notification about the Brussels Conference reached Melbourne before I sailed from Australia. It was sent by the Prime Minister’s Department to the Treasury Department, and I wrote a minuteon it to the effect that if the Conferencewere held while I was in England, I would attend it on- receipt of a cablegram from the Prime Minister. I received a cablegram from Mr. Hughes, dated 21st April, when I reached Suez, intimating that I was to represent Australia at the Conference, and I replied that I would do so. The meeting was summoned by the Secretary to- the League of Nations to study - honorable members will be good enough to mark this - the international financial crisis. I understand that the matter originated in requisitions signed by a number of business, men in various Allied countries, and presented to their respective Prime Ministers. The British Prime Minister, in consenting to the Convention, laiddown the condition that nothing done at it was to increase the obligation of Great Britain to help any other nation. The. idea, behind the Conference was to see if some solution could be found of the puzzle of international exchange-. The French and Belgian franc, the Italian lira, and’ theGerman and Austrian mark had suffered a tragic though varying decline and it was consequently difficult, if not impossible, for countries -trading on a nondepreciated sterling basis to- do business with the countries whose currency had fallen. The British Government nominated three bankers to represent them, and did not send a Minister, although the revival of their great Continental commerce might have seemed to warrant the appointment of a Minister. They, however, thought lightly of the matter.
The more I studied the subject and discussed with financiers in London the prospect of a solution being discovered, the more I became convinced that there was nothing in the matter for Australia. Our microscopic contribution to the problem of international exchange could only be given by increasing the already heavy load on our Treasury and our private financial institutions, and I felt that it would be extremely indiscreet to undertake anything of the kind. The only way in which Australia could help the stricken nations wa3 to grant credits for goods sold to them; in other Words, to take their bonds in exchange for our commodities. Had we consented to do this, to the extent that we relieved their misfortunes we should have increased our own a hundred-fold. This, in the then state of our finance, would have been dangerous, for it would’ have meant either raising a special loan for the purpose, or still further inflating our already big paper issue. The Brussels Conference, instead of bringing grist to the mill of the Commonwealth.,, would, if ‘ we had been committed to anything by it, have drawn upon our substance. Mr. Collins, the Secretary to the Treasury, who eventually attended! as the representative of Australia, evidently discovered this, as his cabled interview published in last week’s newspapers plainly indicates. The clouds of the Brussels Conference were not big with blessings for Australia, as the Prime Minister (Mr. Hughes) professed, aud honorable members will see that Australia lost nothing by my non-attendance at the Conference.
Now we come to the Spa Conference. One would conclude from Mr. Hughes’ references that I had been appointed representative of Australia at the Spa Conference, which was summoned to meetearly in June. That was not the case. On the 12th May, the British Prime Minister cabled to the Australian Prime Minister, through the old channel of the Secretary of State for the Colonies and the Governor-General, directing attention to this matter. Although I have a copy of the cablegram, which I obtained by direction from Lord Milner, I doubt whether I am at liberty to read it. It is not marked secret or confidential, but there are portions of it which, in British interests, it, might not be advisable to disclose to the German Government. I think, however, that I am at liberty, now that the Con’ference is over, to refer to some portions of the cablegram without violating propriety, in order to show generally what was the contemplated purpose and scope of the Conference, and what was the invitation given to Australia. At Spa the representatives of the Allied Governments were, for the first time since the signing of the Peace Treaty, to meet the representatives of the ‘ German Government. The primary purpose of the meeting was to ask the Germans to explain past infractions of the Treaty, and to make arrangements for its future execution. A serious attempt was also to be made to fix the liability of Germany for reparation. It was thought that Germany wished to know her exact liabilities. It was considered that certain other matters might be raised, but - and the cablegram is perfectly plain about this - there was no idea of a revision of the Versailles Treaty. The British Government, feeling that the Dominions were interested, invited each of them to send an accredited plenipotentiary to attend meetings of a British Empire delegation in London, to discuss with British Ministers before they went to Spa the questions involved. That was the substance of the whole matter. The meeting was an Inter-Empire gathering in London preliminary to the Conference at Spa.
An Honorable Member. - Was there any possibility of the White Australia policy being interfered with at that Conference ?
Mr WATT:
– I think not; but I do not wish to make excursions into other matters now, and thus, possibly, confuse honorable members regarding the main issue. Canada nominated its High Commissioner, New Zealand nominated its new High Commissioner, South Africa sent no one, and I was deputed to attend for Australia.
Mr Considine:
– Not to attend the Spa Conference ?
Mr WATT:
– No; to attend the meeting in London.
Mr Mahony:
– You were to meet the British Ministers ?
Mr WATT:
– That was the invitation. I believe there was a short meeting of the Dominion representatives in London, but it was not treated as of much consequence. Mr. Lloyd George’s cable gram to Mr. Hughes declared that what was required in Europe was prompt decision, if hundreds of people were not to perish from disorder and famine; that delay at arriving at conclusions now must precipitate Europe into chaos. That was why he asked for plenipotentiaries. I find that, by the dictionary, a “ plenipotentiary “ is defined as “an ambassador or other high official invested with full power.” I Was nominated as the Australian plenipotentiary, but I was gravely told in the same cablegram that I was not to agree to certain things without consulting Mr. Hughes. The arrangement was so Gilbertian that I was divided between amusement and annoyance. The idea of being asked to masquerade as a man with plenary power knowing I had none, was ludicrous, and I told the Prime Minister so in unmistakable language. I do not believe in hypocrisy of that kind, and I did not see why I should be made a party to it. That ended the matter; but the Prime Minister (Mr. Hughes), in his cablegram of the 2nd June, 6ent me an unctuous homily upon the evil of my way. I had not the slightest desire to assume the powers of a plenipotentiary, but I objected to making a farce of a very serious drama. If the Prime Minister had, in his reply to Mr. Lloyd George, objected to the status to be conferred upon Dominion representatives, as he was perfectly entitled to do, and had nominated me as the representative of Australia, I would not have been serving under false colours, and I would have been only too glad, in fact eager, to consult by cablegram with Cabinet, and especially with the two Ministers who knew the provisions and issues, of the Versailles Treaty better than I. But the Prime Minister did not appreciate the incongruity he had created, and chided me with wishing to usurp the functions of the Government. The Spa Conference came and went and accomplished nothing. When I arrived in England, as the press extracts will show, I put Australia’s view about reparation and indemnity in an uncompromising manner ; but 1 was long enough in England to have lost faith in any German” indemnity for British people worth talking about, and any man who builds on it is, I am afraid, building on air. In saying this, I do not reflect on the genius and strength of purpose of Mr. Lloyd George. No man can visit
Britain and watch him at his work on world problems, noting the great influence which his rare and magnetic personality exercises over Continental statesmen and nations, as well as on the great bulk of the British people, and feel anything but sympathy and admiration for him in his giant tasks. I may be wrong, and I hope I am, but with the unparalleled decline in Continental currency, the disorders that reign in Europe, the resolute intent - and I beg honorable members not to think that the words are hastily used - with which Prance is pushing for a larger share of any indemnity, and priority in its ‘ payment, even straining the Franco-British Alliance in the attempt, I feel that in the end the British Empire must submit to receiving much less reparation than the Treaty provides. It is a lamentable thought, but I believe a true one. Mr. Hughes may place any value he likes upon a gathering of Ministers and High Commissioners in London, but I object to him misleading the people of the Commonwealth by saying that I was appointed to attend the Spa Conference, and by magnifying the loss Australia suffered by my absence.
