Australia

A Joint Meeting of the Empire Club of Canada and the Canadian Club was held in the Royal York Hotel, Toronto, on Thursday, September 12, 1940.

THE HONOURABLE G. HOWARD FERGUSON: Gentlemen. Our guest today, Sir William Glasgow, is by no means unknown in Canada. He has visited us before--some years ago--and he came here again recently in an official capacity. In 1928 I had the pleasure of meeting Sir William when he came here as a member of the Parliamentary Association and, while not coming in contact with him, I have heard a great deal about him since that time.

Sir William has had a very remarkable career and--modest as most politicians are--you hear very little about it. Not only has he had a remarkable career but it has been greatly varied. As a young man he went into business and made some progress, so much that the Bankers Association got their eye on him and took him into the banking business. Shortly after that he went to South Africa where he distinguished himself as an officer in the Australian Force in the South African War. He was created a Companion of the Distinguished Service Order, was decorated with the Queen's Medal, and was mentioned in despatches a great number of times. But his heart went back to Australia-perhaps it never left Australia. He went back there and went into the ranching business. He stuck to that for a time, until his country called him again, when he went to the Great War, in command of the Queensland Division of the Australian Army. Again he showed remarkable qualities and was decorated a number of times. He was awarded the Croix de Guerre and a number of other important decorations.

When he returned to Australia he was elected to the Senate of the Australian Parliament, where he served for eleven or twelve years, when his country called again and he is now on a mission to spread the gospel of Australia throughout the British' Empire. No greater Imperialist have I ever met than Sir William Glasgow. No man, I am sure, will find a warmer welcome during his stay in this country than Sir William Glasgow. He was good enough to say he would come here again. I propose we bring him here as frequently as we can. No man could be more popular and highly regarded in the City of Toronto than the man who reflects so strongly the things that we all feel here-the desire to uphold the hands of freedom and security and justice through the maintenance of the closest possible connection with the old Mother Country. (Applause.) Sir William is a very ardent advocate of that course. Perhaps that is one of the chief reasons that I like him. I now have very great pleasure in asking him to address us. (Applause.)

SIR WILLIAM GLASGOW, K.C.B., C.M.G., D.S.O., V.D.: Mr. President and Gentlemen: It is quite true, as the President tells you, that this is not my first visit to Canada, nor was the occasion on which I came here in 1928 the first occasion on which I had associated with Canadians. Away back in 1899 I found myself associated with Canadians in South Africa. In fact, my earliest recollection of life at the front is when I was in a camp on the Cape, at a place called Belmont, and in the same camp there was a Canadian Infantry Battalion, commanded by Colonel Odlum. I became associated there with some of the young Canadian officers and I can assure you on that occasion I had close and friendly association with those officers.

Then again during the last war, in 1916, I happened to hand over a sector of the line in France to a Canadian Brigade and we Australians shared with the Canadians the great honour of being the spear-head of the great counter attack that brought about the downfall of the German Army. My association with Canadians, both in South Africa and France was one of closest co-operation and friendship, and I can assure you we all thought it a very great honour, as Australians, to be associated with Canadians.

Now, I am going to talk to you about Australia and give a couple of instances of the way in which Australia faces any great problem which arises. About three months ago the Australian Prime Minister, Mr. Menzies, said these words:

"Every good thing that we have is now at stake, our own freedom here in Australia where for so many years we have felt security in our very loneliness; the safety and independence of the Mother Country; the continued existence of the British Empire; the continuance of those institutions of self-government under which men are free men and not the slaves of a machine.

"For the time being we must put our dreams away; our dreams of greater social security, of more prosperity, of less work and more pay, of peace and quietness. Some day we will dream once more of these things, and our dreams will come true. But at this solemn hour, action is what counts. Sacrifice-all-round sacrifice; unremitting toil; unflinching devotion -these are the things which we must have."

