At a meeting at the Palace, the King told Scullin, according to Scullin’s own version of events, ‘It is now thirty years since I opened the Commonwealth Parliament in Australia. Since then we have sent many Governors, Commonwealth and State, and I hope they have not all been failures.’ Scullin replied that none of them had been failures (though in fact some had been) but that his desire was now to nominate an Australian. The King assured Scullin he did not want a referendum or public controversy. He said he had the highest regard personally for Sir Isaac Isaacs. The King’s final declaration, according to Scullin, was, ‘I’ve been for twenty years a monarch and I hope I have always been a constitutional one, and being a constitutional monarch I must, Mr Scullin, accept your advice which, I take it, you will tender me formally by letter.’
So, with George V’s grudging consent and approval, Isaacs was installed as the first Australian to hold the governor-generalship. The Labor Call in Australia saw this as Scullin’s triumph, in so far as he was able to ‘show the world Australians are equal, if not superior to, any imported poo-bahs’. Lord Stamfordham minuted the King: ‘It seems to me that this morning’s incident was one of the most important political and constitutional issues upon which Your Majesty has had to decide during Your twenty years of reign.’
THE END FOR SCULLIN
During Scullin’s absence in England, Australian politics went into crisis. Not only was Jack Lang making defaulting noises in New South Wales, but at the same time the amiable, middle-of-the-road Tasmanian schoolteacher Joe Lyons was already considering leaving Labor and joining the opposition. Scullin and Lyons had been young radicals together, strong orators and socialists. For now Lyons was suspended, he would later say, like Muhammad’s coffin, partway between heaven and earth, and lacking a true political home anywhere. He had assumed the duty of acting treasurer, replacing Theodore when scandal struck as discussed below. Looking at the documents put before him, he believed Australia would have to make more significant economies still, but he knew Labor would not let him. He defected, too, because of Scullin’s restoration of Theodore to the Cabinet while the outcome of an investigation into his shareholding was still not issued. Labor would later depict Lyons as a rat, but it was not without some agony of soul that he would leave the Labor Party and join the opposition Nationals in January 1931, a fortnight after Scullin’s return from Britain. He would soon become Opposition leader.
The shadow over Theodore would loom large with voters. In October 1929, the conservative Queensland government had appointed a royal commission to investigate the sale of Mungana, a silver–lead mine in north Queensland in which Theodore had holdings, to the Theodore state government earlier in the decade. After the sale, Mungana was found to be near worthless. ‘Red Ted’ Theodore was an unlikely swindler—an august, well-dressed fellow who did not hang around in fraternal groups of politicians and who spent his spare time reading and in the contemplativeness of fly-fishing. As premier, at the famous Federal Labor Conference of 1921 at which the socialist platform for the ALP was voted through (that is, the nationalisation of all means of production, distribution and supply), Theodore was the less doctrinaire leader who moved to get Communists out of the party. Theodore came to treat the unions with some dismissiveness, as if they were fretful children who didn’t know what was good for them. He had also raised land taxes, and the commercial and pastoral powers of Queensland had it in for him. He refused to appear before the royal commission, which brought its report down in early July 1930 and accused Theodore of fraud. It also condemned his friend, the former Labor premier William McCormack, for holding a secret half-share in the mines before their sale to the Queensland government. The commission found Theodore and McCormack guilty of ‘fraud and dishonesty’.
Theodore immediately resigned from the front bench until he faced criminal proceedings. He declared himself innocent and said he would demand a judicial investigation. In later times Australian parliaments would face similar scandals, but up to that era nothing like Theodore’s case had ever been brought to its attention. Thus its unprecedented nature was very damaging to the repute of Scullin’s government. It was also true that Theodore’s wealth was notable, that he dressed like a consummate gent, and many of more modest condition on the opposition benches resented all that.
Theodore was acquitted of the criminal charges in August 1931, but Scullin had reappointed him treasurer the former January, outraging Acting Treasurer Lyons and giving the pro-Lang rebel group of seven led by teetotaller Lang’s friend from New South Wales, Jack Beasley, yet more reason to be turbulent, since they considered Theodore one of Lang’s chief enemies.
