An Address

The Empire Club of Canada joined with the other Luncheon and Service Clubs of Toronto in a special meeting on Friday, July 12th, 1935, at which the guest of honour was the Right Honourable J. A. Lyons, P.C., M.P., Prime Minister of Australia.

The Right Honourable J. A. Lyons was introduced by the Prime Minister of Ontario, the Honourable Mitchell F. Hepburn.

PREMIER HEPBURN : Mr. Chairman„ Ladies and Gentlemen: I want to thank my good friend, the Chairman, for the kind invitation which has enabled me to be present today in order that I may discharge the pleasant duty that now falls upon me.

This is indeed an important and auspicious occasion. Important, inasmuch as I believe this is the most representative gathering of Toronto citizens that has ever assembled under one roof; auspicious, in that we have as our guest speaker today one of the outstanding statesmen of the great British Empire.

This morning I had the privilege of receiving the Premier of Australia at my office at Queen's Park, at which time I introduced him to my cabinet colleagues, and in view of the fact that the one of whom I am going to speak at the present moment is in the room, I am going to let you in on a state secret. Naturally, I expected my friend, the Honourable Peter Heenan would be the first friend on the receiving end. To my disappointment he landed quite late. I found later he had got in the big parade today and as a matter of fact, he had to park his car six blocks from the office and from there he marched in the Orange Parade to the tune of "The Protestant Boys". He explained that in his anxiety he was prepared to do anything because he wanted to meet an Australian or a New Zealander. He said, "They have changed the whole course of my life. If it had not been for Australian and New Zealand butter I would today have been Minister of Labour in the King Government instead of Emperor of the North in the administration over which you preside." (Laughter).

During the course of our conversation I gathered that the sister Dominion of Australia has very much the same political problems as we have. Australia is going through the same period of economic evolution, but I must say, in all humility, it appears to me Australia has made a little more progress toward rehabilitation than we have and today we are going to have the privilege of hearing from his own lips the story of how this was accomplished. We are going to hear from the lips of the man who is chiefly responsible for the enviable position which Australia occupies at the present time.

Mr. Lyons started in as the Premier of a relatively small province, Tasmania, and later he accepted the larger responsibility of leading an administration in the Commonwealth of Australia. His rise in public life has been phenomenal. The service that he has rendered to his own people, I know, is appreciated over there and we know, as a result of the interchange of ideas today, some good will accrue to those of us who are here to welcome him.

So, I say, we appreciate his presence, the presence of a man who has rendered great service to his own country, the presence of a distinguished citizen of the British Empire to which we all pledge our allegiance, and who, above all, is a mighty good fellow. And I hope„ while he is here within our country, he will enjoy the fullest measure of Canadian hospitality.

I now have great pleasure in introducing to you the Prime Minister of our sister Dominion, Australia. (Hearty applause accompanied by three cheers for the Prime Minister of Australia).

THE RIGHT HONOURABLE J. A. LYONS: Mr. President, Mr. Prime Minister, Ladies and Gentlemen: You have given me an extraordinarily cordial welcome to this part of the Dominion and it is only in keeping with the welcomes that we have already received before we reached Toronto. It might just be we will want to come back again and I hope that one day that may be possible because I believe that an interchange of visits between those who represent the various Dominions of the Empire and, indeed, between those who represent the various countries of the world, must have something of real value to those we represent.

You apparently are under the impression that because you have a Trade Representative of Australia here who happens to be a Queenslander, that the right sort of temperature to provide for an Australian representative is one that would suit Mr. MacGregor and the State from which he comes. I am afraid he hasn't told you enough about Australia. He must have told you too much about Queensland, because some of us live so near the South Pole that we could do without some of the warmth and some of the humidity that is in the temperature and the climate we have been passing through recently. However, that warmth is utterly in keeping with the warmth of the welcome we have received.

