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Chapter X: Pax Britannica

THE events under review being of contemporary occurrence it is naturally impossible to lay bare the hidden springs which actuated international politics and the workings of which may fully account for the cautious restraint of the Imperial authorities. Secret motives and silent struggles must, of course, have existed, but they are not touched on in the communications between London and Melbourne, and between London and Tokio, which the British Government has found advisable to publish at different times for the information of Parliament. These, together with some duly authenticated, generally hazy ministerial utterances, form the only supply of official intelligence accessible at present. Everything beyond is uncertain. Unfortunately, the period is too recent by nearly a generation for those delightful indiscretions called memoirs.

The Governments of Japan and China protested against the Coloured Inhabitants' Registration Act as soon as its clauses became known. Japan's objections raised no ire in England. That nation was regarded as an equal. But that even the Chinamen should dare to remonstrate, and in such formidable company, was an innovation which could not be stomached lightly by the Empire-conscious Britons. By the perversity of fate, their resentment fell not so much upon the Chinaman

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as on the Colony which had made such a slight possible. The protest and the popular distaste had probably some connexion with the refusal of the King's assent to the measure. And when the sanction was granted at last, the Imperial authorities, apart from the special reservation mentioned before, thought fit to request the Federal Government not to take any further restrictive steps without consulting them in advance. They particularly warned against any attempt to subject the Japanese immigrants to a violent police persecution as threatened by the dispatch of a force of constabulary to the Northern Territory, on the ground that such a course was calculated to drive the refugees to despair and might result in armed resistance and bloodshed. The Commonwealth was, however, officially assured that its just rights would be protected by all the forces of the Empire. This was vague comfort, at best, and it drew, consequently, merely an evasive reply. The haste and harshness with which the provisions of the new act were brought into play soon taught the British Government that verbal behests on its part were apt to be overlooked.

It became therefore necessary to show plainly who was in reality master of the situation. The means employed for the purpose were most emphatic. In the evening of July 1, all serviceable vessels of the Australian squadron left port. Only three small craft remained behind, together with the old gunboat Protector, which represented the Commonwealth-owned navy in its entirety. Two days after the departure the British Government coolly informed the Federal Cabinet that colonial provocations were disturbing the friendly relations between the Empire and its neighbours, and that it had been compelled thereby to concentrate the fleet in

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Eastern waters, at Singapore, as a preparation for all eventualities.

There were voiced in Australia no wild official protests against the withdrawal of the naval screen. Only once was the matter referred to in a dignified manner in the Federal Parliament. Expressions of disgust were left to the Sister-Dominions, which did not disappoint expectations. A perfect yell of execration went up in New Zealand and in Canada.

Especially in the latter colony the Press and the politicians threw moderation to the winds. Oldestablished, reputable papers charged the Imperial authorities with selling their white dependencies to their yellow allies, and delivering them over bound hand and foot. Responsible Canadian statesmen indulged in self-congratulations that they, at least, had not spent money on a foreign navy to be left in the ditch in the hour of need. In New Zealand, a Minister of the Crown refused to be interviewed on the subject, stating as his reason that he could not help talking high treason if he opened his mouth. The sudden explosion alarmed the people of the United Kingdom and had farreaching results. But it did not frighten the British Government, which knew that it was so much empty sound.

Its members were far more concerned about the reports regarding internal developments in the Commonwealth. The overthrow of the Moderates, the rise and popularity of the Extremists, and the forcible opening of new sources of revenue which promised to provide the money needed to open active hostilities against the Japanese immigrants, were so many danger signals. Only in the Northern Territory was an immediate clash between organized forces of both races possible. So far the special constabulary had limited their efforts to Port

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Darwin and the neighbourhood of the railway, where they found ample work to do. The tributary system of mining was suppressed, and a majority of the Chinese were deprived in this way of their livelihood. Some whites who were disliked because of their familiarity with the coloured scum were tried on trumped-up charges and shipped south. But now Palmerston district was reduced to order, and open preparations were made for an expedition into the invaded territory. Already rumours gained currency that the police were to be reinforced by militia. The execution of this design would bring matters to a climax at once.

It seems that Tokio, during this anxious period, abstained carefully from identifying itself with its emigrants to the Commonwealth. Nevertheless, it is only natural to suppose that the Japanese statesmen paid close attention to the drift of events and that they entertained grave fears that the presence and plans of the constabulary might precipitate a crisis. There were other threatening developments. Since the first half of June an irregular corps of bushmen, intent on making merciless war on the invaders, was forming in North Queensland. It was called the White Guard, and all the most determined men and pioneers of the back blocks were enlisting in it. Hand in hand with this movement went an evergrowing bitterness against the coloured aliens. Most probably the Japanese Government had agents who kept it well informed of these complications. Whether and how far it used its knowledge to impress on its ally the necessity for rapid, energetic action, must remain pure conjecture in the absence of documentary evidence to date.