So many speeches have been made in the last year that one might be tempted to think that this was hollow rhetoric and that the Australian people would continue to idle complacently along their way. Or, again, those who are bitterly conscious of graft and class distinction might be prompted to question whether the Unions would be willing to subordinate themselves to the Government and employers in the interest of increased production and whether those at the helm would themselves make voluntary sacrifices.

I know from personal and official information reaching me constantly that they were not empty words and I am convinced that when the occasion demands, my people can sink their differences, make great sacrifices and use every method ingenuity can devise to overcome their difficulties.

In 1914, Australia as a nation faced the greatest challenge in her history. She accepted the challenge, pledged herself to the last man and the last shilling, and all factions became merged into one party co-operating harmoniously for the common purpose of winning the war.

In 1929, the nation was beset once more by a crisis, this time one of a different kind--a severe and nation-wide economic depression which was only part of a world depression. The story of events preceding that crisis, and the manner in which the depression was tackled so successfully that Australia recovered from it before any other country, throw a great deal of light on the character of the Australian people and will give you some idea of the extent to which they will apply themselves and make sacrifices now. For that reason, I propose to tell it to you briefly.

Perhaps Australians have an innate ability to muddle through in economic matters just as the British are reputed to be able to muddle through in international affairs. Most of them would, I think, admit that in many respects luck was with the country as it climbed out of the depression, but they also consider that they adopted sensible measures, both before and during it, which made it possible to share evenly those sacrifices which were essential for recovery. Before 1929, particularly drastic steps were taken to revise the Commonwealth Constitution and financial organization, and so pave the way for a sound economy when it was most needed. I shall give you an account of these steps, because they involve problems which Canada has faced or will probably face, problems for the study of which the Royal Commission on Dominion-Provincial Relations was, a short time ago, set up here.

At the outset I should explain that the Australian Constitution is modelled on lines similar to that of the United States; that is to say, when it was drawn up in 1900 it defined specifically the powers of the Commonwealth Government and left the residual powers in the hands of the six State Governments. This system, you will observe, is the direct opposite to that laid down by the Constitution of the Dominion of Canada where the powers of the Provincial Governments are specifically defined and the residual powers rest with the Dominion Government.

Although Australia was, at the time of the last Great War, essentially a primary producing country, industries were gradually being established--to a large extent with the help of imported British capital. For this reason, and because the State Governments had also been borrowing for public works, debts had been steadily rising. War borrowing increased the figures to such disturbing proportions that the Federal and State Governments recognized the necessity for some control over borrowing, especially overseas.

The Commonwealth Government, as early as 1924, invited the State Governments to co-operate with it with a view to preventing undue competition and clashing in raising loans, and a Loan Council, consisting of the Commonwealth and State Treasurers, was formed. This Council decided that borrowing in the United States and borrowing simultaneously in the United States and London, on behalf of the Commonwealth and the States, should be conducted solely by the Commonwealth.

The work of the Loan Council in trying to instill some order into the Commonwealth's finances only served to accentuate other financial matters which needed regulating.

Provision had been made in the Commonwealth Constitution for the Federal Government to take over certain of the public debts of the States and possibly the whole of the indebtedness of each State. It was largely with a view to fixing and settling this responsibility of the central government that a Premiers' Conference was convened in 1927. At the Conference an understanding, since known as the "Financial Agreement", was reached, whereby the Commonwealth took over the unpaid balance of the gross public debts of each State and all other debts of each State existing in 1929 for money deemed to have been borrowed for and on behalf of the Commonwealth. The Commonwealth was to contribute for fifty-eight years for interest charges on such debts and to a sinking fund to extinguish them in that period. Future debts, to be raised after the Agreement, were to be covered by the establishment of a sinking fund to which the Commonwealth and States would each contribute one dollar per cent per annum. Lastly, it was decided that all future borrowing on behalf of either the Commonwealth or State Governments should be arranged by the Commonwealth according to the decision of the Loan Council.

It should not be difficult to see that the Financial Agreement represented a definite tightening up of the whole Australian financial system and started a systematic saving which was to prove so valuable in the rainy days which lay just ahead.