Dr MALONEY: MELBOURNE, VICTORIA · ALP; FLP from 1931; ALP from 1936
– - You are not fair to France.
Mr WATT:
– I am giving my frank opinion.
Bunning through the Prime Minister’s speech, and in one of his principal cables to me, are two assertions. First, that he and I were in exactly the same position whilst abroad, he at the Peace Conference and I in London; and, second, that I had imposed on him the -same control as he was placing on me. I will deal with these assertions in their order, and hope to prove the first a fallacy and the second untrue. Dealing with them in their order, let me say that there was a vital difference between his task and mine. He and Sir Joseph Cook left this country six months before the war closed, to attend a Conference of Empire statesmen convened by the British Government. We had had no advice as to the matters to be considered. They left without knowledge of -them, with no instructions, and no discussion with their colleagues. We were hopeful that peace would come while they were in Britain; but we did not know. We could only hope.
Then came the Armistice and the Peace Conference, which threw upon them tremendous responsibilities. With the exception of one matter, with which I can deal more fully at a later stage, if necessary - and which arose before the Conference assembled - our peace delegates were left entirely free from interference or control. If the cables were laid upon the table it would be seen that our messages to them are classifiable under three heads : first, those appealing for information regarding the progress of the deliberations; second, many voluntary messages giving helpful data or suggestions; and, third, strong cablegrams of approval and support sent in response to their requests. Once or twice, it is true, I explained to the Prime Minister how awkward it was for his colleagues here to read his views in the press before we had received them direct. But, with the one exception referred to, the Prime Minister received at our hands, as Peace Ambassador, no word of criticism and no instructions or directions. . No other delegates to that Conference were as free. These are generalizations, and provable, if the Prime Minister desires, before any judicial body. However, let me give two specific illustrations to which he has drawn attention. He complained- that his Government turned him down regarding the island of Nauru. I will read the cablegrams upon that question, and allow honorable members to decide for themselves. My first cablegram to the Prime Minister dated 31st January, 1919, is labelled “Very urgent and most secret.”
Dr MALONEY: MELBOURNE, VICTORIA · ALP; FLP from 1931; ALP from 1936
– I suggest that the honorable member give up a lot of this secrecy. Let us have the whole business to-day.
Mr WATT:
– I am doing so. Honorable members will please remember that this was just shortly after the Conference had assembled. The cablegram reads -
Very urgent. Most secret. Pacific Islands. Your telegrams 29th, 30th January arrived simultaneously, and were considered at length by specially called meeting Cabinet. Your colleagues, appreciate and share your bitter disappointment at turn of events. It is clear to us that the situation and prospects outlined by you are fraught with the gravest possibilities to the people of this country. The
Government’s unanimous view is that Australian representatives and other Dominion statesmen are now being forced to proceed to a policy of complete isolation, or, alternatively, to accept conditions surrounding our future safety and welfare Which are ;not warranted by moral ‘or national considerations.
Your former cables conveyed comforting assurances that the representatives of Britain and France would accept Australia’s point df view and support her in this vital matter, and we view with greatest apprehension the changed attitude leading to acquiescence in Wilson’s .procedure and objective. However the project of League of Nations may shape itself, ‘the people of ‘this country fully ‘expected that *he Peace ‘Conference would determine such territorial ‘questions ‘before it rose. If -this is to bc left to some other gathering to be convened later, Australia will feel that its future has been left in a condition of grave doubt, and the Government begs of you to stress this phase to other Dominion statesmen, and particularly to the controlling minds of Britain, Prance, and America.
On “the question of mandate, the people of this continent strongly feel that British or Commonwealth Government, preferably the latter, should be given full control of former German Possessions now in occupation of our Forces. Our beneficent rule of native races in Papua should ‘be sufficient guarantee to our great Allies that, if intrusted with this responsibility, we shall exercise our powers wholly in the interests of the .health, education, and prosperity of the natives. If this full trusteeship is impossible, then any mandate should specify publicly and definitely that the control of immigration, Tariff, and trade matters should be given to the administering authority. The most important of these is immigration. If this is not specified, Australia’s racial policy will be challenged and injured, if not destroyed. This can only mean eventual predominance of- mixed and inferior races in ‘the islands. Surely America must sympathize with a people isolated and adjacent to unnumbered coloured millions, but resolutely facing its duty to keep this fertile continent and its intimately associated islands for the selected white races.
Australia’s bona fides have been demonstrated in such matters ever since her people have undertaken national ‘tasks on this continent and the associated islands. Definite mandatory control, if inevitable, as it may prove, should, we contend, be vested in the Government of the country whose security is especially ‘affected, and whose troops are in occupation of territories in question.
Paragraph (0), your telegram, 30th January, indicates -that Botha, Massey, and yourself, after discussion, agreed to accept inevitable if their Government approved. You are best judge as to whether it is inevitable, but we hope, reinforced by the ‘foregoing ‘views you will strongly press ‘for reconsideration and settlement more acceptable to our people.
