811.71247H/54
The Consul General at Sydney (Moffat) to the Secretary of State
[Received March 10.]
Subject: Australia and the Matson Line.
Sir: Pressure throughout Australia to limit the activities of the Matson Line, referred to in my despatches Nos. 29 of October 14 and 84 of December 30, 1935,68 has now reached a point where the Cabinet has in principle determined on two courses of action: (1) to reverse its earlier attitude and join with the other interested members of the British Commonwealth of Nations (New Zealand, Canada, and, possibly, Great Britain) in subsidizing a British trans-Pacific service; and (2) to reserve the trans-Tasman trade to British shipping.
In the course of a conversation at Canberra last week, the Prime Minister (Mr. Lyons) outlined the situation as he and his Government saw it, with utmost frankness.
For many months he had been hoping that an amicable solution might be reached that would equalize the competition between the [Page 707] Matson Line and the Union Line, but without avail. He felt that the time had now come when he must ask me to send a despatch to Washington pointing out that action on the part of Australia was imminent. “When I say imminent,” he added, “I do not mean today or tomorrow or next week, though that is what many people would like to see. Nothing will be done until after Messrs. Menzies69 and Page70 have had a chance to talk things over in England, say late March or early April, but since I saw you last we have just about decided that we will have to follow your example by giving a subsidy and by reserving the trans-Tasman trade to British ships. If we give a subsidy (and I do not know yet whether Great Britain will join us in making a contribution), I do not want it merely to keep the present second-rate ships running; the British flag should fly over ships that are on a par with yours, so as to create a real competition and not merely pay the expenses of a proposition that can’t compete in services.”
In the course of the next few weeks Mr. Lyons said that he was planning to write a personal letter either to the President or to Mr. Hull, recalling their conversations of last summer71 and the high hopes he had entertained that something might be done to ease the situation. There had been no change, however, and meanwhile British shipping was being driven off the Pacific. The main purpose of writing, however, would be to give an assurance that if he now had to take counter-measures it was not to hurt the American service, but to preserve the British lines on the Pacific, which Australia regarded as essential from the point of view of Imperial communications and defense.
Mr. Lyons was well aware of the difficulties which the reservation of the Tasman traffic might entail, but he claimed that the situation admitted of no choice. Great Britain, which had in the past opposed this step, no longer raised objection and seemed indifferent to possible retaliatory measures. In New Zealand the former Government had been fearful that if action were taken the Matson Line would drop Auckland from its schedule and thus destroy the tourist trade which New Zealand was building up; accordingly its influence had been in the direction of procrastination. The new Labor Government, on the other hand, had now informed Mr. Lyons that they were ready to move. An additional consideration which had weight with both Australia and New Zealand was their common fear that Japan was about to put some ships on the Tasman run; some years ago they had tried it out with a freighter, but the New Zealand longshoremen had put a stop to the [Page 708] scheme by entirely extra-legal methods; Australia and New Zealand could not admit for an instant letting the Japanese into this trade, and yet desired not to give Japan offense by blocking her shipping alone.
I told the Prime Minister that while we considered the giving or withholding of subsidies a domestic matter, I remained seriously concerned lest restrictions imposed upon traffic between the two self-governing dominions, each with its own tariff and coastwise laws, might have repercussions in parts of the world far removed from the Tasman Sea. I went over one by one the familiar arguments, but his attitude remained clear that if he accepted the cogency of my reasoning or was deterred by the possibility of untoward consequences, British shipping would once and for all disappear from the Pacific.
It is, of course, possible that neither the American Government nor the Matson Line feels that it desires to make an issue of the reservation of the Tasman trade. But if a last endeavor should be made to stop adverse legislation, I am convinced that there are only two possible ways to do it: the first would be to convince the New Zealand Government, if such indeed are the intentions of the Matson Line, that upon passage of legislation reserving the trans-Tasman traffic to British shipping, Auckland will be dropped as a port of call, thus killing the American tourist trade. The other possibility would be to have a frank talk with the British as to what specific results might ensue for British shipping in relatively unrelated fields. Policy can only be determined in Washington. My task in Sydney is to inform the Department that in my considered judgment Mr. Lyons is not bluffing and that the time element for possible action is not unlimited.
Respectfully yours,
- Neither printed.↩
- Robert G. Menzies, Australian Attorney General and Minister for Industry.↩
- Earle C. G. Page, Australian Minister for Commerce.↩
- See memorandum by the Secretary of State, July 9, 1935, Foreign Relations, 1935, vol. ii, p. 13.↩