The Story of Government Enterprise In Australia
By L. L. Sharkey, President, Australian Communist Party and E.W. Campbell, Director, Marx School
Published by Australian Communist Party, 695 George St, Sydney, January, 1945. Source: Left History Archive, Marxist Internet Archive
Contents
Hands Off the People’s Property! ... 5
Origin of Government Enterprise ... 8
Private Enterprise Fails to Build Railways ... 10
Government Provides Better Service at Cheaper Rates ... 12
In the Grip of the Bondholder ... 13
Private Enterprise Saddled Us with Break of Gauge ... 15
The Commonwealth Bank: A People’s Bank or a Banker’s Bank? ... 17
Sir Denison Miller: Banker, Not Fakir ... 21
The Fleet That Was Scuttled ... 26
How the Dockyard Was Ditched ... 35
Walsh Island Too Goes West ... 36
A Nine Guinea Suit for Thirty Shillings ... 38
Flow Oil or Palm Oil? ... 42
Skyway Robbery ... 46
Socialism at Work ... 51
Day Labor Saves Money ... 52
Cutting Timber Costs ... 53
Butchers Got More Than Their Chop ... 54
Holing the Net of the Fish Market Manipulators ... 57
Besting the Beer Barons ... 58
C.S.R. Still Gets the Sugar ... 60
The Great Brickworks Swindle ... 64
What the Nationalised Enterprises Have Proved ... 68
Nationalisation is the Logical Next Step in the Advance of the Labor Movement ... 71
Hands Off The People’s Property
The Australian Communist Party pointed out that one of the chief reasons why big business was pouring out money like water to defeat the Referendum was because it was planning the biggest steal in our history; it was scheming to get its rapacious hands on the war factories, constructed by the Commonwealth at a cost exceeding seventy-five million pounds.
These charges have since been substantiated, as the following extract from a leading article, appearing in the Sydney Morning Herald on September 13, bears out:
The Government may decide in certain cases to operate these plants for the production of civilian goods. In such cases, it is unlikely to enter into forms of production which are adequately catered for already. Its purpose will be to seek by this form of development to round out the Australian industrial structure by filling in those gaps which are known to exist.’ The words are those of the Prime Minister, and the occasion was his attempt on August 1st, to allay widespread fear lest the, Government should ‘use the powers sought at the coming referendum to nationalise industry.’ It is not a little surprising now to find Mr. Curtin, after the public has refused to grant the extended powers for which he asked, reiterating his former statement as though the situation had changed no whit.
Here the “S.M.H.” was referring to Mr. Curtin’s statement of the previous day, Tuesday, September 12, when he said:
The future management of Government war-time factories would be considered on the merits of each case.
Some will be best operated by private firms already carrying out similar types of production, but if the Government plants are sold or leased to such interests they will be transferred only when satisfactory terms are offered by private firms.
The Government may operate others of these factories jointly with private firms or may decide, in certain cases, to operate them itself for the production of civilian goods.
In the latter case the Government’s purpose will be to broaden Australia’s industrial structure by filling in gaps which are known to exist, rather than attempting to compete with firms in production already established adequately.
Upon which the “S.M.H.” comments:
... But surely it remains legally and practically beyond the province of the Government to set up industries solely in order to ‘fill in gaps’ in Australia’s civilian needs. The Government has only to ensure that the conditions are favourable and there will be no lack of private enterprise to fill in gaps ...
... There is a disturbing undertone to Mr. Curtin’s assertion that Commonwealth war factories will be transferred to private firms only when satisfactory terms are offered. Who is to judge the reasonableness of the offers made? The Government cannot expect to recover its entire original outlay on a great deal of the plant, and failure to do so must not become an excuse for retaining and operating the factories to the detriment of private enterprise ...
There is no ambiguity here. The meaning is unmistakable. An audacious edict is served on the Government that it must not retain and operate its war factories in peace time and a brazen demand is made that these be handed over to big business on the latter’s own terms. To cap it all the Government is told in advance that it “cannot expect to recover its original outlay.” The enterprises must be practically given away, as were the Commonwealth Shipping Line, the State Brickworks, and numerous other undertakings in the past.
This is only the first shot in the campaign. As it gets properly underway we can expect the usual long diatribes, “proving” how impossible it is for the Government to conduct its enterprises in an efficient manner, to run them on a business basis, etc. There’ll be learned dissertations on how the “Government stroke” is bound to bring about disaster, involving the community in serious losses and so on.
We’ve heard all these arguments before, but that won’t spare us from hearing them again. Those who put them forward seem to forget that the Army, Navy, Air Force and the Police Force, as well as the Education system, are Government enterprises, and, whatever else might be said about them, their efficiency at least has never been seriously questioned. In addition, there are many Municipal public enterprises, however, it might be argued that these departments of the State are not strictly speaking, “enterprises,” but public services.
Leaving aside the curious nature of such reasoning, which admits the possibility of the State providing most efficient service in law enforcement, but denies that it can be equally efficient in other spheres, let us draw attention to the Post Office. Surely this is a business undertaking in the proper sense of the term, it is, moreover, a business undertaking of a magnitude far beyond the largest capitalist enterprise in Australia. As a matter of fact it is almost equal in size to the four largest private monopolies in Australia taken together. The total assets of the B.H.P., the C.S.R., the British Australian Tobacco Co., and the A.I. & S., in 1939, amounted to £68.7 million. 1 The assets of the Postmaster General’s Department at 30th June, 1940, amounted to £68.2 million. 2 The Department controlled 47,000 employees and 6,700 mail contractors, and operated 8,250 post offices and 9,450 Telegraph offices. Its net profits in 1939/40 amounted to £3,758,000. There doesn’t appear to be any inefficiency here.
However, I suppose our hair splitting friends of the Right will still claim that even the Post Office is not actually a business undertaking so much as a public utility. What then is a business undertaking or Government enterprise?
By Government enterprise is meant something wider than public utilities and something narrower than public services. The administration of justice and the provision of defence are public services; the railways and Yallourn Electricity Undertaking are both enterprises and public utilities. The Small Arms Factory and the N.S.W. Monier Pipe works are enterprises but are not public utilities. 3
Let us accept this not altogether satisfactory definition, which narrows down the concept of Government enterprises to undertakings like the Monier Pipe Works. It can still be proved that it has not been due to inefficiency that these undertakings have perished in the past. On the contrary it has been their very high degree of efficiency which has in most cases spelt their doom. They had proved themselves fully capable of providing the community with goods and services of a higher quality and at a lower price than private enterprise. It was not the “Government stroke” which killed them, but the stab in the back administered by big business.
Origin of Government Enterprise
There exists an idea, that seems to have gained widespread currency, that the Labor Party was the originator of Government enterprise, and that this forms part of the policy of that Party directed towards the ultimate “Nationalisation of Monopolies.” This is not true. The real origins of Government participation in industry must be sought outside of Labor’s policy.
From 1788 to 1821, the Governor of the Australian colonies was the main employer in the community. When the several colonies obtained self-government in the ’fifties Parliament became the arbiter of the people ... The sociological background of Australia gave the Government the appearance of arbiter, rather than a tyrant. Add to this situation the fact that Australia was sparsely settled and far removed from the centres of the world and so offered little inducement to private enterprise in the field of public utilities and the result is that the economic features of the country gave the people the opportunity to exploit their sociological background.
When the Labor Party came on the scene in 1891 it heartily endorsed public ownership. It is a mistake, however, to regard that Party as the original source of that policy. Labor did give the proposal added impetus. Since the advent of Labor, Government ownership has increased until today Australia has far more public ownership than any other English speaking community. 4
Like many other aspects of its policy, Labor took over Government ownership from the Liberals and merely developed it further. As a matter of fact, it was not alone the Liberals who initiated the principles of Government ownership.