We appreciate ‘as much as ever ‘the advantage to Australia of Empire association, ‘and of ‘ protection, past and future, ‘by British
Navy, and think that, while Australian people would probably accept- that is, if you yourself accepted- whatever the statesmen of the United Kingdom and other Dominions determined, a settlement, supported neither by necessity nor highest moral interests, would seriously damage splendid feeling of cordiality’ towards British connexion, which ‘hitherto has dominated .our .political ‘and ^national existence.
We feel sure you realize, notwithstanding all these arguments, that Australia could not endanger relationship with Motherland andantagonize America without placing its whole future in jeopardy, and your colleagues, in full recognition of the splendid fight you are putting up to preserve Australia’s future, and. requesting you to continue such representations as far as you may consider it prudent to do, leave this most important of all considerations entirely in your keeping, contenting themselves with an expression .of ‘the hope that, should developments appear to render imminent a decision seriously affecting our continued relationships with the British Government, you will, if possible, take the opportunity of conferring with. us. (Signed) Watt.
That was the cablegram which we sent to the Prime Minister and his colleague on 31st January, 1919.
Mr Considine:
– That explains Nauru.
Mr WATT:
– I have a lot more besides. This message was full of the strongest possible data and considerations, with which - in the busy hours he was then living in London or Paris - he could reinforce his representations to the British, French, and ‘ American Governments. It presented in a more tabloid form than ever . before the whole question of a mandate over these islands, and its influence upon our future racial and industrial development. It told the Prime Minister what was the feeling in Australia, and it then said, in effect, “ We leave all these things in your hands, and are content .to let you exercise your judgment. But, if there .should be a great crisis, and, -on the One hand, America should frown on your representations, and Britain should do as was suggested that she threatened -at one time to do - that is to say, not .support ns in our :suit - then we ask you., it possible, to confer with us.” -Up ‘to that point no man could have been given a greater charter of generosity or liberty ‘to work upon; and ‘that went right through, to the point when the Prime. Minister ‘said we had- ‘turned Wm down.
I shall now read the other cablegrams. The Conference went on, andi these questions had not been settled. We were con.stantly wiring for information asking how the Prime- Minister and his colleague were getting on. We were not blaming our delegates for not advising us. We knew the ramifications and the details inseparable from such a gathering of the world’s statesmen. But we sent to the Prime Minister- this cable,, on 1st May, 1919:-
Cabinet lias been waiting patiently- for. some information concerning destination of, German West Pacific Islands, Surely matter dias been determined, and we are anxious to learn our fate. I need not restate general arguments for control, for Australia’s safety’s sake, of all islands now in military occupation of Australian Forces. Whatever happens to League of Nations, that insurance is vital.
I feel, however, I must again emphasize view of Government respecting Nauru: British authorities are apparently treating it as. if it were to pass to British Commissioner for Pacified Your colleagues hope you will vigorously resist such proposal. Our troops took it, and have garrisoned it for over., four years. If we are to get mandate for other German Islands, and not that one, it will be impossible to understand basis of settlement or explain away so ugly a differentiation. Its transfer to Commonwealth with other- adjacent and similar lands will simplify and cheapen administration, and obviate complications arising out of, overlap, of authority by Britain and Australia in these seas. Our orbit of authority would be plainly charted, and our responsibility clearly discernible. These considerations appear, to Government- to be elementary and irrefutable. Add this one with all the force of which you are capable.
If cost of war is not to be included. in reparation bill, Australia’s hope of getting anything substantial in relief of its crushing war debt is slender. Nauru is the one island whose receipts exceed its expenditure. Its phosphate deposit marks it. .of considerable value, not only as a purely commercial proposition, but because the future productivity of our continent absolutely depends on such a fertilizer.
Without a sure and reasonably cheap supply of phosphate, our agriculture must languish, and instead of peopling our vast unoccupied interior, population will continue to hug the seaboard, where they will be a comparatively easy prey to any predatory Power.
Unless we rapidly increase in numbers and in production, the national treasury will be unable to stand the strain now resting upon it. Australia’s total public debt to-day is greater by scores of millions than Britain’s was five years ago. Think of 5,000,000 people carrying in unproductive war debt of £300.000.000. ‘
League or. no league, we must, always remember that more than half- the people of the world look, with hungry eyes across narrow seas. at. our great empty land. We must guard this British outpost, and we can only succeed by liberal encouragement from our elder kinsfolk. We leave matter in your hands, relying on the wisdom and. generosity of British statesmen. (Signed)- Watt:
Pour months had passed since the first telegram. The second telegram, supporting; and becoming more specific in data was sent to him on the 1st of May, and finished by leaving the matter entirely in his hands. He replied on 7th May. I am not at liberty to read his telegram - he can do so if he likes - but in it he told us, and. I must, boil down the. substance of the- message, that great difficulties had occurred in regard to Nauru ; that he could- not get a. mandate for- Australia ; and’ that appparently, there was to be a British partnership. He concluded by saying,, “ I will not sign the Treaty, and will not- accept mandate- for other islands. Do you agree? Very urgent.” That was the attitude which the Prime Minister took up on the 7th May, and my answering telegram to him on 9th May was as follows:-
Secret. Your telegram May 7th, Mandates: Nauru. - I thoroughly sympathize with your frame of mind and disappointment re this island. I propose in review of peace terms in press to-morrow morning to deal with the matter as firmly as I consider it prudent to do so; but I think it would be improper not to sign Treaty because our reasonable aspirations regarding Nauru have been frustrated. If Australia says she will not accept mandate for islands because Nauru not included, the natural reply will be we are grabbing at valuable asset. I suggest that you put up best fight you can, and, if defeated, sign, relying on subsequent, negotiations and representations to compel Britain to accede to our view or make suitable equivalent arrangements of financial kind. This is also Cabinet opinion.
Mr Watkins:
– Then, were we sold?
Mr WATT:
– I am dealing with another matter. The honorable member may deal with that phase of. the subject for himself- The point I wish to make is that, in reply to the right honorable gentleman’s , inquiry as to whether I agreed that he should not sign the Peace Treaty^ and should not accept the other mandates- if- he could, not- get his way in regard to Nauru-, I said that I though t it would be improper not to sign. the. Treaty, and “suggested” that he put up the. best fight he could, and rely .on subsequent representations to unravel any tangle that might occur. I did not give any instructions. I was not entitled to do so, nor were my brother Ministers; but we made suggestions, and gave helpful ideas all the time. The Prime Minister’3 reply on 4th June, nearly a month later, was this -
In face of your telegram, I could, of course, not follow the only course that would have given us full control of Nauru and its phosphates. I am quite sure I should have succeeded had Cabinet supported me. As it did not, I have been perforce compelled to make best of a bad job.