The fall of world prices for primary products brought quick repercussions in Australia. First the primary producers, who were the backbone of the economy, became impoverished and could not buy from Australian manufacturers and importers and, secondly, the overseas supply of credit to finance Australian industries and public works was cut short.

Conditions degenerated at such a pace that, at the invitation of the Commonwealth Government, Sir Otto Niemeyer, of the Bank of England, visited Australia and counselled severe deflation. Thereupon, the Prime Minister and State Premiers met to draw up a plan to ease the economic situation. The Labour Premier of New South Wales, Mr. Lang, proposed the reduction of interest on internal loans, the cessation of oversea interest payments pending agreement for a similar reduction and the substitution for the gold standard of a "currency based on the wealth of Australia".

The others at the Conference rejected Mr. Lang's proposals and adopted instead a plan combining all the possible remedies in such a way that the burden fell as equally as possible on everyone, and no considerable section of the people was left in a privileged position. Five courses of action were adopted simultaneously. These were

First, a reduction of 20 per cent was made in all adjustable Government expenditure, including all emoluments, wages, salaries and pensions paid by the Government. This reduction of wages rapidly became general for all Australian employees.

Second, internal debts began to be converted.

Third, additional revenue was secured by increased Commonwealth and State taxation.

Fourth, banks reduced their rates of interest on deposits and advances, and last, relief was offered to those saddled with private mortgages.

Before the details of the Premiers' Plan were settled, the Leaders of the Opposition in the Commonwealth Parliament were invited to attend a Conference. After full discussion, the following resolution was passed and published

"The Conference, including the Leaders of the Opposition in the Federal Parliament, having most carefully considered the financial position of the Commonwealth and the States, and recognizing the national inability to meet existing Government charges, is unanimously of the opinion that to prevent national default in the immediate future, and a general failure to meet Government payments, all expenditure, including interest on Government securities and other interest, and expenditure upon governmental salaries and wages, pensions, and other social services must be substantially reduced.

"These measures, drastic as they may appear, are the first essentials to the restoration of prosperity and the reemployment of our workless people.

"The necessary sacrifice is due to national inability to pay, and it must, therefore, be shared by all.

"The Conference has accordingly provided a conversion plan under which bond-holders may make their contribution to the general sacrifice by themselves accepting the lower rate of interest which the existing position makes unavoidable.

"The Conference therefore appeals to all sections of the people to recognize the position, and, in the interests of the nation, to accept the sacrifices which are involved."

The Central, or Commonwealth Bank, at first unpegged the Australian pound and allowed it to depreciate until it found its natural level and then pegged it at 125 Australian to 100 sterling, which is the present par rate.

It was most important that the London funds should be fed, for it was from them that interest obligations on external loans and import debts were paid. The Government encouraged the search for gold in Australia by raising the price and released gold from bank reserves for shipment to London by decreeing that part of banks' reserves could be held in English sterling instead of gold.

It may be of interest to you to know that the Australian Government recently passed an Act under which there is a complete remission of Federal taxes to gold mines where the cost of production per ounce exceeds $32.22.

Both interest and external loans were successfully converted and the Commonwealth Bank reduced its rate for advances. The hours of work were reduced in some industries by order of the Commonwealth Arbitration Court. None of these measures, however, helped the wheat grower, who was in the worst plight. A Wheat Commission was therefore set up which recommended that overseas sales should be supervised and the growers aided by bounties and subsidies, to be paid for by a new home consumption price for wheat.

Finally, to ensure that the sacrifice was shared similarly by the States as well as by individuals, a Grants Commission was appointed by the Commonwealth Government to examine the economic disabilities suffered by the smaller States through federation and to recommend annual compensatory grants to them.

These measures restored confidence in the country both at home and abroad. New credits were loaned for defence programmes, industries and public works. Happily, the price of wool, Australia's greatest export commodity, rose steadily all this time and the Commonwealth was able to set vigorously about the task of building up the balanced economy that exists today.