Even conservative politicians like Sir William Irvine and William Shiels had to return to the idea of the State as a developmental agent and they definitely formulated the theory of State policy to secure land settlement by providing railways, water supply and other equipment. 5
From another article in the same publication we learn that,
Before Federation there was the Conservative Party, dominated by laissez faire traditions and the Liberals, following radical social ideals, who were also led, by circumstances in the Australian colonies, to carry out an extensive programme of State Socialism, usually accompanied by safeguards against the universal spread of such activity. 6
And the same author, in another of his works, informs us that when the
Labor Party entered politics with nationalisation as its main plank it regarded what had been done as an instalment of its policy and began to press for more, with a view to the ultimate completion of the edifice by nationalisation. 7
Private Enterprise Fails To Build Railways
Probably the first serious and large scale essay into Colonial Government ownership came about in the late 1850s, after the dismal failure of several private railway companies, in spite of spoon feeding by the Legislatures, to make any headway with railway construction. By 1848, the need for more rapid and, economical means of transport in the Colony was becoming more pressing, and the Legislative Council in New South Wales passed a series of resolutions suggesting that land grants should be made to any company undertaking railway construction, and, furthermore, the colony would subscribe £30,000 itself and guarantee the interest on £100,000 capital if that sum were raised by any private company. 8 The result was that the Sydney Railroad and Tramway Company was formed with a capital of £100,000, to build a railway from Sydney to Parramatta and Liverpool, with a possible extension to Bathurst and Goulburn eventually.
At this stage, the Colonial Secretary, Earl Gray, sent a dispatch to the Governor of New South Wales, urging the desirability of retaining the power to construct railways in the hands of the Government. But the protagonists of laissez faire were well in the ascendency. When the Council debated the question it decided that the introduction of railways could best be effected by the energy and enterprise of private individuals.
In 1849, in keeping with the spirit of this resolution, an Act was passed incorporating the Sydney Railroad and Tramway Company and empowering the Government to guarantee interest at the rate of 4% on its stock. The first sod of Australia’s first railway was turned in July, 1850, and the hand was that of private enterprise. But it wasn’t long before this hand became palsied, and in 1852, an appeal was made for the Government to come to the rescue of the Company.
The Government proved most obliging and passed further legislation granting increased monetary assistance and providing for the appointment of three Government nominees to the Board of Directors.
In 1853, another Company was formed to build a line from Newcastle to Maitland. It also languished for want of adequate capital. The upshot was that in 1854, the Legislative Council appointed a Committee to go into the whole question of introducing railway services. This Committee reported that it
Seems that private companies could not succeed in constructing railways without Government aid on a scale which ought not to be conceded, and, therefore, these works should be taken up by the Government itself.
The experience in Victoria was somewhat similar. The first Victorian Railway Bill was passed in 1853, incorporating the Melbourne and Hobson’s Bay Railway Co., with a capital of £100,000. The Government assisted the company with a free land grant. Shortly afterwards, Acts incorporating the Melbourne-Geelong and Melbourne-Mt. Alexander companies were passed. Later, when it was proposed to build a line direct to Sydney, a company was formed with an authorised capital of £1,000,000 on which the State guaranteed interest at 5% per annum, with the proviso that if the line were not completed in seven years it would revert to the public. Three other lines were built between 1859-1861, and a total of about 20 miles was open for goods and passenger traffic. The only Co. which succeeded at once in paying dividends was the Melbourne to Hobson’s Bay line, whose route covered more closely settled territory than the others. With regard to the longer lines it soon became evident that they were beyond the capacity of private enterprise to carry through successfully. The Government was reluctantly compelled to step in and take over these undertakings. By the end of 1861, the mileage open for traffic had increased to 110.
Government Provides Better Service At Cheaper Rates
In 1861, the fares charged on the Government line from Melbourne to Geelong averaged 1.87 d. per mile for first class passengers and 1.07d. per mile second class. In the case of the private railways, of which there were then five short lines controlled by three companies, the average charges were 3.2d. per mile first class and 2.4d. per mile second class. The fares on private lines were thus practically double those on Government lines. T.A. Coughlan makes the following comment:
The bearing of these facts was not lost on the public mind and so far as railways were concerned there was no disposition to allow private capital to again enter the field. 9
Ten years experience had proved the incapacity of private enterprise to carry out successfully the vital tasks of railway construction. Their failure in this regard brought about a reversal of Government policy. Even in the ’fifties it may be assumed that a certain amount of public feeling in favour of State ownership of railways existed. In the Bills incorporating the Geelong-Melbourne and the Melbourne-Mt. Alexander Companies there was provision that at any time after the expiration of ten years and before twenty years had elapsed, the State might, if it thought fit, purchase the railways. But this was by no means the dominant sentiment. “Both in New South Wales and Victoria, public opinion ran strongly in favour of confining the activities of the Governor and his Council to the sphere of Government properly so called.” 10
It was only under the stress of economic circumstances that the Government was compelled to take a hand in matters which were then regarded as being outside its legitimate sphere.
The difficulties of the private companies in obtaining money led to expensive construction, money was difficult to obtain and the rate of interest was high. The governing authorities themselves were converted to the principle of non-interference with private enterprise and the reluctance of the New South Wales Government to enter upon the business of railway construction may be judged by the fact that the Sydney Railway Company, an ill managed and under capitalised association, was permitted to hold the field for eight years, during which period it received monetary assistance from the Government to an extent greater than its paid up capital, and interest on this capital was guaranteed ... The business of railway construction lapsed into the hands of the Government when the Company died of inanition. 11
In the Grip of the Bondholder
In 1856, Victoria cast the die for Government ownership by borrowing £8 million to construct the main trunk railways to the goldfields. This policy was continued by successive governments, until in 75 years, £75 million had been borrowed, and, with 4,700 miles of track open for traffic, the railways became the State’s largest industry. The Melbourne Metropolitan electric service is one of the largest in the world and the main station, Flinders St., accommodates more passengers than any other station in the world. But this gigantic enterprise has never been a paying proposition. Only 17 times in 70 years have the railways had a surplus. It is not inefficiency or the “Government. stroke” that is to blame. A Royal Commission which carried out an investigation reported that the costs in Newport Workshops were much less than those in outside industries. It’s the crippling load of interest that converts railway surpluses into deficits. “The normal revenue is £13 million per year. After the payment of operating expenses, the percentage return on capital varies from 3½% to 4½%. But capital charges amount to 5%, so there is always a loss in railway accounts.” 12
The position of the Victorian railways is not unique, the same situation applies generally throughout the Commonwealth. At June 30th, 1940, there were 25,050 miles of State railways and 2,200 miles of Commonwealth railways in Australia. The total cost of their construction and equipment was just on £320 million. The Gross Revenue was £46.6 million and the Working Expenses £36.4 million, making the Net Revenue £10.2 million. However, the interest bill amounted to £11.6 million, which meant that after the bondholders had received their “rake-off” there was a deficit of £1.4 million. 13 This has gone on year after year and will probably continue so long as the present system lasts. The railways have been paid for twice over, but still the debt burden remains and the bondholders levy their annual tribute upon the nation. Whenever the railways are in difficulties, or rather added difficulties, there is immediate talk of raising freight rates and fares, and reducing wages of employees, but no Government has ever come forward with a proposal to reduce or wipe out the interest bill. Apparently the rights of the bondholders are sacrosanct, and, no matter who else goes short, money-bags must receive his “pound of flesh.”
Private Enterprise Saddled Us With Break of Gauge
It is a fact not generally known that private enterprise, which dearly loves to boast of its superior efficiency, was chiefly responsible for inflicting on this country the break in railway gauges at State borders. The manner in which this curse came to be visited upon us was as follows.