The Prime Minister suggests that we controlled him, and that he was subjected to unfair treatment. I will ask any unbiased jury if Cabinet would have been justified in telling the Prime Minister not to sign the Peace Treaty, and not to accept a mandate over the other islands, simply because the mandate- over Nauru was eventually to be a” partnership between certain parts of the British Empire, and not a purely Australian mandate. Any jury can answer that question to suit itself; but I cannot conceive that any rational body of Australians would have thought the Government wrong in assuming that attitude. As a matter of fact, I believe the arrangement ultimately arrived at in regard to Nauru is a better one than that which the Prime Minister sought, and that it is less likely to load us with heavy capital charges in the purchase of the whole of the company’s rights. I propose, at a later stage, to give the facts regarding the new agreement for the purchase of those rights. I am quite sure that historians will .have no difficulty in deciding who played the statesman on that particular occasion.
I will take another case. The Prime Minister said, in his cable to me dated 2nd June -
You complain that I communicated with the British authorities. Let me remind y’ou. 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 for settlement of prewar1 debts, merely notifying -me of the action taken. That was clearly a matter on which I might have been consulted, at all events.
That is a quotation from the Prime Minister’s cable of 2nd June. I have not the means of proving what I am about to say, but the Prime Minister has. My recollection of this matter is that the present Minister for Trade and Customs (Mr. Greene) carefully examined this scheme when submitted by the Imperial Government and brought it to Cabinet for approval. I said that before accepting the recommendation, the Prime Minister should be consulted, and I authorized the despatch of a cable asking his views or wishes. After some delay the Prime Minister said he agreed, and Cabinet approved and for.mally notified the British Government. The Minister for Trade and Customs may recall the procedure adopted; but, in any case, the official files are open for inspection, and I have the temerity, after the lapse of two years, to rely upon my memory of the matter. If I am in error I will gladly make amends to the right honorable gentleman. So much for that.
Honorable members, if they wish to judge such questions fairly, must, I submit, distinguish between the Prime Minister as Peace Envoy and the same man as Dominion Minister doing business for his people in Britain. The right honorable gentleman would fail before any fair tribunal to demonstrate that he was placed in harness as a Peace Envoy.: but he complained in this cable of 2nd June that I had repeatedly checked and blocked him in his other capacity as a visiting Minister. He gave several instances in addition to those I have cited. I propose to take a few of them. He, said that I had extended the wool contract without his consent. That statement, so far as it goes, is quite true. The question of wool was never mentioned as one to which he would attend, and, at his own request, I was specially placed in charge of it during his absence. I shall deal with this more fully when I come to refer to my earlier resignation from the Government, to which the Prime Minister, in his speech last July, gave much prominence. Before dismissing the subject, however, let rae say that, on several occasions while he was in England, he urged me to prevent any further extension of the wool contract. But .for that, I hav.e .no doubt, the recent catastrophic drop in prices would not have fallen on Aus- tralia’s shoulders, and our great pastoral industries would have been standing today erect and prosperous instead of shivering in a night of uncertainty which bids fair to dislocate public and private finance in this country.
Knowing the Prime Minister’s incessancy, and his notorious desire to meddle in everything, I laid down the principle in my cables while he was abroad that general Government functions where it lives - a principle which he indorsed and quoted - but that in regard to the special subjects intrusted to an absent Delegation the position is different. That is why I was studiously careful not to interfere with him in relation to matters specially placed in his hands. Wool was not so placed. It came within the province of general Government.
Here is another complaint of the Prime Minister in his cablegram of the 2nd June. He said -
For months you have communicated on many matters with the Secretary of State direct without notifying me at all.
And in his speech on 2nd July, he said -
For six months I never saw a cablegram, except those from this end to the British authorities, which were shown me by the Secretary of State.
Here again the Prime Minister is in a position, with all the official files in his possession, to prove or disprove the statement. I remember that shortly after his arrival in London in 1918, he asked me to telegraph him copies of all cables exchanged both ways with the Secretary of State. I pointed out the enormous expense of such a duplication, for our correspondence then was very heavy. Honorable members may recollect the congested state of the cables at that period - a congestion which the press and the public said was due to the huge volume of Government messages going through. After alluding to the expense of duplicating such messages, I further advised the right honorable gentleman to get the Secretary of State to promptly hand him in London copies of all cables despatched or received. That was the quickest, cheapest, and most business-like -procedure. If he did not do this for six=- months it was ^ his own fault. That is my answer.
Take another complaint. In his cable- gram of 2nd June, the Prime Minister said to me -
Then, in May, 1918, re finance, you said I . must do nothing involving finance on large scale without consulting you.
That is not strictly correct, but it serves to recall an interesting episode. Everybody thought the Prime Minister1 was going in -an Orient ship, viti Suez, to London. The people who said good-bye to him in the Melbourne express on the, Sydney station certainly thought so Many learned with surprise that he had doubled back from Homebush, and had joined the Niagara for the Pacific route.. It was all very mysterious to me, his locumtenens, and I - and I think other Ministers as well - had to submit to much badinage about it. A week or two after he had sailed, I heard -for the first time that the Governor or the Commonwealth Bank, Sir Denison Miller, was a fellow passenger on the Niagara. Knowing the enterprise of my late leader, and remembering his daring transaction . in the purchase of ships when he was in Britain on a previous occasion, I adopted a wise precautionary measure. I had just’ gone to the Treasury, was deeply ecncerned about the condition of the loan moneys, and, wishing to be sure rather than sorry, I sent him, according to my memory of the occasion, a request, not an instruction, as Treasurer, that he would not embark upon anything involving large moneys without first consuiting me. He at once acquiesced, showing, I presume, his complete approval. Is there any man here, remembering the war and finance outlook at that hour, who will pronounce such an action as unfair or unjustified ? I here, again, speak withoutaccess to official documents, but the Prime Minister is at liberty to table the cables, which, I venture to say, will bear out my recollection. I shall now traverse another statement in the Prime Minister’s cable of the 2nd June. In that cable the Prime Minister said that in connexion with the sale of the Australian ships in March, April, and May, 1919, I. had said the proper procedure was to. obtain definite authority from the Cabinet, and that he should carefully observe that rule. The facts of the matter are these: About March,r1919, the Prime Minister started selling the ships of the.
