The Money Men Page 6

  By the following January, not much had improved, with Watt venting to Hughes:

  On several occasions lately there have appeared in press cables reports of alleged interviews or alleged utterances by you on matters of gravest moment to Australia. Sometimes they contain declarations of Australian policy which Government as Government has never considered. Including list of Aus demands at Peace Conference.

  The position Australia took at the Peace Conference convened in January 1919 at Versailles was the source of considerable tension between Hughes and his Cabinet. Hughes wanted Australia and the other dominions separately represented, but Watt cabled him that this demand was ‘unreasonable and cannot be supported by Cabinet’.

  Here, the disagreement between the two sides, at opposite ends of the world, was understandable. Watt and the Cabinet in Australia were not aware that the Canadian Government had taken the initiative in demanding a seat at the negotiating table, making it a more reasonable position for Hughes also to take. Hughes, on the other hand, was not in touch with domestic political sensitivities—the Labor Party was itself demanding separate representation, and Hughes was therefore playing into its hands.

  Hughes did not take kindly to Watt’s admonitions, though he did make a minor peace offering:

  It would almost seem as if my colleagues think the interests of Australia can be better trusted to Allied statesmen than to me … I feel I can not represent Australia unless my colleagues have confidence in my judgment. I am on the spot: they are not. But I quite agree they must be consulted, and I shall most certainly do so on all important matters where they have not already declared their policy, and it is in accord with my own.

  Yet Hughes subsequently let the Cabinet know only belatedly by telegram that he had successfully concluded a deal selling Australian wheat. Watt’s response was cutting:

  Your telegram November 11th: wheat: was astonished at its contents … when we exchanged cables early July about this matter, I succeeded in getting you the free hand … On several occasions since I have asked you whether the matter has been settled and you have not given me any indication that it has been settled. As to whether it is now prudent policy to sell wheat in view of change in war situation, I am not finalizing in my mind, but will consult with the board about it. In the mean-time I do not regard the wheat as sold and hope you will do nothing until further advised. [emphasis mine]

  Even a matter that the Cabinet had agreed to delegate to Hughes—negotiating the sale of wheat—was allowed by Hughes and Watt to become a source of great tension between them.

  The telegram exchanges above reveal the breakdown in relations between Hughes and his treasurer, though it could be argued that relations between them had never really been properly established. When Hughes returned to Australia in September 1919, his relationship with Watt did begin to thaw a little, but the underlying tension remained. Upon his return, Hughes told a meeting of farmers that he could have sold Australian wheat for a higher price if the Cabinet hadn’t extended the wool agreement without his knowledge. With good cause, Watt regarded this public repudiation as a breach of Cabinet solidarity and threatened his resignation. He did not proceed with it only because the prime minister apologised to the Cabinet.

  The Australian Government’s financial position was made more precarious when the British Government demanded repayment of outstanding war debts at the same time as being tardy in its payments for purchased wool. This time it was decided to send Watt to London to make representations to the mother country. It was also seen as a useful break for Watt, who was exhausted from his seventeen months as acting prime minister and his battles with Hughes.

  Watt in London: the Battle Continues

  Watt’s voyage to London early in 1920 re-established the tension between him and Hughes. Yet again, there was no clear agreement between them about their respective lines of responsibility while they were in different continents. In many respects, their roles were reversed, with Watt arguing that he needed autonomy to make decisions while travelling, and Hughes insisting on a high degree of control from Melbourne.

  Things got off to a bad start. While Watt was still on the way to London, he cabled Hughes from the port of Aden in Yemen:

  Cannot understand why you have not replied to my telegram of April 9th. It is essential that I should receive, as you promised prompt and full particulars concerning all communications between Imperial Government and you. Be good enough to inform me whether you intend to do this.

  It was particularly important that Hughes and Watt work together closely at this time: their actions needed to be mutually reinforcing because the domestic and international aspects of the wool market were interconnected. While Watt was attempting to gain payment from Great Britain for the wool that had been exported, the prime minister had to explain the state of play to wool growers in Australia and also attempt to get their agreement to pooled marketing arrangements in the future.

  Hughes proposed to the Australian wool sector that exports to Great Britain be embargoed to avoid competing with the excess British wartime wool stock that was coming on the market, and he also explained Watt’s role in London. When Watt got to London and read about Hughes’ activities in the The Times, the response was inevitable and familiar:

  Astonished that you should have expounded a scheme to outsiders, portion of which vitally affects my mission, without prior consultation with me. Times today publishes telegram from Sydney … outlining whole (?) scheme which, it says, has caused consternation in wool circles, and this publicity is a gravely embarrassing fact. You must see that it is impossible to run business on these lines.

  Nevertheless, Watt went to work and got good results. The chancellor of the exchequer, Austen Chamberlain, agreed to defer discussion on the repayment of war debts until the issue of British payments for Australian wool had been resolved. Watt then succeeded in getting the British Government to agree to pay almost £9 million of its wool debt, and he was hopeful of getting a pledge of up to £20 million more before he returned to Australia.