In 1848, Sir Henry Young, the Governor of South Australia, who had already taken steps to ensure that the State there retained the right to build its own railways, made a proposal for connecting Sydney, Melbourne and Adelaide by rail. Correspondence passed and discussions took place between the States resulting in a Select Committee being set up in Sydney. This Committee reported against the project, deeming it “too ambitious for the times and beyond the resources of the colonies.” The three railway systems were therefore begun independently of each other. But there was no reason why they should not have been co-ordinated and built to conform to a standard gauge. It was only the capriciousness of private enterprise, in the shape of the Sydney Railway Company, which upset this.
The South Australian Government laid it down that a 4 ft. 8½" gauge should be adopted on its railways. This was approved by the Colonial Secretary, Earl Grey, who wrote to Governor Fitzroy in New South Wales, suggesting to him that he impress upon the Legislative Council the desirability of having a uniform gauge, and proposing that the Mother Colony should also adopt the 4 ft. 8½ in. standard. At this time preparations for the Sydney to Parramatta line were well advanced and the engineer employed by the Sydney Railway Company was strongly in favour of a 5 ft. 3” gauge. As this was actually the first line to be laid down the Council decided to proceed on this basis, not apprehending that any difficulty would ensue if the wider gauge were adopted in all the colonies. An Act was therefore passed in New South Wales fixing the gauge at 5 ft. 3”, followed by a request through the Colonial Office that other colonies be asked to follow suit. The other colonies were quite amenable and the wide gauge was adopted on the Victorian Railways and for the Adelaide City and Port Railway.
No sooner was the matter settled to the satisfaction of all Governments concerned, than the Sydney Railway Company, which had changed its engineer, petitioned the Council for the repeal of the Act establishing 5 ft. 3” as the standard, and requesting a return to 4 ft. 8½". This was done to oblige the Company, but it roused the indignation of Victoria and South Australia, who had already changed their plans once to meet the requirements of New South Wales, and had by this time placed substantial orders in England for rolling stock suitable for the wider gauge. These two States petitioned Lord Grey to have the Queen’s assent refused to the N.S.W. Bill. Grey wrote again to Fitzroy requesting that he move the Legislature to reconsider the matter in the interests of the other colonies. The upshot was that the Act was once more repealed in 1855, but no standard gauge at all was fixed. Instead it was laid down that “all railways within the colony shall be constructed only by the government,” which should be free to adopt whatever gauge it pleased.14 In spite of this tacit deferment to the wishes of the Colonial Office the Sydney to Parramatta line was proceeded with at 4 ft. 8½", and, as Victoria and South Australia continued with 5 ft. 3”, the inconvenience of two gauges was wantonly inflicted on the country. The harm had already been done by the time Queensland appeared on the scene and added to the confusion with the still narrower gauge of 3 ft. 6”.
The chief blame, let it be repeated, must be laid at the door of private enterprise. Had it not been for the stupid whim of the Sydney Railway Co., who, exercising the cherished right of the employers to “hire and fire,” changed its engineer in the midst of the negotiations, Australia might have been spared the costly and vexatious system of multiple railway gauges.
The Commonwealth Bank: A People’s Bank or a Banker’s Bank?
A legend has grown up around the Commonwealth Bank which depicts it as having been established by the Labor Party originally as a People’s Bank, with the allotted role of entering into competition with the private banks and ultimately driving them out of business. In the process, as the sole repository of the “Nation’s Credit,” the Bank would liberally dispense largesse, causing two farms to flourish where one grew before; ten industries to prosper were five languished of old. Eventually, through the wise and judicious management of the “National Credit,” capitalism itself would be conjured out of existence and a new millennium of peace and prosperity would dawn for Australia. Douglas Creditites and Langites particularly, are prone to attribute miracles to the Commonwealth Bank under the Governorship of Sir Denison Miller. They would have us believe that if only the Bank were to be reconstructed on the old-basis, which existed prior to 1924, when the Bruce-Page Government handed it over to the control of a Board of private capitalists, all would be well. We would then have, no need to worry about Referenda for wider powers, no worry about socialising industry. In fact, we would have no need to worry about anything at all. The Commonwealth Bank with its control of the National Credit would take care of our every weal and woe. How much truth and how much falsehood is contained in these legends can best be ascertained by reviewing the origin and history of the Bank.
As mentioned in an earlier section, when the Labor Party came on the scene in 1891, it heartily endorsed public ownership and began to press for more of it. One of the 16 planks of the New South Wales Labor Party in 1891 called for a State Bank. Undoubtedly there were some who regarded this as a step on the path towards socialism, but they were in a minority.
The prime mover in the scheme to establish a State owned National Bank was the colourful King O'Malley. O'Malley was born in Canada, but lived for some years in the United States, where he worked in a bank owned by a relative. He came to Australia in the eighties for health reasons and settled first in Queensland and later in South Australia. Here he entered politics and from 1896/99 represented the constituency of Encounter Bay. King O'Malley’s master passion was banking reform, and, inside and outside the Legislature, he advocated a State Commercial Bank. In the first Federal elections in 1901, he stood in Tasmania, on a programme to establish a National banking system and was elected. He soon saw, however, that the anti-Labor forces, because of their close connections with the private banks, would hesitate a long while before they would establish a National Bank. He thereupon joined the Labor Party. Notwithstanding the fact that a State Bank formed one of the Party’s planks, Watson, the Federal leader of the Labor Party, refused to move a finger to bring it within the realm of practical politics. King O'Malley appealed to the Labor Party Conferences for support.
At the Brisbane Conference in 1908, the protagonists of a National Bank and the champions of an Australian Navy contended for places in the fighting platform. Both succeeded in having their “piece de resistance” incorporated.
Whatever might have been the views of his supporters, King O'Malley, at least, was not thinking of socialism. He declared, as one of the main reasons why his proposals should be adopted, that:
No financial scheme between the Commonwealth and States can be satisfactorily adjusted without the establishment of a national postal banking system.
The scheme adopted by the Brisbane Labor Conference in 1908, called for a Government owned central bank which would enter into active competition with the private banks. It is probably from this resolution that the legend derives that the original intent and purpose of the Commonwealth Bank was to squeeze out the private banks through competition.
At this time even the Liberals were not averse to the idea of a National Bank. In 1909 the Liberal Acting Prime Minister, Sir John Forrest, told a Conference of Premiers in Brisbane that he had in mind to establish a postal savings bank for all Australia and that the Labor Party also supported this Idea. But probably what caused the Liberals to shy off the proposal was the more clear cut and definite assertion of the Political Labor Council of Victoria in 1910 that:
Labor proposes to establish a Commonwealth Bank with unlimited powers, which will enter into competition (with the company owned banks) and the general extinction, without compensation, of the present banks will follow as a matter of course. 15
This declaration no doubt provided more grounds for the aforementioned legend. But it should be taken as the expression of the hopes of the more advanced section rather than the decided policy of the whole party.
When Labor contested the Federal Elections of 1910 point 3 on its programme was the nationalisation of monopolies and point 6 a Commonwealth Bank. Immediately after the elections a bankers’ conference was held in Melbourne, attended by Hughes and Fisher, who allowed themselves to be convinced that there were no profits in banking. The leaders of the Labor Party then attempted to quietly drop the Commonwealth Bank from its policy. But King O'Malley gave them no peace. He organised a “Torpedo Brigade” among rank and file M.Ps, to force the issue.
After fifteen months of secret organising enough support had been mustered to spring the issue in Caucus, which was done on October the 5th, 1911. After a vigorous struggle the advocates of the Bank defeated the leaders of the Government and forced them to bring down the Bank Bill.