Theodore had an ambition, beyond what he and Scullin were doing—to finance large projects in the manner of Roosevelt—but he could only do that by printing more money, as he couldn’t raise loans. He supported the so-called ‘Gibbons resolution’ in Caucus, a proposal that the Commonwealth Bank should in effect cover the shortfall between government tax and loan revenues and a public works program of up to £20 million. This was such a departure from Scullin’s more orthodox policies that it was thought Theodore was girding himself for a challenge to Scullin’s leadership. But in January 1931, when Scullin got back from London, Theodore changed tack and supported Scullin’s idea that Commonwealth Bank lending be directed to the private sector rather than into the hands of government. Believing that the rest of the world would soon ‘reflate’, Theodore assured the young John Curtin that he only adopted the plan as a strategy for delay, but his plans to soften the impact by making jobs had come to an end.
The reward was that Theodore was now given back his Treasury portfolio. His Central Reserve Bank Bill of April 1930, which was aimed at stabilising prices in the manner Keynes had proposed, by increasing the money supply, was defeated purely for political reasons.
At the Premiers’ Conference in February 1930, Theodore and Scullin had become exercised by this issue of price levels and how to keep them down, because they now believed a cut in real wages was unavoidable. A wage cut would generate more credit which would then ease the downward pressure on wages. Australian bondholders would not be paid a bonus yet—they must share in the hard times imposed by world events. From the sidelines Lang proposed that not only should local bondholders suffer by a reduction of interest but that payments to British bondholders should stop totally.
However, Theodore’s scheme was rejected by the bankers, whose message was like Niemeyer’s earlier: that loan repayments should trump support for the unemployed. It was also beaten down in the Senate. Then Theodore tried to release gold for shipment to the government’s account so that he could print more money for unemployment relief works and farm assistance, and also tried to abolish the requirement that the government hold a reserve of gold to back its printing of money. This proposal, too, was thwarted.
Foreseeing a forthcoming no-confidence vote against Scullin, it was thought by the diverse forces of the United Australia Party that the amiability, compassion and responsibility of Joe Lyons made him the face to lead Australia.
It was as Scullin’s destruction was planned that Jack Lang was elected back into power in New South Wales at the end of 1930. Having fallen from office in 1927, he now won his way back by pillorying Niemeyer and those who had acceded to his diagnosis and cure.
In February–March 1931, Lang’s plan on loans became the cause of a split between the New South Wales and federal executives. Federal Caucus expelled the Lang Labor faction, which included five sitting members of the House of Representatives. The Lang group were needed to keep Scullin in power, and for the moment they stuck with him, an internal opposition.
Theodore himself was expelled from the New South Wales branch of the ALP, but remained a member of the federal party. Now the Federal government had to find the money to pay for Lang’s defaults.
In Labor’s rout in the federal elections of December 1931, which was precipitated by Beasley’s pro-Lang group crossing the floor to vote with the United A
ustralia Party, now led by Lyons, Theodore received only 20 per cent of the vote in his own Sydney electorate. He walked away from Parliament condemning Lang, the banks, and the reaction of Labor voters to it all. He went into business with huge success, but in a kinder era he might have made a prime minister, a Labor version of Menzies—though without Menzies’ flamboyance.
SACK JACK
When Lang did not meet the interest payment on his state’s debt, the Commonwealth, in late April and early May 1932, took legal steps to garner New South Wales taxes and to access part of its transport revenues. Proclamation Number 42 of 1932 ordered New South Wales public servants to deal with monies received by them in a manner directed by the federal treasurer. By then New South Wales was in default to the Commonwealth for over £2 million.
