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Friday, 2 July 1920

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

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

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

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

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

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

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

(f)   that you were not supplied with copies of all cables.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(1)   Immigration. - My proposals were Commonwealth to have full control overseas. Agents-General to form Consultative Committee. Commonwealth to be financially and otherwise responsible for overseas organizations and transport arrangements for bringing immigrants to Australia. Primary object settlement on land. Preference British exservice men. States to be responsible for immigrants on arrival Australia. Agreement to be entered into definitely defining respective responsibilities Commonwealth and States regarding provision land and other assistance. Shipping question vital. Murray waters scheme and uniform gauge important factors in providing employment. Commonwealth and States to co-operate as to number immigrants that can be absorbed and classes required. Commonwealth to consider question assisting States by way of loans for approved land settlement and public works. Conference approved outline scheme and Premiers undertook submit proposals their respective Cabinets.

(2)   Uniform Gauge. - I urged action be immediately commenced to connect State capitals from Brisbane to Perth with 4-ft. 81/2 in. gauge. Mainland States to contribute cost on per capita basis. Commonwealth to contribute quota. Work to be placed under Commission consisting one Commonwealth two States Commissioners. Commonwealth to make arrangements for raising money by nonnegotiable bonds for fixed periods. States to pay interest on their respective quotas and to redeem bonds at maturity. Conference inquired what proportionate amount Commonwealth would contribute (a) on main lines between capitals; (b) for general conversion. I pointed out impossible fix Commonwealth contribution as cost not known. Said Commonwealth would pay definite proportion. If States, for instance, said one-sixth fair thing, Commonwealth would be satisfied. Following agreement was reached: -

(a)   Affirm necessity and urgency of uniform gauge to connect State capitals, including conversion of Victorian system.

(b)   Affirm principle of allocation of cost.

(c)   Affirm principle of appointment of Commission - working in cooperation with Railway Commissioners in States.

(d)   Railway experts to meet and submit report re cost, &c, before 26th June.

(e)   To be subject to approval of respective State Governments.

(f)   To be further discussed on 26th June, and an interim report to be presented.

(3)   Murray Waters. - Work to be greatly expedited. Commonwealth's liability be increased from £1,000,000 to one-fourth total cost. Scope, powers Commission to be greatly widened. Power be given to Commission resume all land affected by scheme at any time during progress scheme, and five years "thereafter, at present value plus 10 per cent. Scheme be utilized providing employment immigrants. First preference Australian soldiers. Commonwealth and States to pass necessary legislation for increased expenditure and otherwise giving effect scheme. Conference adopted report of a sub-Committee which substantially agreed with our proposals.

(4)   Aviation. - To be regulated by Commonwealth legislation, not by individual States. Conference agreed introduce State legislation referring necessary powers to Commonwealth, but so as to retain to each State (a) right to own and/or use State aircraft for Government purposes within State; (b) police powers. Conference also agreed introduce State legislation providing uniform action by States pending passage of Federal legislation.

(5)   Industrial Legislation.- Suggested States refer to Commonwealth Parliament powers for following purposes : - (a) Establishment Commonwealth Industrial Court with roster of Commonwealth and State Judges; (b) to give Court jurisdiction over disputes which extend to more than one State and which, while confined one State, affect whole community; (c) creation Industrial Boards whose functions shall extend over same parts of industrial field; (d) creation Industrial Councils representative employers and employees, to bring about agreement as to industrial conditions, including General Industrial Council for whole Commonwealth; (e) provision for collective bargaining by industrial agreements binding both parties; (/) prevention strikes, at least until after procedure which insures that strike is deliberate will of majority after every effort at settlement exhausted; (g) giving effect basic wage; (h) enabling common rule be estab- lished in an industry. Agreement was found to be impossible all sorts of objections raised, and I said that we would act as we thought fit and remit to people.

(6)   Finance. - In relation (a) borrowing; (b) collection taxation; (c) per capita payments. Proposed Commonwealth sole borrower. Suggested one tax-gatherer for land and income taxes Commonwealth and States, failing which one common return of assessment for Commonwealth and State Taxation. Asked States to adjust their finances upon assumption that per capita payment will be reduced as set out by Mr. Watt at last year's Conference.

Following agreement was reached in regard to borrowing: -

(a)   Affirm the principle of agreement regarding borrowing, making the Commonwealth the sole borrowing authority. An agreement based on the principles of the previous agreement to be prepared. Details to be settled later.

(b)   Commonwealth Treasurer to submit definite proposals.

(c)   State Treasurers to prepare memoranda of loan requirements for three (3) years.

(d)   Commonwealth and State representatives to meet at an early date to settle details and confirm this arrangement.

(e)   To be further discussed on 26th June. Question collection taxation to be further discussed 26th June.

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

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

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

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

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

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

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

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

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

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

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

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

I did. However, that is by the way.

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

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

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

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

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

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

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

(d)   Wheat was controlled by Russell, who always submitted question to Cabinet.

(e)   Naval Member whs similarly dealt with by Poynton. For confirmation of last three points, ask the three Ministers named, and when you have done so, kindly lift blame from my shoulders.

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

(f)   It is quite true that, as Treasurer, I prudently requested you not to undertake anything involving large sums without consulting me, and you at once agreed.

(g)   I also asked you to observe proper procedure about selling ships, 'for none of your Ministers considered that within scope of your Peace mission.

(h)   Your reference to Nauru astounded me. My recollection is that we sent you, for presentation to Imperial Cabinet, strongest telegrams of support.

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

(i)   Generally, while you were away, with exception of one brief period, all my telegrams either asked for information or gave you solid backing, the latter mostly in response to your special requests.

(j)   The exception was the armistice break, and if you will re-read my telegrams now, I feel sure that your judgment, mellowed by time, will approve their tone and terms.

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

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

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

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

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

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

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

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

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

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

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







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