611.4731/259: Telegram

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

Referring to Department’s telegram of January 10, 7 p.m., I was received by Lyons on Wednesday afternoon in Canberra. Points 4 and 5 caused much discussion. No note was shown or handed to [Page 125] him, although I told him one summarizing the points made would be left him if the assurances under 5 were given. In that event I expressed a belief I might expect to receive instructions regarding confidential informal exploratory discussions.

The Prime Minister stated definitely that he could give no unqualified assurance of the nature asked by the Department. He emphasized his desire to abolish the licensing system at once, but repeated his inability to do so without Parliamentary action and felt the Department’s point 5 is tantamount to a demand that he perform the impossible. He assures me that the policy of the present Government is one of liberality in issuing licenses and will continue to be under his direction; he claims that Commonwealth Government is retaining prohibition at the moment only so far as is necessary to protect Australian industries that may be without tariff protection.

I must respectfully point out that paragraph 2 of the Department’s telegram does not correctly state the Australian point of view as I have sought to explain it. Their view is that substantial discrimination has been eliminated and Officer has informed his Government that this has been conceded. Given this as a premise it is easier to understand Lyons’ contention that the assurance asked under 5 places the whole matter just where it was before the statement of December 8 [7?] was made. They do not deny the existence of some discrimination but assert their inability to correct this without Parliamentary action.

Because of an unfavorable atmosphere I sensed at once when I arrived (Lyons was obviously put out at being expected to give further assurances and felt a loss of dignity of his position as head of the State because of the demand) I expressed on my own account a doubt that he realized the deep sense of hurt felt by my Government against discriminatory action taken by the Australian Government which, as far as I knew, was unprecedented and more drastic than action taken against American commerce by any other government no matter how strong or dictatorially governed.

I am not sympathetic towards the position in which the Australian Government now finds itself; furthermore the viciousness of their discriminatory policy in the past strikes me with greater force as I delve into it. But I do counsel a realistic view of the present situation providing of course that we wish to enter into discussions with them at all. Assurances already received are not without weight; expressions of future intentions are sincere. Any course taken by us which lacks realism will create bad feeling at a time when good feeling should be cultivated.

I do not feel certain of Officer’s ability to get points accurately or to transmit them clearly to his Government. Furthermore, I am [Page 126] not positive his Government keeps him completely informed of technical details of the operation of the licensing system (referring to the Department’s instruction dated December 1712 received today by mail). Referring to the last paragraph of my telegram of December 23, 5 p.m.12a considerable publicity continues to be given by the press and over the radio to my visits to Canberra and the status alleged or surmised of trade talks. Much of this is misleading but occasionally astonishingly accurate.