On November 1, Fisher introduced the Bill. He soon put the damper on the hopes of those ardent spirits who looked to the Commonwealth Bank to gradually extinguish the private banks through competition. The Bank was to become a supplement to, and not a substitute for, the activities of the trading banks. Fisher said:
It is not the desire of the Government ... to try to cause the transfer of accounts from one institution to the other. In a country like our own ... there is ample room for the establishment of ‘another’ bank. A new bank has not been established in Australia for a long time.” 16
Whether he-was fully conscious of it or not Fisher uttered a prophecy which has since been realised:
... while the Bank may deal in land securities, it will in time grow to be rather a bank dealing in ordinary bills of exchange and liquid securities — that it will ultimately become the bank of banks rather than a mere money lending institution. 17
That is just what the Commonwealth Bank has become. In spite of Government ownership it is today “the bank of banks” and not the bank of the people, as some would have us believe. Nor can it ever really become so until a drastic change is made in existing social relationships. However, it is possible that the reforms contemplated by the present Labor Government will result in the Bank being brought more directly under Government control and thus enabled to play its part in financing post-war reconstruction.
Sir Denison Miller. Banker Not Fakir
Sir Denison Miller, who accepted the position of Governor of the Bank in May, 1912, was a conservative orthodox banker and not the fakir who performed miracles with credits created out of thin air, as pictured in the mythology of credit cranks and currency reformers. He had served a long apprenticeship as chief Metropolitan Inspector for the Bank of New South Wales. And for some years prior to the time he left to take up duties on behalf of the Commonwealth he had acted as assistant to the General Manager of that institution. While most of the other banks were hostile towards the Government’s entry into their preserves, the oldest and strongest bank in the country had no fears that it would ever be eclipsed by the Government concern. John Russel French, the Manager of the Bank of New South Wales, helped Sir Denison Miller all he could, placing the clearance facilities of his own bank at the disposal of the Commonwealth Bank when it was experiencing initial difficulties.
On July 15, 1912, with no subscribed capital and assets amounting to only £10,000, in the form of a loan from the Government, the Commonwealth Bank opened its doors. This one fact is made the basis of many of the fables and foibles dear to the hearts of the misguided followers of the discredited Major Douglas. Starting from this basis, we are told, Denison Miller found millions to finance the war, to finance the Transcontinental railway, to finance the Commonwealth Shipping Line, to finance wheat pools, butter pools, wool pools and swimming pools, and that all this was done, not by kindness as the animal trainer informs his audience, but by the control and judicious management of that mysterious entity — National Credit.
In reality of course there is no mystery attached to it at all. Denison Miller commenced operations by opening Savings Bank branches throughout the Commonwealth. The deposits he obtained built up the funds needed for the General Department, which was not opened until January 20, 1913. The Tasmanian Government agreed to the absorption of its State Savings Bank, which further augmented the funds at Miller’s disposal. The first day the General Department opened for business it received £2,368,126 in deposits, of which £2,327,550 was on account of the Commonwealth Government.
At first there was some uncertainty among other Banks, which was reflected in a weakening of their shares on ‘Change. But Miller soon showed that it was his intention to adhere closely to the policy laid down by Fisher in not attracting business away from private banks. The interest on fixed deposits with the Commonwealth Bank was set at ½% below the rates quoted by other banks.
The original Act empowered the Bank to raise £1 million capital by the sale of debentures. An Amendment in 1914 increased this provision to £10 million. Denison Miller made no use of these provisions. The Bank did not require any subscribed share capital. It had the banking of the Government, which was sufficient to inspire confidence in depositors, whose money provided the funds out of which advances were subsequently made. Anybody knows that the share capital of a bank forms a very small part indeed of the loans which it makes. It is the money of their depositors which banks make available to borrowers, getting their profits from charging a higher rate of interest on advances to that which they themselves allow on deposits.
But it is not likely that depositors would entrust their funds to a group of private individuals who set themselves up as bankers without capital of any kind. Therefore, what is necessary in the case of a private concern is not essential to a Government institution. To have sold debentures, as the Act provides, would have simply amounted to admitting private capital to a share in the profits without any reciprocal gain to the Bank.
The war which broke out in August, 1914, had a profound influence on the development of the Commonwealth Bank. “War finance made the Commonwealth Bank a leading bank in the world.” 18 The Commonwealth Bank was able to underwrite the War Loans floated by the Commonwealth Government. Over £250 million was subscribed by the Australian public, while a further £100 million was subscribed in Britain. Had these loans been underwritten by private banks the charges would have ranged between, £2 and £3 per cent. The activity was carried out by the Commonwealth Bank at all average charge of 5/7 per cent.
Sir Denison Miller, at a Luncheon given by the Royal Colonial Society in London in 1918, said that the six war loans issued at that time had been floated by the Commonwealth Bank at 4/6 per cent. To get loans floated between 1910-15 by private banks had cost £2/7/1 per cent. The Bank had saved the Commonwealth of Australia £3,261,000 on this item alone.
Notwithstanding this “cheap” service the Bank had accumulated £1,847,000 in profits by June, 1919. Actually the service charges were not so much cheap as merely reasonable according to “normal” standards under capitalism. But “normal” standards go by the board in the epoch of imperialism; the era of finance capitalism. “'No banking operation brings in profits comparable with those, obtained from the flotation of loans.’” 19 “Capitalism, which began its development with petty usury capital, ends its development with gigantic usury capital.” 20 One very valuable service performed by the Commonwealth Bank during the war years was to expose the extent to which the nation had been held to ransom in the past by the racketeers of high finance.
No doubt the financial oligarchy would cheerfully have strangled the Commonwealth Bank, had this been possible. But it was not possible, the Bank had become too firmly entrenched during the war to be dislodged without evoking a loud protest throughout the community. Still there was another alternative, one which had its merits for the ruling class, and that was to bring the Bank more directly under their control. An additional reason for carrying this out as quickly as possible was that the masses were beginning to act under the illusion that it was their bank. In 1923, just before he died, Sir Denison Miller received a deputation of unemployed. The spokesman is reported as having asked him could he find the money to finance work — providing projects in peace, with the same facility as he found the money to finance the war. To which Sir Denison is alleged to have replied: “I will do what I can.” However, before he had time to fulfil the implied promise, Sir Denison Miller passed away.
In 1924 the Bruce-Page Government amended the Commonwealth Bank Act to restrict the power of the Governor and vest control in the hands of a Board comprising the Governor, the Secretary of the Treasury and six other directors who must be “persons who are or have been actively engaged in agriculture, commerce or industry.” The first Board consisted of J.J. Garvan (Chairman), R.S. Drummond, Sir Samuel Hordern, J. Mackenzie Lees, J.R. Collins (Secretary to the Treasury), Sir Robert Gibson, James Kell (Governor) and R.W.B. McComas. Sir Robert Gibson succeeded to the chairmanship in 1926, and he in turn was succeeded, after his death at the beginning of 1934, by Sir Claude Reading. E.C. Riddle had in the meantime been appointed Governor of the Bank. At June 30, 1939, the Commonwealth Bank Board members were Sir Claude Reading (Chairman), S.G. McFarlane (Secretary to the Treasury), Sir, Harry Sheehan (Governor), A.F. Bell, R.S. Drummond, M.B. Duffy and L.F. Giblin. All of the foregoing, with the possible exception of M.B. Duffy, former Secretary of the Melbourne Trades Hall Council, who was appointed by the Scullin Government, and L.F. Giblin, Professor, have very close ties with the world of big business. Duffy and Giblin were there merely to supply democratic and academic tone. J.J. Garvan, for instance, was managing director of the Mutual Life and Citizens Assurance Co. Ltd., R.S. Drummond was a wheat-grower and manager of the N.S.W. compulsory wheat pool. Sir Samuel Hordern was governing director of Anthony Hordern and Sons, a director of Perpetual Trustee Co. of N.S.W. and a director of the Royal Insurance Co. J. Mackenzie Lees had been chairman of the Associated Banks in Queensland and general manager of the Bank of Queensland Ltd., Sir Robert Gibson was a director of a number of companies. R.B.W. McComas was a merchant, the proprietor of W.M. Houghton and Co., and had been chairman of the Woolbuyers’ Association in Victoria, South Australia and Tasmania, Sir Claude Reading had been managing director of the British-Australasian Tobacco Co. and a director of other companies. A.F. Bell was a director of the Union Trustee Co. of Australia. 21
By the Act of the Bruce-Page Government in 1924, we are often told, “The People’s Bank perished.” In actual fact the Commonwealth Bank never was a people’s bank, any more than the railways are the people’s railways. It is true, however, that the constitution of the bank prior to 1924 allowed greater scope for this institution being used by a conscious, well organised, and advancing people, to solve certain immediate economic problems. But something more than a return to the pre-1924 set-up is required before we can regard the Commonwealth Bank as being a real People’s Bank.