Commonwealth as. if they were his own private property. The Minister for Shipping (Mr. Poynton) was as much disturbed as I was. The Cabinet had never been consulted as to the method of disposing of our tonnage, and the first we knew of the matter was when the PrimeMinister coolly told me- of the sales he had made, and asked me to arrange the transfer to the British register.
Dr MALONEY: MELBOURNE, VICTORIA · ALP; FLP from 1931; ALP from 1936
– Why did you not let us know at the time?
Mr WATT:
– When, my honorable friend gets into a Cabinet: he. will know that a Minister’ cannot do such things-.
Dr MALONEY: MELBOURNE, VICTORIA · ALP; FLP from 1931; ALP from 1936
– He can, if he wishes - if he is honest.
Mr WATT:
– I hope the honorable, member is not casting any imputations on. me.
Dr MALONEY: MELBOURNE, VICTORIA · ALP; FLP from 1931; ALP from 1936
– No.
Mr WATT:
– I remonstrated with the. Prime Minister, and reminded him of the requirements of the Audit Act. The real; point, however, in this discussion is whether I impeded him in his legitimate duties as an absent Minister. The answer to that question is that not one of his. then colleagues thought it was part of his job to undertake such business without previous consultation with the Cabinet,, and they authorized me to say so.. No rational man charged with the responsibility of running the Government atr that or any other time could have taken any other course. The mere fact that the Prime Minister does not see the differencebetween the definite: commission on finance with which I departed from Australia and bis own unauthorized activity- is an evidence of obtuseness - which he has hitherto successfully concealed.
Now, as to wheat, which is the remaining question. The Prime Minister complains that he was hampered by contradictory instructions and compelled to back down concerning some arrangements he had made with the British Wheat Commission. There is a man at present in the Cabinet (Senator Russell) who could answer this if he-would. All I know is that the Prime Minister, himself, constituted a Wheat Board, of which Senator Russell’ Was chairman. He gave to. that Board’ large powers regarding wheat, and everything that was- said by Senator Russell in the cables. I despatched for him to the Prime Minister’ was after consultation with the men whom- the Prime Minister had appointed as trustees for the owners of the wheat. There- are a great number of men, intimate with- the wheat trade, who regret that the handling of the commodity was not in commercial hands at. that particular time ; and these men were in some cases associated with the Board..
To sum these matters up I say that, as . peace envoy, Mr. Hughes was, in the fullest sense of the word, a plenipotentiary. He was subject to no interference or control in that capacity. I never con.municated directly with the British Government on one subject arising out of his. peace negotiations without his previous approval. All my suggestions and help went directly to himself. In all business - as distinct from peace matters - which the Cabinet placed in his hands, he was just as free, with, perhaps, the doubtful exception of wheat; and any influence that was brought to bear on him was of his own creation - it did not emanate from his Ministers. With regard to the things he did outside his specific commission, the telegrams will show that I sought nothing but Cabinet consultation, by cable,, which was. a perfectly legitimate attempt. This Mr. Hughes resented. There is something strangely painful in the fact that a man with such an adroit and able mind should harp raucously on matters that, after all, are small, and’ do not matter. I have paid extended attention to these matters, not because they are strictly germane to the issue between us, but because the Prime Minister raised them, and’ I was anxious to give honorable members the answering facts. If the Prime Minister’s view were right, that my position was identical with his own at Paris, at best he was, according to. his own showing, only trying to get a “ little bit of his own back ;” in other words, he was trying to flog me with the whip he said I had’ used on him. I have shown that our missions were widely different - that I never used the whip as he suggested, and, above all, and this is the crux - that I never communicated directly with the British Government on matters concerning his work without his previous knowledge or approval.
I now come to some other- matters. I think it is generally true that the management of wool affairs by the Central Wool Committee has been wise and successful. I know there .has been criticism directed against its administration; but, considering ‘the magnitude and diversity of its business, I have always thought that the organization established to handle the Pool worked with smoothness and satisfaction. The Government and the growers have been fortunate in securing the services of so many able men to perform this work; but while that is true of the Central and State Committees, I am not sure it is true of the Prime Minister whenever he interfered with wool. Some of his decisions are like the peace of God ; and when I was looking at wool matters in London a few of them came under my notice. There was a question of tho supply of .50,000 bales to France, which the British. Administration felt bound to deliver. They regarded the transaction as good business, and they asked me to get the, matter fixed up when I was in London. I, therefore, wired the Prime Minister on the 21st May, and told him I thought he should give a decision, and that in view of the history of the negotia-tions I did not see how we could refuse. That, I may say, was for some reason omitted by the Prime Minister when he read the cables to the House. He replied on the 29th May, and told me not to “worry about it.” That was his gentle way of telling me it was none of my business; but I did “worry about it,” first, because the British Administration, with whom I was working amicably, desired a decision, and, secondly, because I knew we were offered good busi-ness. The price at which the wool was to be sold was at the rates of February, 1919, which were higher by 85 per cent, than the appraised rates. Apart from our obligation to- give France the wool - if there was such an obligation - I felt that, on a doubtful market, we were foolish to risk a loss of clearly £10 a bale. I do not know what has been done in lie matter, but if the sale has not been made - and .as to this the Prime Minister can inform us - I venture to say that the loss is in the neighbourhood of halfamillion sterling.
There was another matter of which’ I incidentally heard, .namely, a. sale to the
Austrian Government pf 25,000 to 30,000* bales. The Brit:sh Government were anxious to supply this wool; they wished to stop the spread of disorder, and to help the Central European countries, and this was their method of giving employment. A difference of opinion arose between theBritish Government and the Australian Government, not as to the question of supply, I understand, but as to the question of price. The British Government wished the price to be on the basis of the month of issue, which, ,as I remember, was July of this year. The Prime Minister of Australia, however, wished the price to be fixed on the average of the last six months. To me that was an unheardof. suggestion, with a fluctuating commodity like wool. I’. do not know whether that sale went through or not ; but, if it did not, and the July prices were not taken, there, is another loss of about £250,000. These items total about £750,000, half of which would belong to the Australian grower. It would be interesting to have all the papers concerning these matters laid on the table.