Lang recruited unemployed members of the Timber Workers’ Union to guard the state Treasury, and had begun recruiting potential special constables. To his enemies this meant that he was about to make ‘a ruthless militaristic attempt at Sovietism’. While conservative commentators reminded the New South Wales police that their first loyalty was to the King and not to the state government, throughout April, large squads of workers drilled in the early morning at suburban parks and ovals, and on 29 April fifteen hundred of them marched, supposedly in support of Lang, through the streets of Sydney. Lang’s rhetoric was that the police should defend New South Wales from ‘Federal bushrangers’. In reaction to the formation of the secret conservative armies, a Workers’ Defence Corps (WDC) was founded, and an Australian Labor Army, made up of members of various factions, including the Labor and Communist parties. Lang’s army was larger than the secret conservative armies that had been drilling for some years, and indeed his was the only serious attempt in Australia to rally a leftist corps to face off with the conservative ranks. The Federal Intelligence Branch believed that the WDC was in communication with the Red Army Council in Moscow and had close relationships with the Sinn Féin Irish republican organisation; one of the Australian branch of Sinn Féin’s leaders, known as ‘Irish Paddy’, spoke of a range of activities that would be called ‘terrorist’ by today’s standards. The leader of the Balmain branch of the WDC was a German who claimed to have been employed by the Russian Anarchist Association, while some of the Irishmen involved proudly implied that they had assassinated or ambushed police in Ireland.
But in fact the WDC did very little except fight evictions and take part in May Day rallies, and the Australian Labor Army was equally loud in its promises but frail in its performance. The conservative Old Guard’s structure was a far more serious-minded thing, and its members were better drilled, by former World War I officers. And Old Guard leader Lieutenant-Colonel Frederic Hinton, a pastoralist from Canowindra, considered that there was ‘every possibility of Lang quickly putting us under a Labor dictatorship with thousands of his supporters sworn in as specials and armed’.
The Old Guard was rather less populist and less involved in gestures than the breakaway New Guard. Its chief centre was Sydney, where the lines of organisation coalesced, and it was led by established pastoral and commercial figures. These were often related by marriage, and lived in the more fashionable reaches of the eastern suburbs or on the north shore, in Pymble and Wahroonga. They played together at Royal Sydney Golf Club. They were, in practice or by temperament, decidedly Anglican, which again meant that they were less frenzied than the evangelistic Eric Campbell, a country lawyer who had left them to form the New Guard. The Old Guard’s party of choice was the United Australia Party (UAP), which had been formed largely out of the old National Party and some Labor men, including the new prime minister, the Tasmanian schoolteacher and Catholic, Joe Lyons, who had left Scullin and gone to the conservative side. But some of the Old and particularly of the New Guard believed that parliamentary democracy had gone to seed and Australia needed a new order such as Mussolini had brought to Italy.
Philip Goldfinch, Chairman of Colonial Sugar Refinery (CSR), ran the Sydney headquarters office of the Old Guard out of the CSR offices in O’Connell Street, and one of the company’s warehouses in Pyrmont was used to stockpile arms and ammunition. Brigadier General George Macarthur-Onslow was a leader, as was James Heane, ‘Cast-Iron Jimmy’, Gallipoli veteran and leader of the Second Brigade in France, and who lived at an orchard he owned in West Pennant Hills. The Old Guard ran another office in Pitt Street, one made available by Sir Mark Sheldon, Chairman of the Australian Bank of Commerce. In the country the leading figures included Lieutenant-Colonel Hinton of Canowindra, Major Albert Reed of Crowther, near Young, and Lieutenant-Colonel Donald Cameron of Aberdeen, near Scone. Members of the squattocracy such as the Whites of Belltrees, the family of the future Nobel prize-winning novelist, were involved, as were the Fagans of Mandurama. Indeed, there was in the Old Guard a respect for law. They believed their intervention in affairs should begin only when the law broke down. One Old Guard document declared that breaches of the peace should be avoided: ‘In English-speaking communities it is almost impossible to establish, or maintain a Government by force in opposition to the wishes of the majority.’