The Fleet That Was Scuttled
None of Labor’s ventures into Government ownership, which it tries to pass off as being instalments of socialism when it serves a purpose, really derive from that doctrine at all. Rather do they spring from Labor’s traditional liberal bourgeois role of “developing and strengthening the country,” 22 of developing and consolidating Australia as an independent capitalist State.
This was certainly the case with the Commonwealth Shipping Line. Before the first world war Australia lived mainly by, exporting primary products and importing manufactured articles. The overseas shipping combines, particularly the British, since the bulk of the traffic was between Australia and Great Britain, levied a heavy toll upon Australian trade. To use an expression of Lenin's, they were engaged in “skinning the ox twice.” By charging exorbitant freight rates for the carriage of wool and wheat, they cut into the profits of primary producers. By charging equally exorbitant rates on manufactures which were shipped here, they cut into the profits of merchants and importers. The working class also suffered indirectly on account of this brigandage, since, on the one hand the cost of living was made dearer, and, on the other, the employing class tried to make good the leeway by depressing wage levels.
In one year alone, 1910 the British shipping companies skimmed off £4½ million for freight on wool, wheat and meat alone. Virtually all classes in the Australian community were united in their desire to break the grip of this octopus. The Labor Party, as in many other issues where the class interests of the workers ran parallel with the interests of the bourgeoisie, became the spearhead of the opposition to this form of exploitation from without. A solution was to be sought through the Commonwealth acquiring its own line of steamships.
This policy was announced in the Governor’s Speech opening Parliament on October 8, 1914:
My advisors are in favour of establishing a line of Commonwealth steamships, and steps towards that end will be taken as soon as possible.
If the exploitation of shippers had been intense before the war it was now unbearable. Soon after war broke out the shipping companies bumped up freight rates from 47/- a ton to 105/- a ton, notwithstanding the fact that the Imperial Government had shouldered the burden of war risk. In May, 1916, one M.P. told the House that:
Owing to the enormous increase in freights the returns from one short voyage have been sufficient to cover the cost of a vessel previous to the war, and a vessel valued at £7,000 before the war now sold for £47,000.
One typical example of piracy on the high seas was quoted:
While the value of the cargo (maize) was £18,226, the freight was £50,443, or 260% higher than the value of the cargo. 23
The freight on wheat rose from 25/- to 30/- per ton to £15 per ton. 24
In Britain Lord Inchcape had formed the “Shipping Conference” to keep all British shipowners in line. In America Morgan had formed a similar body to unite all steamship companies operating from the U.S.A. At a banquet held to celebrate the birth of this trust Morgan is alleged to have said:
We are the advanced socialists; we have discovered that combination, not competition, means success in trade, and we are going to take, the profits of combination until the people are sufficiently intelligent to take the profits from us.
A year and eight months elapsed before the policy foreshadowed in the Governor’s Speech could be put into effect. In June, 1916, W.M. Hughes, who had meanwhile replaced Fisher at the head of the Government, found that there was a fleet of 15 cargo ships for sale in England. He arranged for an overdraft of £2 million with the Commonwealth Bank and bought the vessels. These fifteen boats, built between 1906-15, and averaging 3,500 to 4,500 tons apiece, became known as the Austral Line. By the end of August, 1917, they had all arrived in Australia and were supplemented by 21 vessels, ranging between 1,000 and 6,000 tons, which had been seized or captured from enemy powers.
With this fleet of 36 ships the Line operated up to the end of the war, and, in spite of the lower freight rates charged, returned a handsome profit. In October, 1919, Mr Poynton, in a Budget Speech in Parliament, said that the Fleet had carried to and from Australia over one million tons of cargo, and in the case of the Austral Line the receipts had exceeded expenditure by £2,121,000, while the net earnings: of the ex-enemy vessels from 1914 to 1919 totalled £3,576,901. There was no doubt that the Management did take advantage of the high freight rates prevailing to make money, but their average freight for wheat was £6 per ton whereas private shipping companies were charging £10 to £12 per ton and sometimes as high as £15 per ton. There were times when profits were sacrificed to national service, as for instance when 123,000 tons of phosphate were carried to Australia when it was urgently needed. Then again when the Commonwealth Ships could have been carrying cargo in other parts of the world for £15 per ton they were employed carrying cornsacks to Australia at £5 per ton.
The sad experience of the Commonwealth Government with the 14 wooden ships which it ordered in America and Australia seems to indicate that if there is one thing above all others in which private enterprise is most efficient that is in making a “packet.” Every variety of graft in the calendar of illicit spoils was associated with the construction of these ships. Those delivered from America were little more than floating coffins and had to be given away or scrapped. The Australian contract was eventually cancelled. The whole transaction involved the Government in heavy losses.
Quite different was the experience with Government shipbuilding, which offers a most favourable contrast. These activities were undertaken at Williamstown, Victoria; Walsh Island and Cockatoo Island, N.S.W.; Maryborough, Queensland; and at Pt. Adelaide, South Australia. From 1919 onwards the “D” and “E” class vessels were coming off the slips. These were ships of 3,300 to 3,350 tons, and altogether about 20 were built. Shipping experts agreed that no better ships were built anywhere in the world. And as for the “Government stroke,” it must have been a strong one and a shrewd one, for the construction costs were £30 per ton compared with the £36 prevailing in private yards during the war. 25
In addition to the “D” (Delunga, Dilga, etc.) and “E” (Ennoggera, Echunga, etc.) class ships the five “Bay” liners (Moreton Bay, Jervis Bay, etc.) were built for the Commonwealth Line in London in 1921. These were ships of 13,800 tons and served as the model for the two “Dale” liners, Fordsdale and Fernsdale, of 9,700 tons, which were built here and launched in 1924.
Shipbuilding developed into a thriving industry in Australia, subsequent to the founding of the Commonwealth Line. In 1921 there were 3,000 men directly engaged in repairs and construction. At one stage during the war the number reached 5,000. In 1923 it is estimated that the total number of seamen, mechanics, shipbuilders and their families dependent on the Commonwealth Line was 15,000.
But this lusty infant was thriving at the expense of my noble Lord lnchcape’s super profits, and the edict went out that it must be strangled. The “Shipping” Conference, which was the euphemistic title under which the Inchcape Monopoly operated, included the P and O Line, the Royal Mail, the Cunard Line, the Ellerman Group, the Eastern and Australian Co., and a Japanese line. Altogether it controlled more than seven million tons of shipping and was described as “The richest, ablest and most rapacious organisation in the World, with its own press and its financial ramifications in every industry and country under the sun.”
During the war the Monopoly had been preoccupied in other lucrative fields and had not been able to do much about its young Australian competitor. But after the war, when the Commonwealth Line continued as a thorn in its side, the “Shipping Conference” got down to the serious business of bringing about its elimination.
Three main methods of warfare were decided upon:
1. The deferred rebate system. Under this scheme shippers had to sign declarations periodically, to the effect that they had not shipped any cargo on vessels not controlled by the “Conference.” If they had, then they would forfeit their rebates. When the Victorian Government on one occasion booked space on a Commonwealth ship, the “Shipping Conference” refused to pay them rebates on all goods shipped in its own vessels for the previous six months. The Commonwealth Line had to reimburse the Victorian Government for its losses.
2. A campaign against the Fleet in the columns of the daily press. Skillfully written articles were to be inserted appealing to the prejudices of different sections of the community and building up hostility towards the Line.