  However, just as Watt was sending a cable to Hughes to advise him of his progress, Hughes was dealing with the related discussions with wool growers in Australia. Yet again, the tension between them boiled over. Hughes had gained the agreement of peak wool groups to his plan to stop exports to the United Kingdom, but they also pressured him for progress on the wool negotiations in London. Instead of waiting for an update from his treasurer, Hughes sent a cable to the British secretary of state for dominion affairs, urging that the matter be resolved immediately and in Australia’s favour. His cable to the British Government crossed with the update from Watt.

  Hughes’ intervention in the negotiations provoked an explosive reaction from Watt. Hughes may have just been trying to assist his treasurer, strengthening his hand by letting the British know that the Australian Government wanted an early and positive result, but this was not how Watt saw it. And the British Government heightened the tension between the two of them by telling Watt that they could not carry out dual-track negotiations with Watt in person and Hughes by cable. Watt sent a scathing cable to Hughes, which expressed regret that he had ever come to London, given the prime minister’s lack of support.

  As well as sending Watt to London to negotiate on wool and debt, Hughes had also appointed him Australia’s representative to the Spa Conference, established to revise the Treaty of Versailles. This time it was Watt’s turn to be provocative. In his opening remarks at the conference, Watt criticised the separate representation of dominions in the peace process, the very thing Hughes had argued for so hard two years earlier—in so many ways, the disagreements between Hughes and Watt from that earlier separation were coming back to haunt their relationship. Hughes instructed Watt that he was not to agree to revisions to the Versailles Treaty without Hughes’ explicit approval. Watt’s reply was caustic. This was clearly the final straw:

  You do not propose that I should act as a plenipotentiary, but merely as channe
l of communication between British Ministers and yourself … it would be incongruous for me to wear the garb of a plenipotentiary and mind of a telegraph messenger … If you want me to do good work here, you must leave matters confided to my care entirely in my own hands, and trust my judgment as to whether I should consult you or decide them here.

  You must also request Secretary of State to send me copies of all cable correspondence both ways about other matters. If you are not prepared to do so, kindly say so at once and I will take course I think necessary and proper.

  The threat in the last sentence of the cable was readily apparent to Hughes, who convened a special meeting of Cabinet so he could brief them about it. Hughes then sent a long reply that was simultaneously conciliatory and combative. He expressed sympathy for Watt’s workload and stresses, and conceded that no further cables about wool would be sent to anyone but him. He reassured Watt that he wanted to be supportive and expressed regret if Watt felt he had behaved in any other way. But he also turned Watt’s previous words against him, saying it would be impossible to give him a free hand in the Spa negotiations because the precedent that Watt had set in insisting that Hughes abide by Cabinet decisions in negotiating the Versailles Treaty would have to be honoured.

  Hughes must have known that this revisiting of the issues that had led to his last confrontation with Watt ran a high risk of insulting the treasurer further. If he had in fact been fishing for Watt’s resignation, he was not disappointed. Once Watt knew that the Cabinet had expressed support for Hughes, he cabled his resignation. Hughes attempted to get the resignation withdrawn by offering to have a Cabinet discussion on Watt’s return, but Watt replied that Cabinet discussions were no longer of any interest to him, given he was no longer a member of it. When Watt later ascertained that Hughes had not submitted his resignation to the governor-general, Watt sent it directly to the viceroy.

  As Kevin Rudd could attest, a Cabinet minister resigning in protest against their prime minister is at a distinct disadvantage in managing the domestic political ramifications when they do so from the other side of the world. In Watt’s case, this was especially so given that he was dealing with a prime minister as wily and manipulative as Hughes. Hughes accepted Watt’s challenge to table their cables in parliament, but he ensured that his perspective and not Watt’s was the one put before the members and the people. He was also critical of Watt for leaving Australia unrepresented at an important conference due to his impetuous resignation.

  Watt couldn’t give his side of the story as he was slowly returning to Australia via the United States, the side trip a chance for him to recuperate from his work stresses. It was only in October 1920 that he could address the House of Representatives, whereas Hughes had done so in July. Even given the slow media cycle of the time, Hughes’ version of events had gone uncorrected far too long for Watt’s response to have much of an effect on public opinion. While Watt did manage to paint a picture for the parliament of Hughes’ inefficient meddling, he also left a clear impression of paranoia. Watt alleged that his demise was all part of a Hughes conspiracy, that even the trip to London had been intended as part of a grand plan to nobble his ability to negotiate and provoke his resignation: ‘I was sent abroad, there to be discredited which, doubtless, suited the Prime Minister’s ambitious schemes better than my quiet withdrawal from office.’12

  Such conspiracy theories were as unconvincing then as they are now. There was plenty for Watt to hold Hughes to account for. By convincing himself of such a far-fetched theory, he gave his opponents, Hughes now chief among them, a chance to discredit his judgement. It was a sad end to a treasurership that had had much potential.

  Afterwards

  Watt was quiet in the immediate aftermath of his resignation statement in the House of Representatives. He was generally not an active participant in the House of Representatives debates, though he did intervene from time to time as a government backbencher critical of Hughes’ approach to various issues, particularly his old hobbyhorse of separate dominion representation at international negotiations.

