611.4731/158: Telegram

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

Your telegram of April 10, 6 p.m. The Prime Minister has requested me to transmit to you the following reply to your personal letter. In view of its length I am not telegraphing the introductory paragraphs in which Mr. Lyons welcomes your assurances that America is not indifferent to Australia’s welfare and refers to the friendship felt in Australia for the United States. The letter continues:

“Where friendship exists, frankness is permissible. Therefore permit me to speak frankly and to say that there is a growing feeling in this country that in so far as economic questions are concerned we have not received from the United States that measure of practical reciprocity which the high position Australia has always held as an overseas market of the United States entitles us to expect.

In this country your great fight for economic liberalism has been [viewed] with admiration, and I need scarcely say that the activities of the United States Government in the negotiation of trade agreements have been watched with close interest by the Australian Government. We had hoped that through the extension to Australia of the duty reduction effected under these agreements some tangible benefits to Australian commerce would have resulted. It is with regret, however, that we have observed that the agreements concluded to date have neither directly nor indirectly ameliorated our trading difficulties.”

Next follow three long paragraphs (a) sympathizing with the principle of multilateral trade and equality of commercial treatment, (b) recounting the tariff reductions made by the Lyons government since it assumed office, and (c) pointing out that Australia notwithstanding its overseas interest, still buys abroad more than 11 pounds per head of population. The letter continues:

“Notwithstanding this policy, several former important outlets for our exportable surplus have been severely curtailed owing to the application to our trade of the principle of bilateral balancing or other equally restrictive measures—restrictions which the Australian Government feels are not wholly unconnected with the failure of the great creditor nations of the world to adjust their economic policy to their creditor status.

Our exports, upon which we must rely to pay for our imports and service our recurring interest and other overseas financial commitments, have not kept pace with our imports and, in order to preserve equilibrium, we are forced to a reconsideration of our economic policy particularly our position vis-à-vis those countries which do not afford this country facilities to cover its trading transactions by exchange of goods.

[Page 750]

It will, I am sure, be apparent to you that, while our former ‘good customer’ countries apply the bilateral principle to our commerce, we cannot continue to buy increased quantities of goods which are not absolutely essential to the national welfare from countries which do not allow payment to be made in Australian goods. Instead we must either obtain our requirements—possibly at a somewhat higher cost—from nations which will accept payment in the only form in which it is possible to effect settlement, or alternatively produce them at home where the same considerations in regard to payment do not enter.

I should like you to appreciate that the problems which face my Government are urgent and pressing and any measures that do not offer some amelioration in the immediate future would not be of utility.

There is no need to remind you that this country is emerging from a very serious financial depression of some years duration throughout which the greatest hardship and loss were suffered by very many of our people. Our economic and financial position has to be watched most carefully and every expedient adopted to restore our nation to a condition of greater prosperity. The considerations which prompt my Government to apply restrictions against the free flow of imports from the United States and other countries which fail to afford reasonable opportunities for making payment by the exchange of goods are not actuated by any spirit of unfriendliness but are dictated solely by the existing situation.

My colleagues and I are conscious of, and are deeply appreciative of, the affinity which does, and I hope always will, prevail between our two peoples and I trust that no steps that we may be obliged to take will in any way disturb our cordial relationship. Yours sincerely, J. A. Lyons.”