These took the following form:
(a) Articles making out that the Fleet was making huge profits at the expense of primary producers.
(b) Articles “proving” that the Line was running at a ruinous loss.
(c) Articles “exposing” the fact that the Commonwealth Line was in secret agreement with the overseas monopolists to keep up freights.
(d) Articles condemning the Line for entering into unfair competition with private shipping and thus preventing “sane trading.”
It mattered little that these arguments were self contradictory, the “Conference” no doubt, anticipated Hitler, in believing that the greater the lie the greater the prospects of getting it accepted.
3. The third method of warfare against the Fleet was to get members of Parliament who were “sympathetic” towards the “Conference” to press for its employment in places where it would not only be removed from competition with the Monopoly but in addition would operate as a heavy loss.
At the latter end of 1921 Lord Inchcape cabled an offer to the Government to either purchase the Commonwealth ships on behalf of the “Conference” or to sell the combine’s own ships engaged in the Australian trade to the Commonwealth Line. This offer was debated in Parliament and turned down. Up to that time the propaganda of the monopolists had apparently had little effect. The President of the Sydney Chamber of Commerce eulogized the Fleet and referred to the debt of gratitude owing to it by all business men. A Farmers’ Conference, then in session, instructed country representatives in Parliament to object to any sale.
Fifteen months later, in February, 1923, the Bruce-Page Ministry came into office. The interests represented in this Government were closely interwoven with English banking, shipping and insurance companies. Things looked brighter for Lord Inchcape and Co. Bruce had barely dusted the Treasury Bench with the seat of his Saville Row trousers before he announced, “He did not think that what had been done by the Commonwealth Line justified its continuation as a Government venture.” Soon afterwards he produced a financial statement purporting to outline the situation of the fleet. Long association with the importing and warehousing concern of Paterson, Laing and Bruce had taught him how to manipulate price tickets, and the urbane Mr Bruce had no trouble in converting an actual gain of £2 million into a bookkeeping loss of £3 million, to impress the bovine back-benchers and the loobies in the lobby. He followed this up with a Bill, “to remove the Fleet from Parliamentary control.” Under this measure both the Fleet and the Dockyards were handed over to a Commonwealth Shipping Board, which had power to dispose of any of its assets, subject only to the approval of the Treasurer, S.M. (“ Spats”) Bruce.
In return for the property received the Commonwealth Shipping Board was obliged to issue debentures to Bruce for £4¾ million, bearing interest at 5%. This meant that Bruce, as Treasurer, virtually acquired a mortgage over the Line, which could be foreclosed at any time in the event of the Board defaulting on its interest payments.
Lord Inchcape rubbed his hands and chuckled with senile glee. To pay the interest bill on its debentures the Board would have to raise freight rates, which would bring it into line with the Monopoly. If it failed to do this and defaulted on its obligations, Bruce would seize the Line and sell it up. To make doubly sure that the Line could not carryon, it was saddled with a highly paid and superfluous executive and subjected to crushing taxation. The ships began to be sold. Bruce carried on like a mad floorwalker at a remnant sale. The eleven remaining Austral ships, whose market value was £550,000, were sold up for £248,000. Bruce valued the ex-enemy vessels at £197,000. The British Government valued them at £337,000. He finished up paying the British Government something like £310,000 to gain a clear title to these ships, which were then sold for what they would fetch, mostly scrap iron prices. The “D” boats, which cost £271,000 to build, were sold for £84,000, and the “E” boats, which cost £2,600,000, were given away for £380,500. By the beginning of 1927 all that was left of the once proud Commonwealth Fleet were the five “Bay” liners and the two “Dale” boats. These seven ships were the pick of the Fleet and even Bruce dare not sell them out of hand.
The tactic of setting up a Public Accounts Committee, to advise on their retention or disposal, was resorted to. In May, 1927, this Committee reported:
Not only has the Commonwealth Line been responsible for actual reductions in freight, but the presence of the Line has exercised a material restraining influence against proposed increases. The Committee, therefore, recommends that in the interests of Australia the Line be continued.
This, of course, was just the opposite to what Bruce wanted. He then fell back on the method of tendering evidence in camera, a device often used by employers in the Arbitration Court, when some particular judge finds their arguments in favour of wage reductions a little abstruse. The Chairman and four other Bruce-Page appointees to the Board were called on to interview the Public Accounts Committee behind closed doors. Nobody knows what transpired at this stage, only the people concerned. But the upshot was that in November, 1927, the Committee reversed its previous finding and urged that the Line be disposed of. Bruce announced that he would sell what was left to the “Shipping Conference.”
The cost of construction of the seven ships had been £7,527,504. Allowing a very generous 33 1/3% for depreciation, their value in 1927 would not be less than £5,018,336. In real fire salvage bargain style Bruce disposed of them for £1,900,000, to be paid off in instalments. It was not even a lay-by transaction. The ships went overseas, to augment the tonnage of the “Conference,” but all that Australia received was the first instalment of £580,000. Lord Kylsant, who handled the business for the “Conference,” very conveniently went bankrupt, and Australia now has neither ships nor money.
When Mr. Bruce travelled to London in 1933 to represent Australia as High Commissioner, he travelled in a Combine ship, and was no doubt given the best suite of cabins available, at our expense of course.
How the Dockyard Was Ditched
If the Commonwealth Shipping Line perished through thuggery the demise of the Commonwealth Dockyards was a clear cut case of infanticide. The Commonwealth through its Attorney-General went into the High Court and swore away the life of its own offspring.
The Cockatoo Island Dockyard was acquired by the Commonwealth Government from the New South Wales Government in 1912. It operated successfully throughout the war and early post-war years. It was from here, in 1924, that the Fordsdale and Fernsdale were launched. But with the gradual disposal of the Commonwealth Line ships and the falling off in ship repair work, the management had to look to other avenues to maintain the level of activity and employment.
In pursuance of this policy the Dockyard successfully tendered for the erection of six turbo-alternator sets for the Sydney Municipal Council at its Bunnerong power station. This led to litigation which spelled the doom of the Dockyards. The Commonwealth and the Attorney-General, on the relation of one, Edwards, Secretary of the N.S.W. Chamber of Manufactures, sued the Australian Commonwealth-Shipping Board and the Sydney Municipal Council, in an attempt to have the contract voided. The High Court held “That the Australian Commonwealth Shipping Board had no power to enter into an agreement with the Municipal Council to supply, deliver and erect on municipal land, steam turbo-alternators.”
From the joint judgment of Knox, C.J., Garvan Duffy, Rich and Starke, J.J., we learn:
The Parliament has only such power as is expressly or by necessary implication vested in it by the Constitution.
There is no power which enables Parliament or the Executive Government to set up manufacturing or engineering businesses for general commercial purposes. The Trade or Commerce Power was referred to, but that is a power to regulate trade and commerce with other countries and among the States. The Naval and Defence Power, coupled with the incidental power conferred by section 5 (xxxix) was also relied upon. Extensive as is that power, still it does not authorise the establishment of businesses for the purposes of trade and wholly unconnected with any purpose of naval and military defence ... Despite the practical difficulties facing the Commonwealth in the maintenance of its dockyard and works, the power of Naval and Military Defence does not warrant these activities in the ordinary conditions of peace, whatever be the position in time of war or in conditions arising out of or connected with war. 26
That was the end of the Commonwealth Dockyards. Shortly afterwards Cockatoo was leased to a private firm, to the great gratification of the N.S.W. Chamber of Manufacturers. So skillfully was the whole thing managed that the Dockyard had to meet the costs of its own funeral.
Walsh Island Too Goes West
The State undertaking at Walsh Island, erected after the N.S.W. Government had vacated Cockatoo to the Federal Government, lasted longer but fared no better than the Commonwealth concern.