The suggestive fact is that on July 12 the Imperial Government proclaimed the north coast of Australia between degrees 132 East and 137 East a closed

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area for ordinary navigation purposes. All landing and discharging operations within these limits were prohibited except in the case of vessels furnished with special certificates signed by a nominated Imperial agent or by an officer of the British navy. Vessels without such permit approaching to within three miles of the mainland were declared liable to confiscation with all cargo. To enforce these rules, cruisers were despatched from Singapore. A gunboat anchored off Port Darwin. Its commander had orders to supervise the shipping at that port. A strict watch was kept also over the Western shores of the Gulf of Carpentaria by patrolling men-of-war. Of course, no difficulties were put in the way of through navigation from Port Darwin to Bourketown and further east, so that the intercolonial and oversea trade was not interfered with. But the measure practically cut off the invaded territory from the nerve-centres of the Commonwealth, as no convenient overland routes existed. Moreover, to complete the isolation, the commander of the gunboat off Port Darwin was vested with Imperial authority to control not only the waters, but the dry land as well, for the proclamation empowered him to take such precautions, within a coastal stretch twenty miles wide, as he might consider necessary to ensure the proper working of the maritime restrictions. Though the Japanese immigrants were not mentioned once in the extraordinary decree, it was evident to all observers that it was entirely in their favour, and that further proceedings against them from Port Darwin were made dependent on the sanction of an Imperial naval officer. And thus the use by Australia of the only base within striking distance of the enemy was suspended.

This meant, to all intents and purposes, the arbitrary establishment of a British protectorate

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over part of the Commonwealth. Tokio professed immediately to look upon it as such, and instructed its ambassador to entreat the English Government to garrison the settlements of the refugees by an Imperial force, on the ground that this step would serve best to refute the invidious colonial aspersions that Japan was coveting Australian soil.

Downing Street considered it prudent to explain the motives for its action and to disavow the ulterior aims which were charged against it in an official communication addressed to all autonomous colonial Governments. This document, which was published at once, laid stress on the point that British protection, and still more British citizenship, formed a privilege which could only be extended to applicants who conformed to a certain standard. There was no attempt to define the standard in the document, which, however, ran on with the reassuring statement that there was no reason to apply different rules in the present case. The temporary control of a small stretch of Australian coast line, it continued, was decided on for reasons of expediency, and questioned in no way the sovereignty of the Commonwealth. But as it was clear that the latter was not in a position to deal with the difficulty single-handed, Great Britain had to step in. This necessity had not converted the closed area into a protectorate, and no British garrison would be placed there.

As a further sop for the self-governing dominions, the Imperial authorities suddenly adopted towards Tokio an attitude of impartial firmness. The Mikado's offer was curtly rejected as an attempt to force citizens upon an unwilling nation. His Majesty's Government regretted that subjects of an allied Power had created, by tactless management, an untenable situation. Imperial claims must

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prevail on Imperial soil. The maritime restrictions would be enforced against Japanese shipping with equal thoroughness as against every other flag. And any interference with Commonwealth navigation by Japanese craft would be regarded as an unfriendly act.

The concluding sentences of the declaration of policy were calculated to appease Australian anxiety. For rumours were about that warships flying the ensign of the Rising Sun had been seen hovering off the coast, and the excited people believed that their mission was to pounce upon the unprotected shipping. Although the absurdity of the idea was palpable, its circulation had already led, in the general nervousness, to a rise of the local maritime insurance rates. It is doubtful whether the belated and merely verbal demonstration regained many colonial sympathies. But it is certain that the strong language of the British Government created widespread consternation in England. There the financial reaction caused by the long drawn-out disturbance overshadowed more and more the political interest. And a sudden fear of further complications, even of war, removed the last sentimental barrier against a panic in colonial securities.

The London Stock Exchange had taken jokingly the first reports of a Japanese invasion of Australia. Antipodean stocks were looked upon favourably, on the whole, in consequence of the very satisfactory harvest of the preceding year. Quotations ruled rather high, for the prospects of another splendid season as the result of sufficient early rainfalls were just being discounted. The economic outlook in the other self-governing dependencies being similarly reassuring, the condition of the markets for

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colonial state-land and railway securities could be summed up as remarkably healthy at the opening of the second quarter, 1912.

When the official Tokio explanation became known, consols declined slightly, but recovered quickly on the calmness shown by the Imperial Government. The big financial interests lent their support to steady the home funds, for now that cheaper money could be expected for the summer months the ground was being prepared already for a general rise in the more speculative markets, and a decided weakness in gilt-edged values would have spoiled the game. On reflection, this inflow of coloured labour into the empty spaces of the tropical Northern Territory was voted rather a good thing, and all the better if it should become a permanency.