While the Prime Minister was away two years ago, a question arose of the cancellation of a big sale to the United States of America after the war had closed. So far as I remember - and I was then dealing with wool in the absence of the .Prime Minister - the Government at Washington asked the British Government to agree to an abandonment of the contract, and the British Government recommended the Australian Government to agree. The Prime Minister objected, and resisted the cancellation. Eventually the .British Government did cancel the contract, with the. consequence that the undelivered portion was sold’ at a much better price than the contract price. If that transaction were analyzed, I would not be surprised to learn that the extra profit accruing through the sale, which the Prime Minister tried to prevent, was a couple of millions sterling, half of which, in duo course, is coming to Australia.
I must now deal with two .other wool matters of grave concern to this -country. Before the armistice, but late in 1918, While the Prime Minister was in London, the Central Wool Committee was giving thought to the question of a post-war
Pool. The chairman of the Committee told me that many of the members thought it would take two or three years after the termination of hostilities to organize and stabilize the wool manufacturing industries of the world. With a large prospective carry-over of Australian wool at the close of the contract, the Committee thought it would be advisable, with the consent of the growers, to keep going an organization to bridge the gulf of uncertainty, and to maintain Australian and British supremacy in the wool trade. They were, therefore, considering whether we should attempt to have a still further extension of the wool contract. All those interested in the trade were not unanimous, and representations were made to me on the subject; but, to use a popular phrase, the Prime Minister” squashed “ the idea by cabling that there was to be no extension. I so informed Sir John Higgins, and there, so far as I know, the matter ended. Of course, we can all be wise after the event; but I venture to say that if the question had received the attention it deserved, the Australian wool position to-day would have been sound and free from anxiety, instead of being in such a critical position.
In my earlier remarks I referred to a meeting which the Prime Minister held in Sydney on the 27 th April. I think I ought to say that when the tenor of his speech on that occasion was published in the British press, administrators, wool traders and manufacturers, and bankers commented very unfavorably upon it. It created profound agitation in the trade, and much press criticism followed. The proposals were almost everywhere spoken of as impracticable, and illconsidered, and they were rejected by British wool opinion. That was the atmosphere I encountered in commencing the practical part of my mission in London. Whether the Prime Minister or his critics were right or wrong, I do not even now consider myself competent to judge; but this I do know: that from that day confidence in the Wool Committee appea rs to have been shattered. The market has been tumbling ever since, and the outlook for both old stock and new clip is, to put it mildly, very black. That may be a coincidence, or it may be the inevitable operation of cause and effect; but the net result is a loss to Australia of tens of millions of pounds. It is no wonder that the Wool Committee, in its annual report, disclaims all responsibilities for the proposals. I deeply regret that the Prime Minister has so often gone out of his way to flout on technical questions expert opinion which through the war, and since the war, has given such aid to Government. That is his responsibility, however, and I submit these facts and reflections for the information of the House, bearing, as they do, intimately upon a matter concerning which I was sent abroad.
The Prime Minister implied in his cables and speech that I was a highhanded man, who would not consult Cabinet or accept any directions. In laying the file of correspondence before the House, he omitted several things which prove the exact opposite; and I may say to the honorable member for Yarra (Mr. Tudor) and the honorable member for Franklin (Mr. McWilliams), after noting in Hansard their certificates as censors of the correspondence, that I do not blame them. I have no doubt that they were called upon to do their work hastily, and perhaps could not see from my point of view the bearing which such cables had upon my relationships with the Prime Minister (Mr. Hughes) ; but I propose to read some of those omitted cables, in order to show’ how anxious I was at every point to consult Cabinet, except in regard to those things concerning which I had been left free and specially commissioned. Let me take first this statement from the file in reference to the Nauru agreement. It is in my cable dated 18th May to the Prime Minister -
Secret. Re Nauru. - You are now in possession of Secretary of State’s despatch, dated 25th February, referring to purchase price, compensation, &c, to Pacific Phosphate Company. Draft agreement has now been sent to High Commissioner, and it has been perused by him and our lawyer, and by Collins. As you will note, in paragraph seven of Amery’s despatch above-mentioned, two important reservations are made by the company (a) in relation to their contract with the Empire Transport Company, and (b) in relation to the right to take, after certain interests are safeguarded, up to a maximum of 100,000 tons phosphate per annum. I think both of these are wrong, particularly the latter; but, before asking the High Commissioner to sign draft, I think it advisable that Cabinet should consider these new conditions. Three other matters hav.e arisen, but you need not worry about them. The first is that the original Act does not cover Ocean Island - statutory provision could subsequently be made. The second is compensation to company’s staff - in all circumstances I think we ought to agree to proposals up to £30,000. The third is mutual agreement, referred to in article 8 of agreement between Governments, dated 2nd July, 1919, which has never been reached. Failing such agreement, contributions of capital will be decided under article 14. As proportion provided for in article 14 appears quite equitable, I think we may consider position on this point satisfactory. Please give early attention to question raised relating to tonnage contract and rights of Pacific Company to take phosphates after transfer of property, and advise me Cabinet’s views.
That was consultation of a very useful kind, to prevent , an unhappy blunder being made between the two Governments; and on the 21st May the Prime Minister cabled this reply -
Nauru. - Your telegram 18th May, re draft agreement and reservations A and B in paragraph No. 7 of Secretary of Colonies’ despatch, 25th February; quite agree they are undesirable. I do not understand why they were put in. Try and get them excised. If you fail, it is hardly worth wrecking agreement if we get full market rates for up to 100,000 tons. As to other points, they are not important.
We did fail to get them excised, and finding that we were to get at least the full market rate on the 100,000 tons upon which the company was theoretically entitled to lay its hands, the agreement was accepted. That cablegram shows that I was in an amicable spirit of concord with the Prime Minister in regard to all matters in respect to which consultation was the proper method of procedure. As another instance, let me quote the cablegram I sent regarding the Commonwealth shipping line, which the right honorable gentleman also excised from the file for some reason or other.
Mr Hughes:
– The excision was done by the Committee. I excised nothing.