Up to 1912 the construction and repair of State Government dredges, tugs, etc., were carried out at Cockatoo. A smaller branch workshop had been set up at Dyke End, Newcastle, to cater for the Newcastle and Northern Rivers tugs and dredges. When Cockatoo was disposed of in 1912 the State Government decided on the construction of a new workshop and floating dock at Walsh Island. For the first three years in which accounts were framed and presented to show the results of the Dockyard as a trading undertaking, profits were revealed, averaging £20,000 a year. This was from 1918-19 to 1920-21. However, Walsh Island, like the Commonwealth Shipping Line, began to be hedged around with impossible financial and taxation commitments, and for six years losses were shown. A bright patch was struck in 1927-28 when profits were again made, but from 1930-31 losses were again incurred. The Auditor-General’s Report for 1933-34 relates that:
Over 15 years of operations the accumulated losses were £276,142.
However, the Report goes on to point out that
It has been urged from time to time by various managements that in connection with the losses shown by the Accounts, that consideration should be given to certain compensations and advantages not reflected in the Accounts. Considerable amounts have been paid to the Railway Commissioners, the Hunter District Water Supply and Sewerage Board, and the Government Insurance Office, for freights, water and other services. It has been further urged that the bulk of the work carried out by the Dockyard was for other Government departments, and that substantial savings were made on other departmental votes. Special stress is laid on the considerable savings made in connection with the manufacture of steel carriages and mild steel pipes by reason of the lower prices paid after the entrance of the establishment into this class of work.
There we have the key to the whole situation. Private capital is willing to tolerate Government ownership in those fields where there is no prospect of high and immediate profits. It is all the more ready to do this when there exists an opportunity to still take all the cream but none of the risks, through investing its surplus cash in Government bonds and securities. But the moment Government enterprise oversteps the mark and enters into competition with private capital then the howl goes up for its blood.
The besetting sin of Walsh Island was that it lowered the prices of steel carriages and mild steel pipes. It had to go. And no ceremony marked its passing. The total capital expenditure to the date of closing the accounts in December, 1933, was £1½ million odd. Part of the plant was transferred back again to Dyke End, the Laboratory and Testing Room apparatus was handed over to the Department of Public Works, a large part of the remainder was sold for less than £5,000, and as for what remains, it presents a pitiful sight of naked girders and twisted scrap, a monument to venal politicians and rapacious private enterprise.
A Nine Guinea Suit For Thirty Shillings!
Ridiculous? Maybe, but that’s just what the Commonwealth Woollen Mills and Clothing Factory could do for John Citizen, and, moreover, were able to throw in a cloth cap to match at no extra cost. Little wonder these two enterprises went the way of all flesh and State undertakings which dared prove their superiority over their capitalist contemporaries.
It was not socialism but militarism which gave the Commonwealth Woollen Mills and Clothing Factory their initial impetus. In 1909 Compulsory Military Training was introduced. Private enterprise was given its choice to supply the greatly increased number of uniforms required. It failed. Contractors not only persisted in foisting off cloth of poor quality, but continually fell behind in their deliveries. When the Defence Minister attempted to give them a “shaking-up,” by enforcing penalties against a firm which had defaulted on-its contract, he was assailed in the House “for the injustices he had done by interfering in such a manner with private enterprise.”
On October 5, 1910, the Fisher Government introduced a Bill to establish its own mills and factory. This was passed and the Clothing Factory was opened at Collingwood, Victoria, in July, 1912. It employed 300 workers, mostly women, and paid them higher wages and gave them far better conditions than those prevailing in outside firms. Nevertheless so high was the quality of the work and so reasonable was the price that the capacity of the factory had to be doubled to cope with the orders which kept pouring in.
Work started on the construction of the Woollen Mills at Geelong also in July, 1912. But this was suspended when the Cook, anti-Labor Ministry came into office. This Administration also took the contract for supplying postal uniforms away from the Government factory and placed it in the hands of a private firm.
When the third Fisher Ministry came to power in 1914 the war was already raging and the need for uniforms was greater than ever. The Clothing Factory was revived and expanded and construction of the Woollen Mills resumed. The latter were ready to go into production in September, 1915, and were soon turning out the cloth to supply the Clothing Factory.
A high standard of quality was maintained at a low price. As one Senator informed the House:
Similar classes of material are being sold wholesale in Flinders Lane at 17/6 to 20/- per yard. The cloth was being produced at the Commonwealth Mills for 6/6 to 8/6 per yard. The best quality cloth manufactured here could not be bought elsewhere for less than 25/- per yard. But for the operation of these mills we would be paying three times as much for the cloth in question. 27
Private enterprise clamoured for a Royal Commission, claiming that the undertakings must be running at an enormous loss to achieve such wonders. The Commission was granted and its findings must have come as wormwood and gall to the private entrepreneurs. The senior undertaking, which was the clothing factory, had accumulated a profit of just on £75,000, while the mills had made £22,000 during their shorter period of operations.
After a conducted tour of inspection one politician exclaimed,
These Mills, combined with this factory, could turn out a good three-piece suit and cap for 30/-. It behoves the Minister to ascertain why the public have to pay £7/7/- to £9/9/- for their suits. There must have been some big profiteering somewhere for the public to have to pay so much for their clothing.
There was no doubt about this. Senator Guthrie told the House that during 1915-17 the existing private woollen mills made a total net profit of £1,197,000 on a total capital of £1,144,000, i.e., just over 100%. One firm, the Colonial Combing, Spinning and Weaving Co., made a net profit of 303.2%.
When the troops came back from overseas in 1919 and demobilisation began, they found they were unable to obtain a civilian suit for less than £12/12/-. This led to the Returned Soldiers’ League acquiring the agency to sell suit lengths of cloth manufactured by the Government Mills, which cut the cost by one half.
The Golden Fleece wasn’t in it with the Machiavellian merchants of York Street and Flinders Lane. They shore their public closer to the skin than Jackie Howe the Ringer ever clipped his jumbucks. One little racket that was brought to light was the sale of Australian cloth at overseas prices. The Storey Government in New South Wales appointed inspectors to check on the activities of clothing dealers. The first two firms called on denied point blank that they stocked any Australian made material. The inspector was shown their best imported serge, which was being hawked at the best imported prices, and on close examination found that it was manufactured at the Commonwealth Woollen Mills.
In 1920 the Commonwealth Government announced its intentions to expand its factories. Flinders Lane and York Street panicked. A National Federation was formed to combat this move and to challenge the Constitutional right of the Government to act as a tradesman or merchant.
In 1921 S.M. Bruce entered the Ministry as Treasurer, and the haberdashers lost their haggard looks. In July, 1922, Hughes announced that the Mills would be sold to a private firm. James Scullin hit the nail right on the head:
The fear that State enterprises will not prove payable finds its best answer in the fear of private enterprise to be subject to State competition. The crime the Woollen Mills is committing is not that the workers are practising the “Government stroke,” not that it is inefficient, but that it is too efficient and is carrying out its operations better than private enterprise is able to do.
But the protest of the future Labor Prime Minister had no more effect than King Canute’s injunction to the waves.
Hughes called for tenders. Before they were received he went out of office, making way for the Bruce-Page combination, which rushed the deal through to completion.
The Government had invested £295,000 in the Mills. When valued in 1922 the estimate was £267,000. This covered land, buildings and machinery only. As a going concern the mills would not be worth less than £400,000. But Bruce disposed of them for £155,000, once again on the instalment plan, and had the cheek to tell the press, “This is a satisfactory sale.” It was a most satisfactory sale from the buyer’s angle. An obnoxious aroma surrounded the whole transaction, and it wasn’t the smell of Harris Tweeds. Bruce’s confidential secretary was the son of one member of the purchasing syndicate. The two persons appointed to carry out the valuation on behalf of the Government were both connected with Lincoln Mills, of which Senator Guthrie was a director. Senator Guthrie was also a member of the syndicate which bought the Commonwealth Mills.