Now, we are representing here today, you and we who come from Australia, two important units in the great Empire of which we are so proud to be members and it has been a very great privilege to me to be associated with you through your Prime Minister of the Dominion in the celebrations that have taken place recently in London. The great unifying influence of the head of our Empire, of the King, himself, is one that is valued and appreciated by you and by us away out in Australia. Apart from the freedom we enjoy as members of the British Commonwealth of Nations, we do enjoy it and we value it. Apart from that, we have the wonderful example that the King and the Queen have set to all of us, just as individuals, just as members of their family and it is because of that we have developed an affection and a loyalty that spreads right through the Empire and in a world where countries and peoples„ generally, are no longer placing any very great value on kings and thrones and crowns, the loyalty and the love of the people of the Empire for their king and their throne and their crown is more intense, I think, than it ever has been in its history.

You people of Canada and the people of Australia that I represent have many things in common. We are neighbours because the Pacific doesn't separate us; it unites us and we are bound together by ties of trade. We are hoping that we shall get closer and closer together as the years go by and the development of the methods of transport and communication must bring us closer and closer. When we think of trade, for instance, we are hoping and we not only hope but we ask that the Dominion that has done so much to provide the transport between Australia and Canada will provide better transport, more up to date and modern transport as time goes by, so that trade may grow with the method of transport. The development in the air will bring us closer together. I not only hope but I am absolutely sure that we shall see in the near future developments in that direction that will bring us very much closer together than we are today, and I think it will be well for the world because I believe this Empire of ours is destined to play an important part for the world, for the people of the world, for the peace of the world, and to exercise a great influence in the development of the world in the future generations.

Now, our trade with you people is very important to you and very vital to us. We have had treaties with Canada from 1825 to 1931 and the result of those treaties has been to develop our trade. You have a benefit and we have a benefit. You have the greater benefit. We are not complaining about that, but we ask that an effort be made by Canada, not altogether to balance up because there are circumstances that make that scarcely possible, but that you shall do something to bring the trade balance a little bit nearer, to bring it nearer to a balance, at any rate. And we ask, as we are such good customers of Canada, that you will develop as customers of Australia.

In your last financial year we bought from you $18,000,000 worth and you bought from us, $6,000,000 worth, so that our trade is worth three pounds to you for every pound your trade is worth to us. As I say, we don't hope that that shall balance because there are circumstances that prevent, perhaps, but we do hope the position will be improved from the Australian standpoint. You know, last year we purchased from Canada 208,000,000 feet of Canadian lumber and we bought 12,000,000 pounds of Canadian canned salmon and we bought 100,000 tons of Canadian newsprint and we bought 16,189 Canadian automobiles. In fact, in that year you sold to Australia more automobiles than you have ever sold to any single country within the Empire or outside of the Empire. So, apart from ties of sentiment and of Empire, you realize what a value we are to Canada and how we ought to understand each other and get close together as members of that Empire.

On the other hand, while you don't buy from us so much as we buy from you, you buy commodities that mean success and profit to particular industries and interests in Australia and that is very valuable, indeed, because in difficult times it is well that some interests, at any rate shall be living under decent and profitable conditions and we get a benefit there. For instance, you have bought 12,500 tons of raisins and currants from Australia and that goes a long way to bring some prosperity to the people providing those things and you bought 72,000 gallons of wine. I don't know what you do with that. You bought 4,000,000 pounds of canned fruits and 30,000 tons of raw sugar and 3,000,000 pounds of wool and wool products.

Again I say, while this thing doesn't balance, all the things I point out to you that you buy from us are of very great value to us, indeed, and all we say - we are not complaining at all - is that we are hoping the condition will improve on what it is today.

So we discussed this trade question with your Dominion Government and we are hopeful of making progress in this regard. We have always, or practically the whole life of our Federation in Australia, given definite preference to Great Britain in our trade. Back in the days of the great Alfred Beacon, we laid down first a definite margin of preference of five per cent and it has gone on and on until we reached the Ottawa preferences and some of the margins are up to 30 and 35 per cent. And we give preferences to the Empire, too. We believe that is where we should start, though we believe also that trade with the countries of the world is essential to you as to us. We are hopeful of continuing that policy and, as I say, getting closer and closer to the other parts of the Empire.

Now, I don't want to worry you with that trade situation today. We discussed it with your government. I appeal to you gentlemen because you are such a representative gathering here today. When you are making your purchases show a little discrimination sometimes in favour of my country. When you realize what a fine customer that country is in your interests, buy some more Australian goods - even if it is wine, try that out. It's all right. I can answer for that. (Applause.) But do this in order that you may show to the Australian people, Gentlemen, that you appreciate the trade they are doing with you.

