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Friday, 2 July 1920

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

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

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

(1)   No export of new 1920-21 clip from Australia prior to 1st October, 1920.

(2)   No auction sales of Australian wool in London after 30th September, 1920, until 1st May, 1921.

(3)   Earliest notification of this to be given, so that buyers will know that Australian wool will be procurable only in Australia between the dates mentioned.

(4)   No auction sales of wool to be held in Australia until 1st October next.

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

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

Referring to Mr.Watt, I stated -

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

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

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

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

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

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

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

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

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

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

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

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

Secret. Prime Minister unwell--

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

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

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

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

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

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

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

Here followed the figures, which are strictly confidential--

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

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

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

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

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

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

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

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

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

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

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