Watt’s decision to extend the wool agreement continued to rankle with Hughes, and for some time afterwards he was not backwards in needling his deputy about it. Months later, he cabled Watt to say that ‘wool is the key to whole situation here … if contract had not been extended while I was on my way to England, little or no difficulty would have been met in selling all our other products, metal and c[oal] at satisfactory prices’.
By September, Watt in turn was expressing frustration that Hughes was not keeping the Cabinet properly informed, echoing Hughes’ earlier complaint that he was finding out too many things for the first time in the newspapers:
Ministers naturally very pleased with rapid changes in war situation but are obliged to take all our information from the press. Ordinary war cables are generally four or five days old. Can you arrange to keep us posted, so that parliament, which is sitting, may at least receive official confirmation of press cables?
In November, Hughes cabled Watt to consult with Cabinet on the approach to the peace negotiations, but he didn’t wait for a reply before announcing Australia’s position in Europe, fuelling Watt’s fury:
Immediately on receipt of your telegram 6th November Cabinet called together. While considering it we were apprised of your utterance on the question, as telegraphed by Herald representative. This greatly embarrassed us, as I understood you would await colleagues’ views before defining any public utterance …
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