Mr WATT:
– I do not -wish to impose on the right honorable gentleman any responsibility that he should not properly bear; but from the point of view I am now submitting to the House these communications should have been included in the file to show how far I was in consultation with Cabinet at the time with regard to these special matters. I wrote in my cable of 21st May -
Re Commonwealth Shipping , Line. - Have discussed management with Larkin. He is very upset at inability obtain decisions important matters. At my request, he has furnished memorandum setting forth difficulties of present system. He says, inter alia, “ That, unless management of line is given full power without further delay, disaster will result a.t no distant date. If it is not possible to legislate as suggested, I .would advocate selling out whole venture while there is yet time.” Am convinced that problem calls for your urgent attention.
And the right honorable gentleman replied in his cablegram of 29th May-
Re Larkin. - I do not understand his attitude, and I suggest you inform him that, if he has anything to complain of, he should communicate direct with me. We have just raised his salary to £3,000.
As instructed, I told Mr. Larkin that his business was to communicate direct with-“ the Prime Minister. He replied, “ I have been doing that all along, but I’ thought that now you have come to England I was entitled to speak to you as if you were a visiting Minister with some power.” I do not know whether T declined very much in Mr. Larkin’s estimation after that conversation. British Ministers frequently consulted me about matters that were not on the list of my mission - they always do when Commonwealth Ministers go to London - and I always cabled to the Prime Minister about them. One instance’ was the appointment of a successor to- Sir Ronald Munro Ferguson as GovernorGeneral, but in regard to these matters I was warned off the grass. As I told the Prime Minister in one of my cablegrams to him, I was not permitted to touch subjects which were not included in my list, and in respect of those with which I was sent Home specially to deal I was told that I must await instructions before acting. I said plainly that that was the status given to an inferior official and not to a Minister of State, and I could not accept it.
Let me clear up two other matters which excited comment by the Prime Minister. He complained that he read of my resignation in the press before he received it from me by cable. Of course, I did not know that the right honorable gentleman was on holiday in New South Wales at the time, but I despatched my cablegram to him a full twenty-four hours before I spoke to the press. At that time Government messages were easily racing press messages -to Australia. My late private secretary, who is now private secretary to the present- Treasurer (Sir Joseph Cook) can testify to the truth of that. Here is the other matter: In my cablegram of 27th May I told the Prime Minister that his fatal cable to the Secretary of State in regard to wool ‘ ‘ was not the same in- form or manner of presentation “ as he had advised me. Deliberately, or unwittingly, he distorted my statement, and said in the House that I had complained, that the two were different in substance. He professed amazement at my assertions, and said that he had shown the two cables to the honorable member for Yarra (Mr. Tudor) and the honorable member for Franklin (Mr. Mcwilliams), who could see noi difference between the two.
Mr Hughes:
– They were shown the right honorable’ member’s statement.
Mr WATT:
– But in order to judge whether the statement was true they should have seen the other two cablegrams.
Mr HUGHES: NAT
– They saw them.
Mr WATT:
– Then I do not understand how they could regard the- two cables as being the same. The Prime Minister’s cable to me indicated that he placed first the scheme relating to the new clip, and that he had put his views concerning old wool accounts as a .kind of postscript or’ afterthought, whereas his cablegram to Lord Milner started with a straight demand about the old wool accounts and moneys. There was no bond fide reason why the. Prime Minister should not have sent me an exact copy c-t the cable he sent to Lord Milner.
The. fact that he did not indicates that lie thought he had better camouflage his message. He knew he was doing me an injustice, and he tried to hide it as much as he could. This was an occurrence, not -important in. itself, but ugly and significant when surrounded by its context. It is another example of the Prime Minister’s unpardonable, lack of frankness, even with a. colleague.. There are some kindly members of the Government, and, I understand, also- private members of the party, -who cannot, understand a man resigning office. Such a step is so foreign to their habits or. natures that they are baffled when another takes it. In their bewilderment they are driven to search for all sorts of mysterious explanations. Sometimes such an action is ascribed to mental aberration. In my case,. I believe it has; been charitably attributed to shattered’ health. The rumour has been sedulously whispered abroad, “ Poor fellow; he is not himself; he. has broken down.” To these gentlemen, I would say that I am conscious, of their fraternal consideration,, but they are the victims of an unfortunate delusion. I had not been very well before I left for England, and I deemed it prudent to get medical consent before undertaking the trip. . During the voyage - which was a long one, because I travelled on’ a captured German vessel - my health rapidly improved, and I arrived in Europe full of mental vigour. Some of those who were brought into official contact with me would be inclined to confirm that de scrip ti on. I say these things be-, cause I wish members to dismiss from their minds the suggestion that Mr. Hughes exchanged cables with a petulant and impulsive invalid.. Whether they approve of my conduct or not, I ask them to accept my assurance that I was in possession of whatever faculties the Almighty had lent me, and that I determined on my course after the fullest consideration of all the consequences, national and personal. As I reflected on the Prime Minister’s tactics in his. handling of me, my memory recalled an incident of some interest. ‘ When Mr. Hughes returned home from the Peace Conference, .we stage-managed, you will remember, a series of welcomes to him, from Fremantle eastward.
Mr Tudor:
– We. said on every platform that those welcomes were stagemanaged.
Mr WATT:
– The gatherings culminated with a meeting in Melbourne, and on that day I was seated with him on the dais at the Lord Mayor’s reception. Towards the close of his speech th’e right honorable gentleman recounted my services to Australia during his absence, and dwelt eloquently on my fidelity and loyalty to him and to the National party. He concluded by turning round with what the audience and I mistook for spontaneity and sincerity, and warmly wringing my hand, said, “ For what he has done, he has earned my undying friendship.” In less than a year that friendship was dead, and he had vilified me in this House in my absence as a man who had deserted his country and left it stricken and helpless. If that be a tribute of friendship, to loyalty and sustained assistance, may God save me from any further exhibition of such friendship ! I have reflected mournfully upon the motives that impelled the Prime Minister along the path he trod. Although I believed from the first in the conjunction of the parties led by Sir Joseph Cook and Mr. Hughes, I did not desire, as the right honorable gentleman knows, to join the National Administration when it was formed. I again resisted inclusion in the new Government after the resignation of the old one at the close of the second conscription campaign. As I have explained, and as I shall have occasion to do again in a moment, I wished to withdraw from office when my health declined. During the time that I was a member of the Government, I gave of the best that was in me, and my consciousness of loyalty and of work tolerably well done is perfectly clear. In some of the Polynesian islands, a man suffers death for stepping on the king’s shadow, andI supposethat, in some thoughtless moment, ‘I must have committed that crime.such speculation, although interesting, is fruitless, and I shall not explore further the dark question of the Prime Minister’s motives. I leave them to his own conscience, and to the., more discerning brains of others to unravel.