Now, your Prime Minister has been kind enough to say kindly things about me and what I have done in Australia. As a matter of fact, I haven't done very much. Whenever a big job is done, it is done by the people as a whole. What Australia has done is the result of sacrifice made by her people at the right time and if I have succeeded in any way at the head of the government, it is not because of anything I have done individually, it is because of the co-operation and the loyalty I have received from my colleagues. I have only one qualification for the position I occupy, that is that I am able to pass my job on to my colleagues who work with me. I do little; they carry the load. The sympathy and the co-operation and the loyalty that they give me makes it possible for me at all times to carry on, and through those colleagues, we pass on our policy to the people and the people take up that policy and say that this may mean a sacrifice, an extra burden we will bear because we think it is necessary. And I have today to pay tribute to every section of the Australian people, high and low, for what they have done and particularly the workers of our country, to those who are at the lower end of the scale who in all times of difficulty have to bear the greatest burden. They have borne it with cheerfulness and courage, characteristic of the Australian people and if a greater tribute is paid to any section, it must be to the workers of that country.

We, for many years were developing our country as you are in Canada. We are still building up or developing and neither you nor we have reached the highest point. Our greatness, I think, as your greatness, lies in the future and we are building foundations which will make possible that greatness in the future. We were going along, developing our country, making use of borrowed money from outside of Australia, making possible the settlement in the various parts of the country. We were building up a national debt which added to our burden of interest, to our annual commitments and I am afraid we were going along sometimes on foundations not too stable and reliable. We didn't look quite far enough into the future. We were happy so long as we could borrow more money and spend it and continue to borrow. Many of the works carried out were productive, making possible the progress of the country. Many of the works we spent money on, I think we are getting no return on today. That is true, I think, of every new country, at any rate, but we have been able to improve the position in recent times. Perhaps, after all, the depression is not an unmixed evil if it brings real lessons to governments. Our interest bill five years ago for instance got up to $325,000,000 a year. We are not 7,000,000 of people out there in Australia and the interest bill was $325,000,000 five years ago. As a result of the things we have done, the plans we have followed in conjunction with the States, the relief we have got in interest following on the conversion of our national debt to a lower rate of interest, we haven't been piling up the national debt in recent times; instead of the $325,000,000 of five years ago, the interest on our national debt today is around $250,000,000. (Applause.)

And to show you the financial stability of our country, I show you that that is the trend in the last five years, lightening the burden and at the same time we have been increasing our contribution towards a sinking fund, the aim of which is, of course, to bring about the extinction or the end of the public debt. In that same period we have increased our contribution to the sinking fund. While the interest debt has been coming down we have increased our contribution to the sinking fund from $30,000,000 to over $40,000,000 in the same period. So we are not only saving the position so far as interest is concerned, but we are making still greater provision against the future and we are insuring to those who invest in Australian stocks real security which is worth while to them as it is worth while to us. Our interest debt today is just about what it was nine years ago. In recent years we dropped but it is just about what it was nine years ago. Our contributions to the sinking fund are just about double what they were nine years ago.

Now, we have done this in a difficult time. We have had to face this depression as you have. Perhaps if we had met the effects a little earlier, it would have been better. We were up against it because all the things we sold from Australia to the world were primary products and you know how primary products suffered in price. So you see the problem of Australia. Our national income was £650,000,000 normally. In about two years, because of the drop in the price of commodities, we produced and sold to the world, we found our national income £200,000,000 less and we had to face all this depression and all its effects with £200,000,000 less money per annum to do it with.

When you look at that you begin to realize what our difficulties were. Well, we were concerned about this position. We had been going on borrowing money, as I said, year by year from London and spending it in Australia. That source of income, if you can call it income, dropped completely because we couldn't borrow any money in London and as a result of our financial position in Australia we couldn't borrow a copper in Australia either.

Through those difficult days when States and Commonwealth each had substantial deficits, year by year, we had to go cap in hand to the trading banks and the Commonwealth banks asking for just enough to carry us on from year to year, for the banks to supply the deficits of government and in addition to find sufficient to keep going a minimum programme of public works to employ some of our people, at any rate. We had to go to the banks because the people in those days didn't trust governments. The people in Australia wouldn't lend anything, no matter what rate of interest we offered and we couldn't raise a copper in London.