  Meanwhile, Hughes’ grip on power was fading, with a burgeoning Country Party working with dissident elements in the Nationalist Party to disrupt Hughes’ dominance. Watt was a more-than-willing encourager of these moves behind the scenes, although he was careful not to do anything that might leave an opening for the election of a Labor government.13 He was very critical in the House of treasurer Stanley Bruce’s 1922 Budget, which he saw as high-spending and interventionist, and there was occasional speculation that Watt would lead a breakaway party centred on Victorian members of a similar liberal persuasion. But when the Victorian Liberal Union was formed, Watt did not join. He was effectively an independent member of parliament.

  When Hughes eventually fell at the hands of the Country Party, there was speculation that Watt might be that party’s preferred candidate for prime minister. The Country Party leader, Sir Earle Page, did think well of Watt, but there is little evidence that he was ever a serious chance of being preferred over Bruce as the new prime minister. In fact, when the Bruce–Page Cabinet was formed, Watt did not even get a ministry. Perhaps his well-earned reputation for petulance counted against him, as well as his earlier attacks on Bruce when he was treasurer.

  However, Bruce and Page were no doubt aware that Watt would make a formidable critic, a situation best avoided. As Anderson writes, ‘his independence and critical powers made it dangerous to leave Watt on the backbenches’.14 So Watt was offered the speaker-ship of the House of Representatives, which would take him out of the game politically. Watt accepted the role, which came as a shock to many. He became the first former federal treasurer to become speaker; Sir Bill Snedden would become the second, fifty years later.

  Watt’s abilities served him well in his new position. His confidence in the House, his experience of parliamentary practice and his penchant for independence made him a good speaker. But after three years he announced he would not continue in the role. This could have been motivated by parliament’s move to Canberra, given that Watt’s attendance plummeted once the move from Melbourne was complete.

  Watt did not often speak after stepping down as speaker, although in keeping with his passionate and informed interest in federal–state financial relations, he did cross the floor in 1927 to vote against the abolition of per capita grants to the states. Watt did not contest the 1929 election, and he was not an active participant in public life during his retirement. He died in 1946.

  An Evaluation

  William Watt has substantial achievements to his name. However, his career was at its most productive during his Victorian premiership. His time as federal treasurer was dominated by the struggle of dealing with the fiscal hangover of World War I and, when he was acting prime minister, by the challenges of dealing with a headstrong, roaming prime minister. This all ate away at Watt’s energy and health, and led to him becoming an insulated, paranoid treasurer at the end of his term.

  Any objective analysis of Hughes and Watt’s working relationship marks them both harshly. Hughes was not a good manager of his ministers and did nothing to foster a collaborative approach. As the head of government, it was Hughes’ obligation to ensure there were clear lines of communication and responsibility within the government, particularly during his lengthy absence from Australia. Hughes failed to do this.

  Watt cannot escape criticism either. He was an accomplished and experienced politician by the time he became federal treasurer. He had led an administration at the state level and knew that a head of government was the primus inter pares. If his position while acting prime minister was reasonable, his arguments with Hughes grew increasingly erratic and less sound. Hughes was merely being consistent when he required his treasurer to comply with the same rules of engagement in international negotiations that the acting prime minister had laid down just two years earlier.

  It is not possible to review the story of William Watt as treasurer without drawing a conclusion
of unfulfilled potential, of promise undelivered. In many ways, this is the inevitable result when a prime minister and a treasurer don’t have the requisite amount of mutual respect.

  3

  SIR EARLE CHRISTMAS GRAFTON PAGE

  A Treasurer in Partnership

  Born: August 1880, Grafton, NSW

  Died: December 1961, Sydney

  Treasurer: 9 February 1923 – 21 October 1929

  THE LONGEST-SERVING TREASURER of the pre–World War II era, Earle Page had a formidable mind and was a canny figure who helped pioneer coalition politics. The treasurership of Page was an experiment, but the government that brought together the Country Party member and Stanley Melbourne Bruce of the Nationalist Party proved to be a stable one. This was largely due to the relationship that developed between treasurer and prime minister. Bruce and Page were very different: in personality, background and experience. But in many ways theirs was an ideal partnership based on trust and reform, unsullied by ambition on Page’s part or suspicion in Bruce’s quarter.

  After its federal conception in 1920, it was conceivable that the Country Party might be subsumed into the Nationalist Party, the dominant conservative group of the day, after the 1923 election. It was also feasible, though less likely, that the Country Party would enter into a coalition with Labor, as it would do in some states. Alternatively, the Country Party could have chosen to remain outside government, simply giving its support on matters of confidence and supply to its conservative city cousins. Instead, a pattern emerged of the Country Party entering into coalition with the dominant conservative party—initially the Nationalist Party, followed by its successors the United Australia Party (UAP) and the Liberal Party—and of its members serving as part of a coalition Cabinet. The agreement that was eventually struck between Bruce on behalf of the Nationalists and Page on behalf of the Country Party has provided a blueprint for relations between the main conservative parties to this day.