611.4731/143: Telegram

The Consul General at Sydney (Moffat) to the Secretary of State

Carrying one stage further his threat to restrict or divert to better customers American imports into Australia (reported in my March 16, 4 [6] p.m.) Gullett yesterday announced in Parliament that special subcommittee of the Cabinet had been appointed to explore every avenue which seemed to have some possibility of correcting the present adverse trade balance. The Prime Minister7 later announced that the Government hoped soon to formulate its policy vis-à-vis American trade and would announce it after the Easter recess. The debate in Parliament showed great bitterness notably on the part of the Government’s supporters at the extent of American imports, and the Government was pretty generally accused of weakness in dealing with the United States.

While I am still hopeful that the Government will be unable seriously to dislocate the more essential items of our trade with Australia, nevertheless I do not believe that Lyons and Gullett are any longer bluffing. I think that we must look forward to some formal adverse action (probably discriminatory) if for no other reason than that the [Page 745] Government must try to shift on to other shoulders the blame for a condition of affairs where imports have increased to a point which is causing concern as to the future of Australia’s financial credit.

  1. Joseph A. Lyons.