Then we approached this thing. I say this to you, we offer no criticism of anything any other country in the world has done. We only tell you the story of what we did in order to get out of that difficulty. I think it is proper that the people in each Dominion should know something of what the other Dominions have done, some thing of its plans and what it is trying to do. We say that with an income reduced by roughly a third, we couldn't continue on the old basis and we didn't try any fantastic schemes to get out of our troubles. We said that a government is like an individual. If it wants to retain the respect of its neighbours it has got to live within its income and endeavour to balance its budget and cut its coat according to its cloth. (Applause.) So we said, "We have got to ask the people of Australia as a whole to bear an extra burden. We have got to ask the public servants and the pensioners to take something less." That wasn't pleasant for us to propose. We must raise more revenue and therefore increase the taxation on the shoulders, particularly, that are able to bear a bit of extra taxation. We put our taxation up and cut our expenditures down. We went to the bondhouses and we said, "We are asking every other section to do this jab. You have got to bear your share of it." So we proposed a conversion loan in Australia of the national debt held in Australia and we asked the bond holders to convert to a lower rate of interest by cutting the interest by 22 1/2 percent and over ninety per cent. of the bond holders voluntarily came along and converted their holdings.

At the time that we tackled this problem the Commonwealth of Australia was facing a deficit of $100,000,000 -to put it in your currency. In the year in which they did it the recovery was so great, the confidence so restored in the minds of the people that even in that year the Commonwealth of Australia balanced its budget. And every year that we have been there as a government - it was during the time of the present government that the thing was done, we came in at the end of 1931, and at the end of 1932 the budget was balanced -it has been balanced. We closed our accounts on the 30th of June, the other day, and again we have a surplus of $3,500,000 in the national balanced budget.

So we have done this thing and we are very proud of it. I said we couldn't borrow a penny in Australia at that time. But since then, not only have we converted that loan in Australia on a voluntary basis but we have gone to London and converted a substantial portion of our national debts, especially those with a high rate of interest. London trusts us, too. We converted the debt and we save '£20,000,000 a year for the people of the Australian Commonwealth and the States and that has gone a long way towards helping us to balance the budget.

To give an idea of the recovery that has taken place in Australia as a result of this. We haven't got out of the woods, of course, we are a long way from it. We depend on world recovery. Unless the prices of our commodities and yours recover we can't expect complete recovery in Australia but we have made wonderful advances.

We had a huge rate of unemployment, especially in the middle of 1932 and from then on, again because of confidence restored by government, the employment was provided by private enterprise which provides eighty per cent. of our employment.. After all, confidence restored in the minds of the controllers of our industry leads to the beginning of the cutting down of unemployment in every quarter. Since the beginning of 1932 we have seen the position improving and it is improving today.

Then again, there is no better indication of the recovery than this: the railways. The railways are a mighty good indication of where we stand. Of course for very many years past our railways which are owned by the government have provided facilities, perhaps private companies wouldn't undertake to provide, because we do it from the national standpoint to develop a district, whether the district will pay immediately or not. It doesn't matter; we do it for the purpose of national development. As a result we lost on our railways substantially. We lost that in the national interest. Last year the improvement in the railway position was this, that the losses on the Australian railways as a whole were less last year than they have been since 1925 and they were less last year in the actual losses upon the railways compared with 1931. There was definitely a two-thirds reduction to the loss that has taken place between 1931 and 1934.

Then, again the confidence that has been restored has enabled us not only to go to the Australian market to raise our money-we do that for all new works, we raise the money in Australia, no longer outside of it. At the beginning of this trouble we couldn't raise a sixpence. Since the position recovered and we have gone on the market time after time, we have had our loans subscribed within two hours on some occasions, almost subscribed before they are opened and always at a lower and a lower rate of interest and we raised our second last loan at the lowest rate of interest ever experienced in the history of Australia. So we see the recovery.