The Old Guard in the bush was made up not only of pastoralists but also, in the country towns, by doctors, solicitors, accountants, bank managers, and stock and station agents. The proprietors of the refreshment rooms at Narromine baths and of the cinema at Cumnock were members, as were garage owners at Canowindra, Blayney and Manildra. Don Whitington, a future eminent press-gallery journalist, was typical of those who were required by their employers to be involved; as a jackaroo at Keera Station, working for the Munro family, he was put in charge of a sudden supply of .303 rifles that appeared in the harness room, and which he was required to clean and keep in good order. All other Keera employees had jobs to do with the Old Guard as well. Jackaroos practised with Mauser pistols supplied by the management on many Riverina stations. The station hands were easily led by appeals to their patriotism, and by their fairly automatic allegiance to the station on which they worked.
The Old Guard were nonetheless willing to be tough on their opposition. In the country towns, the Old Guard made it uncomfortable for Labor-leaning people. In a rare display of its overreaching, two progressive-minded schoolteachers in Cowra—Charles Hanks and Hedley Gross—were targeted by the Old Guard-influenced Parents and Citizens’ Association, and were transferred to other schools. There was a confrontation when former Communist Jock Garden, considered the éminence grise of Jack Lang, came to speak in Cowra at River Park. The Old Guard wanted to throw him in the Lachlan, but two hundred Labor Army men, made up of local Labor Party branches in Cowra and Wyangala, turned up to protect him. Throughout the west of the state, vigilance committees, also known as Citizens’ Committees or Citizens’ Defence Committees, threatened working-class militants. A night-time meeting occurred in November 1931 at Dubbo, held in the open air in the lights of an encircling number of cars, and which led to the mayor being called on to expel Dubbo’s ‘Scummunists’ and ‘human dingoes’. The mayor himself, Dr Gordon Fitzhill, was a member of the Old Guard. He had already banned members of the state ALP and the Unemployed Workers’ Movement from meeting in Dubbo. After forty-eight hours had elapsed, about a thousand citizens met in the main street of Dubbo to ensure that Fitzhill’s ban on meetings was adhered to. The Dubbo UWM tried to defy the ban, a spokesman declaring that ‘if any of the so-called Dubbo White Guard [a common name for the Old Guard] interfered with this body there would be bloodshed’. There was not, however, a confrontation, and a few days later, reinforcements were called in from surrounding towns to make sure the expulsion took place. Cars came to town from Trangie, Narromine and Gilgandra, prepared to enforce the expulsion, and assembled with local automobile-owning worthies in Church Street. As the clock struck 5 p.m., they moved off to enforce the ridding of Dubbo’s streets of Laborites and UWM members.
The Governor of New South Wales, Sir Philip Game, an establishment British officer with a passion for the Royal Air Force and himself a
pilot, was under great pressure from that part of society represented by the Old and even the New Guard to remove Lang, whose refusal to pay interest on debts was seen literally as criminal. The Federal government was also one of Lang’s enemies, since they had had to pay the loans he defaulted on.
Game was no Niemeyer; he was a flexible and likeable man who, like Scullin, would have preferred to hold his post in more amiable times. He received constant advice from newspapers such as the Sydney Morning Herald, and from nearly every conservative he met (and he met many), to dismiss Lang. A gentleman told Game, ‘You should go to the Union Club to hear yourself discussed.’ All this had an impact on the man, even though he was a British liberal and had sympathy for Lang’s compassion. Under pressure, he yet decided to give Lang more time. He was in many ways less frightened of Lang’s rebellion than he was of the way the near-fascist New Guard under Eric Campbell were becoming more dangerously militant, and by reports that the New Guard were planning measures—including Lang’s kidnapping—which were in themselves criminal.
When the volatile but charismatic Eric Campbell had left the Old Guard for its perceived lack of militancy and formed the New Guard, one of his gestures was to gather those who left with him, as well as men he was accused of having picked off street corners by bus, to fight a bushfire near Cobar. The equipment they brought with them to the town was useless. The mayor of Cobar, J.T. Maidens, was a Labor man, and said that, if he could, he would get these vainglorious men out of town. On their first night in Cobar, stones were thrown into the New Guard camp. And when they left town, defeated by their own ineffectuality, they had run up a bill of £266 that the local graziers, chiefly Old Guard, chose not to meet.