But there was a small well-informed section with oversea connexions who quickly discerned great possibilities of a political scare. Quietly, a bear position was reared. It is not probable that the professionals committed themselves heavily at the outset: first honours, as is Stock Exchange custom in ticklish cases, went no doubt to gay outside plungers who exist to be egged on and sucked dry. Australian stocks began to give way. Next settlement disclosed a huge bear account. These pioneers fare badly, for strong forces counteracted the decline. People considered that the Commonwealth pace was too tremendous to last, even with all the applause of the Sister-Dominions thrown in. The line of policy which the Imperial Government proposed to follow became more clearly visible and inspired confidence. The fear of international complications diminished accordingly. A satisfactory solution was regarded as possible any day, after which the bulls were expected to have a great

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innings. This uncertainty, tempered with hopefulness, made prices move in jerks, now up, now down, within narrow limits.

Then came, as eye-openers, news of the mobilization, of the Registration Act and of the crisis in its wake. They marked the first serious set-back of high-class securities and the jubilant inrush of professional bears who were badly bitten however, for a vigorous rebound followed—the British Treasury had entered the fight. Large amounts of consols were taken up. It was rumoured that the Government had fathered a trust formed by leading banks and capitalists to back colonial issues from time to time, when the depression became too pronounced. No doubt the responsible statesmen wished to financially assist the daughter nations, in the hope that generous economic support would dispel the growing distrust of the latter and would render them more tractable with regard to political necessities.

The Stock Exchange, which was adversely influenced by the protest of the Far Eastern Powers, became more cheerful immediately afterwards on the report of the withdrawal of the Australian squadron, which was hailed as a well-deserved disciplinary lesson for the colonies, and turned gloomy again in contemplation of the overthrow of the Moderates in the Commonwealth and of the frenzy raging in the sister-dominions. The tension was now approaching the danger point, but was relieved once more by the establishment of British control over the invaded territory. Then came the strong note to Tokio, and vague fears of the possibility of war began to haunt the prosperous classes of England. Their alarm found expression in a steady stream of sales of all kinds of securities. Once this instinctive

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movement was fairly started its persistence defeated every attempt to stem it. And suddenly the bottom dropped out of the colonial markets altogether. Curiously enough, the first big raid was made not on Australian stocks but on Canadian issues. This flank attack showed rare disquistion. Perhaps it was accidental. But it carries the suspicion that at last the master minds of British High Finance had determined on severe chastisement of the obstreperous dependencies. If so, their strategy was helped by the fact that Canadian funds ranged considerably higher than the Antipodean equivalents, without possessing a larger intrinsic value. The reason for this was purely sentimental: it was a manifestation of the popular conviction that the trend of Canadian legislation had so far been more closely on time-honoured English lines. That sentiment being rudely shaken by the uncompromising advocacy in the Great American dominion of Commonwealth methods, the higher prices were no longer justified before critical eyes. Consequently Canadian Threes dropped six points within a few hours. In the midst of wild panic, the more speculative issues followed the head. Canadian Pacific Railway shares lost nearly twenty points before pulling up. Grand Trunk Railway, Hudson's Bay and industrial ventures suffered in proportion. There was no holding back the inevitable after that. The baisse tendency spread to other departments. All Australian and New Zealand values tumbled heavily. It became now apparent that the system, championed by colonial treasurers, of draining their states of every surplus shilling so that they may pick up a profit by investment, for fixed periods, at good rates of interest, in London, was at best a fair-weather luxury. At the critical moment, when ready money at call might have

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done wonders, all the cash was locked up and unavailable.

Next day many descriptions of stock were practically unsaleable. Support had ceased. Probably the British Government had been converted to the opinion that the cause of peace would be served best by the debacle of colonial finance. Even if it had been willing to help, it had no moral influence. For the economic policy of Great Britain, the unrestricted licence of the individual which is affected there as the commercial ideal, has internationalized the London Stock Exchange and has emancipated it from official control. It has become impossible to emulate the example of Continental Powers who, at times, have transformed the courses of their capitals into machines for waging financial warfare against a political enemy. Even unruly Wall Street is not unmindful of hints from Washington, because its money kings are dependent on indirect support from the national treasury in periods of scare and stress. But the London Stock Exchange acknowledges only one dominating factor: money power.