Gentlemen, may I say this, that one aspect of it, I think, is this: Away back in 1910„ the Commonwealth Bank was established by a Labour Government. The Commonwealth Bank through the difficult time of the war period was Australia's financial salvation, operating as it did with private trading banks. That bank has gone on developing and throughout this difficult period, if you look back on Australia, you will see practically no failure of any bank that mattered, because of the close co-operation between the Central Commonwealth Bank which is a trading bank, too, and the trading banks. They carried the government on their shoulders, those banks, during the difficult times. They are now helping governments. Their systems, their methods have been absolutely sound, based as they were upon the old Scottish and English methods of long ago. We are proud very proud of the Commonwealth Bank. It is set up by the people of Australia. It has an authority which controls our activities. And one thing and one of the reasons on which I differ with my old colleagues and the government which preceded it was that I laid it down and asked the Australian people to lay it down as they have - while I have the greatest admiration for politicians and I have associated with them for twenty-six years, it doesn't matter what party they belong to, I respect them and I believe some times the people of this country and any other country misjudge politicians and do not do them justice - with all due respect to their ability to handle national affairs, one of the duties of a politician is not to manage a National Commonwealth Bank - and I have laid it down as far as it is possible for me to lay it down, that neither the Parliament nor the government nor am individual politician shall lay any hand upon the management of that national institution that has been our safeguard through two of the most difficult periods in our history.

What the Commonwealth Bank has done is as the old man, now dead, at the head of it, Sir Robert Gibb, a hardheaded old Scotchman, said at the end. He said, "Lyons, when I look back on what it has done it seems to me like a fairy tale." And no bank in the world has ever done a greater job than the Commonwealth Bank of Australia, left entirely free to the men using it as an instrument for the betterment of the nation.

Therefore, that is the policy of the government with which I am associated, that the Board of Management shall be free from any interference. That Bank, in order to help our primary producers, reduced exchange 25 per cent. That acted as a subsidy to our primary producer the farmers, and it kept them in production and it was done because the Bank considered the economic factors, not because the politicians recommended it but because they looked into all these things as a national asset, free from party influences. Let us keep our hands off and let the men especially qualified to handle this thing go on with the management of it.

Now, there is just, perhaps, one other thing I would like to refer to because this morning I was speaking to your Prime Minister and your Ministers on this particular aspect and it is well, I think that we who have had some experience in. any particular direction might give the benefit of our experience for others and they can decide for themselves what course they will follow. In the Australian Constitution which is more like the American, of course, than like the Canadian, there was set forth the provision in it for grants to States in difficulties by the Commonwealth - necessitous difficulties. There was no great financial cohesion between the States and the Commonwealth in the beginning but at the time when I was Premier of Tasmania and the Bruce Page Government was in office in the Commonwealth the Bruce Page Government brought forward a proposal for closer cooperation between the State and the Commonwealth. At that time each of us was going on, competing for whatever few shillings there happened to be in the market and offering any old price to get it. The most extravagant offered the highest price with the result that the money lender was living in a paradise and getting the highest rates of interest because seven governments were fighting, one with another to get whatever was available. Consequently, we created between the Commonwealth and the States a financial agreement and the people of Australia put the financial agreement into the Constitution. The chief points are that we sit around the table, State representatives and Commonwealth representatives and that we put forward our various loaning proposals, also our works proposals and what is available from London and we decide whether the market will stand the whole of it. If it does, each gets what he asks for. If the market will not provide the whole of it we have a method of allocation between us. That has worked very satisfactorily, largely because we decide the rate of interest. We are the chief borrower in the whole community and with the co-operation and advice of the Commonwealth Bank Board we decide what we shall pay for the money we borrow, and the States say themselves.

It has been suggested: Is there any disadvantage to the States in this?' I see none, Ladies and Gentlemen. When this was brought into existence I signed the financial agreement as the representative of a State, a State that has generally been in financial difficulties, the smallest of all the States. And I have had to operate it as the representative of the Commonwealth and whether as a State representative or as the Commonwealth representative, I find it satisfactory. It doesn't matter what the political party is. When we formed that I think there were four Labour Governments that signed it. Today, we have a couple of Labour Governments in Australia and the question is never raised as to what government is making the request for assistance for its share in the loan monies. That doesn't make any difference whatever. We meet as States and Commonwealth. When there is any difficulty about allocating the money, the Commonwealth has two bites and the State has six bites, so you can see the State is not under any disadvantage. If there is any disadvantage it is to the Commonwealth. There is only one borrower and if a State fails in the payments of its interest, the Commonwealth under that and under the Constitution is compelled to meet that payment on behalf of the State, so you have not only the security of the backing of six States or the individual State in any particular case, but the whole of the Commonwealth behind that undertaking, too.