For some reason, which to me is inscrutable, but which, I assume, was designed to discredit me, Mr. Hughes told the House that I had resigned three times fromthe Ministry since his return from England. Let me give the facts. While he was away, I was strongly urged by medical authority to retire from office. That advice was supported by the requests of many relatives and friends. It was conveyed to him by cablegram, and he urgedme to hold on until his return. I had fully intended to keep going until he came back, and I told him so. In our conversation, as we came east from Fremantle, I asked him to give me early relief from office. T didnot resign. He urged me to remain with him until after the election which was then looming. Wishing to help him, I consented, and we worked on together. In
September he made a speech in Sydney which re-opened a rankling sore in our relations. He had never forgiven the Government or myself for extending the wool contract while he was away, and, in that speech he reflected so seriously on his colleagues in regard to that action, that I sent to him the following letter of resignation - 22nd September, 1019.
My dear Prime Minister,
I take the earliest opportunity on my return from the country of addressing you upon a matter which has caused me much surprise and concern. The Argus of the 17th instant reports you as having said to the Farmers and Settlers Association in Sydney - “He could have sold more wheat and at a better price if it had not been that the Australian wool clip had been sold while he was on the water. That took away the strongest weapon in his armoury. In wheat they had competitors, but, in regard! to wool, Australia was ‘ it.’ If the wool had not been sold when it was, Australia would have been in a better position.”
If that is a correct report, and I assume it is, as it has not been contradicted, but rather confirmed by your reply to a question in the House later in theweek, to my mind it involves a grave breach of Cabinet etiquette and principle.
It will be within your recollection that on several occasions while you were representing Australia in London and Paris after the cessation of hostilities, I expressed by cable disapproval of some of your published utterances: but, in my anxiety to preserve the unity of the Cabinet, I studiously refrained from announcing such differences. On the contrary, when questioned in Parliament and elsewhere as to whether the Government was bound by certain of your speeches on critical questions, I unhesitatingly said that the Government accepted full responsibility for. the views of the Prime Minister.
You, apparently, consider it permissible, without consultation, to take the other course. In my opinion, your action in so doing constitutes the most dangerous infraction of Cabinet solidarity.
I have always believed this principle to be absolutely essential to the maintenance of responsible Government when the Cabinet represented a homogeneous party; and I consider that its jealous observance is even more necessary in the present case when Ministers speak for a composite party.
Your statement disclaims responsibility for, and virtually repudiates, one of the most important acts of administration performed by your colleagues during your absence from Australia, and your open condemnation of it places them in a very invidious position. I do not know how they view the situation, but, as the one who bears, and cheerfully accepts, the prime responsibility for the transaction under review, I feel that my position is quite untenable.
As to the merits of the wool contract question, inquiry will elicit the fact that the vast bulk of enlightened judgment cordially approved the sale It was hailed on all sides as a highly advantageous business deal, and I can recall no act of Government during the war period which received such unanimous sanction. It stimulated rural production and stabilized public and private finance at the most perilous point in our history, as competent judges will testify. In view of the widespread satisfaction expressed at the extension of the contract and t he acknowledged benefits it conferred, there appears to be something sinister in your having gone out of your way to pronounce so strongly against it.
Your remarks suggest that, had the further sale not been made while you were on the water, you could have made better sales of other Australian products. I am, of course, not qualified to say whether that is, or is not, probable; but, if that opinion implies that, by accepting worse conditions for wool, you could have obtained better conditions for wheat or metals, then I say frankly I could not stand for such, procedure. If every producer of our staple commodities was, or is, entitled to relative world parity for his goods, there was, and is, surely no justification for asking the one man to take less for his wool in order that another should got more for his wheat, &c.
Considerations surrounding the merits of the wool question, however, while thoroughly relerant, are not the most material things at issue between us. The main and vital point is that of Cabinet solidarity. This has been destroyed by your unexpected remarks on the occasion referred to, and while anxious, as I have ever been, to avoid embarrassment to the National party, or yourself as its leader, I feel that the only course open to me is to retire from the Government.
It would, perhaps, be scarcely fair to you, or to my colleagues, who may consider that they share responsibility for the situation I have endeavoured to describe, to summarily resign without discussion of it in Cabinet.
If an opportunity for such discussion is afforded before the House meets, I am prepared to withhold my resignation, but, if not, I shall bo reluctantly compelled to ask you to relieve me from office without further delay.
I shall, in the circumstances, not attend Cabinet to-day.
With unaltered personal regard,
Believe me to remain,
Yours sincerely, (Sgd.) W. A. Watt.
A special Cabinet meeting was called, and we discussed the matter, the Prime Minister saying that he would put things right that day at the Melbourne Show He made another speech there, but his speech did not put things right, and, on the 24th September, I wrote this letter -
Melbourne. 24th September, 1910.
My Dear Prime Minister.
I am glad that you have put the Central Wool Committee and its chairman in the right light before the public in your speech at the Show yesterday.
I am sorry, however, that you did not act similarly with regard to your colleagues, as you expressed your intention of doing at Cabinet on Monday. I cannot fathom the reason, although I suppose you have one satisfactory to yourself.
Since I wrote you on Monday, I have read the report of your Sydney speech in the Morning Herald and Daily Telegraph, and they are much more objectionable than the Melbourne extract I quoted. Both these papers report you as saying that the last wool sale was conducted behind your back.
An apology to, and eulogium of, the Wool Committee cannot undo the evil effects of such a statement. The Government, and not the Committee, sold the wool; and, as the Minister who made the recommendation to Cabinet, I cannot submit in silence to such an unwarranted attack.
I have informed you on several occasions that my medical adviser has for some months insisted on my early withdrawal from Ministerial work; but, in response to your earnest appeal, I have continued in office, and was prepared to go on so long as my health permitted.
Your latest utterances, however, renderit impossible for me to longer remain a member of the Government, and I now desire to resign my position as Treasurer of the Commonwealth.
Cite as:Australia, House of Representatives, Debates, 20 October 1920, viewed 22 October 2017, <http://historichansard.net/hofreps/1920/19201020_reps_8_94/>.