It was difficult to detect traces in Australia ten years afterwards of the ordeal through which she had been. There was one indelible scar, however. In the financial year 1927-28 about $35,000,000 were spent for defence purposes, but with the general reduction of estimates this amount fell to about $18,000,000 by 1930. All branches of the defence forces were seriously affected and the practice of compulsory military service had to be abandoned. Yet, in all this gloom, there was one bright spot. The Government managed to keep the small arms, clothing, munitions and ordnance factories going with skeleton staffs so that when we were faced with the crisis in 1938 we were in a position, although somewhat cramped through shortage of trained personnel, to start on the immediate production of most of the materials and armaments our troops required. Since the outbreak of war, other factories have been established with amazing speed and the Government expects soon to be able to produce all the food and munitions the Australian forces will require and, in addition, augment the supplies of these which she is already shipping to Great Britain. (Applause.)

The united spirit shown in the emergency of the depression was revealed again at the outbreak of the present war. When in the House of Representatives, last June, the Prime Minister moved the second reading of the National Security Bill, his motion was seconded by the Leader of the Opposition, Mr. Curtin. That Labour should have seconded such a motion was significant enough in itself, but Mr. Curtin took that opportunity to sum up his party's view on the whole situation. Referring to the Bill, he said: "We have at stake self-government in Australia; we also have at stake a trusteeship for the future, and for the soil on which we live." In order to assure the safety of the country, he said the Labour Party had decided that "the entire resources of Australia, which include all productive and financial organizations, should be placed under the control of the Commonwealth Government for national service." "Labour," he continued, "knew that in arriving at that decision it was giving to the Government, power over life and death, over industrial conditions and over property and persons. It knew that this amounted substantially to making the Executive of the Australian nation the equivalent of absolute government of Australia."

I am sure that the unity of purpose and spirit of sacrifice which is becoming increasingly evident in Australia is equally strong here in Canada and in the other parts of the British Commonwealth of Nations. How then can Nazi Germany hope for the crumpling of the Commonwealth's resistance that Hitler optimistically forecast in his speech last week? Such boasting as his can only be the product of uneasiness and uncertainty of mind.

While the German propaganda machine was trying to persuade the world and itself that, if the German hordes marched on Poland, the Dominions would decide they had no quarrel in Europe and watch developments there with an indifferent eye, anyone who happened to be reading Arthur Conan Doyle's The White Company, written in 1891, might have gauged the true position from these last two prophetic sentences of his book: "The sky may darken and the clouds may gather, and again the day may come when Britain may have sore need of her children, on whatever shore of the sea they be found. Shall they not muster at her call?"

That is exactly what has happened. The whole British Commonwealth has mustered to the call and already we have seen ample evidence of the sacrifices which we British people are ready to make and must make if we are to be able to restore sanity to the world.

There can be little doubt that Hitler, and Mussolini too, confidently anticipated that if they could terrorize the French into submission by treachery, propaganda and a sudden massed onslaught, they could count on the collapse of British resistance. In this, as in so many other things, they showed a complete misunderstanding of the British spirit and of the cause for which we are fighting. Now, at last, the Nazis must realize the vastness of the British Commonwealth, the unity and tenacity of its peoples. Certainly Australia's determination to continue the fight, no matter what reverses we may suffer, should be clear, for about three months ago, when our prospects were darkest, Mr. Menzies threw out this challenge to Germany "Whatever calamity may happen elsewhere, the nation that wants to conquer us must come and take us. We don't come from the surrendering breed." (Applause.)

To the people of Australia the course that lies before them is clear and they know there can be no short cuts. Their watchword is "All in"--all in with everything they have, their savings, their property, their skill, the service of their hands, if necessary the service of their lives. (Applause.)

Mr. R. A. COURTICE (President of the Canadian Club): Mr. Chairman, Sir William: We have listened to your address on Australia. It is highly desirable that the members of the British Commonwealth should become better acquainted and to that end your address has made a splendid contribution. On behalf of the Empire and Canadian Clubs I sincerely thank you, and may I couple with that the wish that your stay in this country and that of Lady Glasgow, may be a very happy one. (Applause.)