We have had the experience of one State, for political reasons, not for economic reasons but for political reasons, refusing to pay, the Commonwealth malting that payment for the sake of the good name of Australia and then going out and collecting from the State, in turn with the backing of the people of that State. (Applause.)

So that is working satisfactorily with us. For you, I don't know. That is a matter for Canada. She decides for herself. I only want to give you a little of the experience we have had and I am perfectly sure the co-operation in borrowing has saved the people of Australia huge sums of money in interest and as a matter of fact, it exercises a check one upon the other.

All I want to say in conclusion, Gentlemen, is this, to thank you so sincerely for the welcome you have given us, for the encouragement you have given, to thank you for the recognition you give to whatever little effort we have made on behalf of our country and to express the hope that we shall both be out of our difficulties before long.

One thing we are very proud of in Australia is this: There has been no default whatever of the Commonwealth or any State or municipality. There is no default in any part of Australia (Applause.) And we hold our heads high through the world because of that and we have two reasons for that: the one, our own pride and self-respect, and the other, our pride as members of the Great British Empire and we have tried to live up to the traditions of that Empire and prove ourselves worthy of it, as you in Canada have. Therefore, in our travels throughout the world we don't carry any apologies whatever. We say we are members of the British Empire. We are proud of the Empire and its traditions, its achievements and its objectives today. We are proud, as an Australian people and as a part of them we make no apologies at all. We are proud people, proud of our record, short and all as it is in the world history; proud of the courage our people have shown, whether on the battle field or in the days of peace„ in the difficult days we have recently passed through. We are trying today just to lay the foundations in such a way that the superstructure that will be built upon those foundations in. the generations and the centuries to come will be of such a character that those who live in that great land of ours will be just as proud of the superstructure as we are proud of the foundation we are laying down for the building. (Applause prolonged.)

MR. T. FRANK MATTHEWS: Right Honourable Mr. Lyons, Honourable Mr. Hepburn, Gentlemen: I am sure you have enjoyed this simple, explanatory talk by Mr. Lyons. He is certainly proud of being a native of Tasmania and proud of being a Premier of the Common wealth of Australia. As a writer in an editorial in the newspaper said, "His characteristics are honesty, simplicity and the faculty of holding warring factions together."

He went into office in 1931 at a very difficult time and he has told you very frankly what has been done to overcome the difficulties and place the Commonwealth on a firm, solid foundation.

His slogan, in the last election, particularly, was: "Restore Confidence," and you can see from what he did how the people have trusted him. They have backed him up and confidence has been restored throughout the Commonwealth of Australia because of such a leader.

We assure the Right Honourable Mr. Lyons that we appreciate more than we can tell you your coming here to address this audience, made up of the Clubs you have heard mentioned by the Chairman and the Canadian Manufacturers' Association and the Board of Trade and we do hope it will not be your last visit here. This is the Honourable Mr. Lyons' first visit to Canada, his first visit to Great Britain, and he has told you how he enjoyed the conferences in London and we sincerely trust his enjoyment will root be lessened in Canada. He is hurrying through and we are giving him rather a warm reception but I trust that you and Mrs. Lyons will complete your journey in Canada to your satisfaction and that you will enjoy good health and that during the long trip of 7,000 miles from Vancouver to Sydney you will recover the strength you have exhausted in meeting such people as we have here and in delivering this address. We assure you, we will welcome you back if you care to come.

I might add, Australia has something on us in the makeup of their Senate. The Senate of Australia is not appointed, it is elected. Two members from each State are elected for six years, after which they retire.

We are also proud of the record of our banks here during the difficult times through which we have been passing. We have now a Canadian Bank also which will function as Mr. Lyons has said the Commonwealth Bank functions in Australia. I do think that all the provinces of Canada and the Dominion itself can learn a great deal from what has happened in Australia under the government of Mr. Lyons.