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Friday, 2 July 1920

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

ReBrussels Conference. Please see my telegram May 28th.

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

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

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

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

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

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