It seems that Japan had studied the financial side of the problem with its usual thoroughness. Its various funds lost some points during the first week of the panic, mostly on large continental sales. A few English papers, indeed, commented on the unpatriotic method of smashing Imperial values while the securities of the country with which the whole disturbance originated were maintained at a high level. Very little attention was paid in London to such exhortations. The bulk of the prosperous classes was against quarrels with the ally—now more than ever. For the losses were quite big enough already, without any further engineerings of international panics. Moreover, a severe fall

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in Japanese funds could only be brought about by spreading and magnifying the fears of war, which course would have been certain to affect adversely the price of consols and to lead to still further complications. And the great banks and capitalists were vitally interested that the ring should be kept, that the trouble should be confined to the colonial field. There were, nevertheless, some adventurous baisse speculators who organized attacks against the Japanese issues and occasionally succeeded in depressing them sharply. But the agents of Tokio had enormous gold reserves—part of the last loan—at their disposal in London, New York and Paris, and soon forced quotations up again.

Subsequent events impaired the credit of Australia further. Apart from temporary slight recoveries the prices of its State issues continued on the downward grade, until in the darkest days of the Commonwealth the old Victorian and New South Wales Threes went begging at half their face values.

Never before had the airy pretentions of dependencies been reduced to more complete absurdity. The shallowness of the talk of perfect equality, of the right of autonomous states to shape their own destinies, was glaringly exposed. British supremacy had successfully asserted itself. Not by violent altercations or by force, but by the simple process of lowering the values of colonial stock. It was in vain that the victims shrieked furiously, and that they denounced the methods of the manipulators of the collapse. Undeniably there were sounds reasons for the decline, which the sordid features surrounding it could not do away with. It was all very fine to sing high Imperial strains in quiet times. But when the tail tried to wag the dog, when a few free and easy millions attempted to

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overlord the toiling masses of the United Kingdom who paid for the display, then the make-believe of pretty phrases and ornaments had to be brushed aside. Without regard for the sufferings of individuals, great Britain seized the baton. It was true that the act involved tremendous sacrifice. Many millions of pounds were lost to the backbone of Imperial power, the sober, steady English and Scottish middle classes. That, however, was merely a rearrangement of wealth, and the disadvantages might be turned to profit in the long run, if the decline was severe and lasting enough to cause a permanently higher rate of colonial interest on loans advanced by the mother country.

Nevertheless, the cruel lesson did not have all at once the desired effect on Australia. There was too much at stake for it. It could not acknowledge the mastery of London on any conditions at this moment. It was actually invaded, and the surrender of its principles might have meant its extinction as a white nation. Besides, the force of the blow was not realized fully because the citizens of the Commonwealth were kept in excitement by internal political developments, which appeared far more important to them. Indeed, nothing could have driven more disciples into the ranks of the Extremists than the financial collapse, which must be held largely responsible for the civic convulsions which followed.

But the Sister Dominions were stunned by the shock. The complete cutting off of the national credit sobered the calmer leaders. Appeals to caution were heard above the last wild shrieks for instant succession. That proposition was settled, anyhow. It was recognized that the colonies were wholly subject to public opinion in England, and that they would have to fall into

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line with the declared British policy regardless of their own wishes, whenever their opposition was taken so seriously as to lead to panic in London. The outlook was black. Many self-governing states had millions of loan funds falling due at early dates, which must be renewed. Most of them had started works, the progress of which called for more loan money. Nearly all had borrowed already to the limit, confident of the exhaustlessness of the British purse and of the splendours of their own future. Even in good times only a small part of the sums required for development could be secured locally. A further part might be had in France, perhaps, provided that deep peace reigned. Under present circumstances the pockets of the whole world were sealed against colonial needs.

Thus the White Dominions had pawned the right to work out their own destinies and to go their own way. They had pledged so recklessly the national credit, and thereby national independence and honour, that they had become counters in a game in which they had no say. It was no use blinking the facts. There is no equality between creditor and debtor if the latter cannot meet his bills without the help of the former. This unlooked-for position had now arisen: the colonies had no option but to propitiate London by conforming to its views on international issues. After some vexatious delay, they might hope to be allowed again to negotiate for financial accommodation on reasonable terms, though, perhaps, they would have to consent to a higher rate of interest than they were used to in the past.

Some time elapsed, of course, before the return to unquestioning loyalty by Canada, New Zealand, and South Africa was complete. For several weeks after the Stock Exchange panic, colonial indignation

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seemed to lose nothing of its intensity of expression. Popular orators still bragged of the national ability to stand alone, of being at the mercy of none. But one by one the politicians with any aspirations to responsibility dropped out of the performance. The language of the leading papers became moderate. The “Defence League of All the Whites” began to show signs of paralysis, brought on by the retirement or cool reserve of its wealthiest members. Those who persevered began to lose caste. It was not that the sympathy with Commonwealth aims diminished. But deference to the sentiments which swayed the great heart of the Empire was of higher importance, loyal acquiescence in the world policy of the Central Government took precedence before all other considerations. Once more Pax Britannica ruled triumphant.