London, 20 July 1971
13615. Secret
According to this morning’s Times, Daily Telegraph, Guardian, Financial Times, Daily Mail, and Daily Mirror, Roy Jenkins at a meeting of the Parliamentary Labour Party in the House of Commons yesterday, made a trenchant attack on the Australian Government at a time when you were Treasurer. The Daily Telegraph report is as follows:–
‘Mr Jenkins said of Australia: “I am not a great believer in kith and kin politics; I don’t think that has much to do with international Socialism and I prefer to make my judgments on a different basis”. The Australians were ‘without exception the toughest, roughest and most self-interested Government with which I ever had to deal. We had an outflow of portfolio investment—all one way—to them. It was at a time when we were very weak and they were very strong and prosperous. It was a most dangerous haemorrhage and cost us £55 million in the three summer months of 1968 and £150 million that year as a whole, massive amounts flowing to a fairly small country. We tried to stop it. I approached the Australian Government in the summer of 1968 and again in the spring of 1969. On both occasions they made it brutally clear to us that if we did anything we could say “goodbye” to the Basle agreement and that there would be a massive, immediate and, for us, crippling switch of Australian sterling into gold or dollars.’
‘Not much kith and kin politics about that.’
The Times reports Jenkins thus:–
‘Mr Jenkins’ attack on Australia staggered his audience. Discussing capital flows, he said he was not a great believer in kith and kin solutions. “I do not think that has much to do with international socialism and I prefer to make my judgments on a different basis. Fortified by my experience as Chancellor of the Exchequer in dealing with Australians—who 1 see have been complaining a good deal recently—they were without exception the toughest, roughest, most self-interested government with which I ever had to deal”’[…]
The Guardian reports it this way:–
‘Mr Jenkins then dealt head-on with one of the most powerful arguments advanced by Mr Wilson and by the anti-Marketeers—the arrangements provided for New Zealand, Australia and other “kith and kin” parts of the Commonwealth. He said he had never been a great believer in kith-and-kin politics, and had been prepared to make his judgments on a different basis, since it did not seem to have much to do with international socialism. In perhaps the most forceful but controversial part of his speech he said his experience as Chancellor had taught him that Australians were, without exception, the “toughest, roughest, most self-interested Government” with which he had ever had to deal’[…]
‘He approached the Australian Government in the summer of 1968 and in the spring of 1969. On both occasions they made it brutally clear that any action by Britain would mean “we could say goodbye” to the Basle agreement on sterling and that there would be massive, immediate, and for Britain, crippling, switch of Australian sterling into gold or dollars. “Not much kith-and-kin politics about that”, said Mr Jenkins.’
The Financial Times gives a similar report, but at the end it reports Callaghan as saying that he had found the Australian Government most understanding and had been offered very full co-operation. Likewise the Daily Mail.
2. On the basis of this evidence, do you wish to make a reply? Alternatively, I am quite prepared to do so if you so desire.
3. You will recall the negotiations in 1968. Harold Lever, the Financial Secretary to the Treasury, and Jenkins’ principal lieutenant, in a conference with me on 30 May 1968 took a much softer line. I took Fleming with me. See my 9000 to you 30 May 1968.1
You will also remember that in 1968 we were smarting under the British Government’s reversal of policy over Defence commitments East of the Suez, and that we were also unhappy about the consequences of their devaluation of sterling on 18 November 1967 contrary to their previous assurances to us. All of these things Jenkins ignores.
During my time here I have never found Jenkins friendly towards Australia, or either the Old Commonwealth or the new. In my seven years here he has persistently refused all invitations to official and private entertainments I have given. In the Labour Government, where we had a number of Ministers well disposed towards us, he always seemed the chief of those who operated against Australia’s interests. I have long felt it no exaggeration to describe him as anti-Australian.
1 Document 257.
[NAA: Ml003]