So perished another valuable Government undertaking and today, if you cannot afford the price big business put on its wares, you can go clothed in nothing more than a mantle of dignity for all it cares.
Flow Oil or Palm Oil?
In his announcement of September 12, 1944, concerning the future of the Government’s war industries, Mr. Curtin indicated that in the case of some of these the Government may decide to operate them “jointly with private firms.ö It is to be hoped that this does not foreshadow any repetition of the Oil Agreement Act. of 1920, whereunder the Government became a sleeping partner to the Anglo-Iranian Oil Co., in the Commonwealth Oil Refinery. The smooth manner in which this transaction was effected at the time indicates that something received a liberal application of grease, and it was not the wheels of industry.
If the Overseas Shipping Combine has been described as rapacious, it is hard to find terms to describe the Oil Monopolists, their avariciousness and venality knows no bounds. In the struggle for markets these unctuous monsters have not stopped short at precipitating wars between countries and peoples. It is well known that the British Shell Oil Co. and the American Standard Oil Co. were behind the scenes of the wars between Paraguay and Bolivia in 1928 and 1932-34. Apparently in Australia they were able to come to some agreement to divide the market between them and to fix prices at a mutually satisfactory high level.
In 1916 the Vacuum Oil Company (later to link up with Standard Oil) and the British Imperial Oil Co. (later Shell Co.) together controlled 98% of the oil trade in Australia.
From 1912-17 the turnover of the Vacuum Oil Co. rose from £2 million to £4 million, and its profits increased from £300,000 to £488,000 per annum, while at the same time its capital was doubled out of undistributed profits. The British Imperial Co. prospered likewise. In fact it fared even better since it was able to avoid the payment of over £3 million in income tax. The Government was compelled to amend the Taxation Act to recover a fraction of what was its due. From 1912 to 1917 the price of kerosene was pushed up from 6/11 to 14/6 a case, and the price of benzine from 13/4 to 23/8 a case.
By the end of the war, in 1919, prices had been further boosted to 16/- a case for kerosene and 26/- a case for benzine. To escape the exactions of the oil monopolists Australia commenced the search for well oil. Prospecting was carried out in the Lakes District, South Australia, the Kimberleys in Western Australia and at Roma in Queensland. The latter area showed the most promise. Several shafts tapped gas at a certain depth and from one well the terrific flow caught fire, sending a pillar of flame hundreds of feet towards the sky and lighting up the countryside for miles around. Experts had to be brought from America to smother the conflagration. Seemingly they smothered more than that, for on every subsequent occasion when a well was nearing the suspected oil bearing level a mysterious “accident” would occur, blocking up the shaft and putting an end to the operations.
The Government also sponsored investigations for oil in Papua, and again there was a lot of jiggery-pook in the jungle, and the Government got no oil. At this stage the Anglo-Persian Oil Co., which had been reconstituted in 1914, becoming a semi-government concern, with the British Government holding a majority of the shares but having only two directors on the Board of sixteen, put a proposition to the Australian Government. The purport of this was that the Company should be subsidised to carry out any further exploration of Papuan oil resources and that a refinery should be built in Australia in which the Government and the Company would share control. This proposal was taken up and in 1920 Hughes introduced the Bill for an Oil Agreement Act, which was passed.
Under the terms of this Act the Commonwealth was to subscribe for 250,001 £1 shares and the Company 249,999. The Government was to have three directors on the Board and the Company was to have four. All questions of technical and commercial management were to be left to the Company. This meant that the Government was to be no more than a sleeping partner, a contract which it has fulfilled to the letter.
The Act. laid it down, furthermore, that the Refinery should not enter into, or be in anyway partner to, or act in concert with any commercial trust or combine. This part of the Agreement has been honoured only in the breach. The Commonwealth was to supply 200,000 tons of indigenous oil to the Refinery when it became available. Until then the Anglo-Persian Oil Co. would supply this, on the understanding that it would be admitted duty free and sold at a price to be mutually agreed upon by the Government and the Company. For these good offices, and so long as its prices conform to what the Government considers to be “fair and reasonable,” the Government will protect the Refinery Company from “dumping and unfair competition.” It is most unlikely that the Commonwealth Government will ever be in a position to supply 200,000 tons of indigenous oil, at least not while the search is entrusted to the Anglo-Iranian Oil Co. So the latter will not only continue indefinitely to reap the benefits of protection from “unfair” competition, but in addition will have three cuts at the C.O.R.'s profits to its sleeping partner’s one. The Oil Company makes one large profit on the 200,000 tons of crude oil it sends to the Refinery. It makes another on the freight for transporting it, and a third when the refined oil is sold. Whereas the Commonwealth Government shares only in the last and smallest part of all.
Brian Fitzpatrick sheds further light on the more recent history of the C.O.R.:
This semi-public concern started with a capital of £750,000 in 1926, which was later increased to £850,000. The Commonwealth now holds £424,999 in 4 shares, which is to say, just less than a controlling interest. This lack of a controlling interest is reflected in the personnel of the directorate, which consists of W.J. Byrne (chairman), M.T. Lloyd (managing), T.A. Fancourt, H. Payne, and, for the Commonwealth, E. Abbott, J.E. Fenton, E. Findlay. ‘Indigenous’ oil has not been supplied to the company at any time. What has been relied upon has been the overseas combines’ supplies of crude oil from abroad. A few months ago this so-called public concern joined with the other oil combines in the formation of Pool Petroleum Pty. Ltd., a private company set up at the request of the Commonwealth Government to take over the distribution of “Prescribed products.” C.O.R. has two seats on the P.P.P. Board. It is stated in the 1942 report of the company that due to the continued absence under war conditions of any appreciable capital expenditure, together with depreciation oh the usual basis” there had been an improvement in profits. After the fall of the Netherlands East Indies, nearly all supplies of crude oil to the company came from Persia, the seat of the Anglo-Iranian monopoly. The assets of this company are now above two and a quarter million pounds.
The 1943 report contains this revealing passage: ‘Importations of all products continue to be arranged on an industry basis. The “global” machinery for providing and allocating tonnage to the Allied consuming areas has been perfected ... The Directors propose a dividend of 8%.’ The Directors represented the opinions and interests of the British Oil monopoly in the Near East, and with the effective control of the company the Commonwealth Government has precisely nothing to do. From the point of view of the monopoly, Commonwealth participation in the capitalisation of C.O.R. has this value only, that the public being committed to the affairs of this particular company, the (remote) prospect of any competition is removed to vanishing point. 28
We hope that Mr. Curtin will take the C.O.R. experience into account when he is considering the future of the Government undertakings, not in order that he might be guided by it, but in order that he might steer well clear of any repetition.
Skyway Robbery!
A witty point much favoured by the older school of socialists was to the effect, that if the capitalists could succeed in bottling the air we breathe and retailing it to us at a profit they would do so. Which, of course, is true. While this stage has not actually arrived, the plutocracy have, nevertheless, succeeded pretty well in bottling up the international means of communication by air and thus keeping up the cost of wireless services to stratosphere levels. The Commonwealth Government, which set out in 1912 to control the cupidity of these skyway robber ended up in 1922 by becoming their paramour.
The Wireless Telegraphy Act, of 1905, gave the P.M.G. exclusive rights to receive and transmit wireless messages in Australia. Four years later the Deakin Government placed £10,000 on the estimates to develop wireless throughout the Commonwealth. At that time the two main systems in use were the Marconi, British controlled, and the Telefunken, German controlled. The Government called for tenders for the erection of two transmitting stations. The Marconi tender was £19,050 for each station. The lowest tender came from the Australian Wireless Co., which was prepared to build the stations for £4,150 each. This company was formed with a capital of £5,000 by the German agents of Telefunken in Australia, who had drawn in Denison of the Tobacco Co. and McLeod, of the Sydney “Bulletin” to give the company an Australian facade. The object in tendering so low was to secure the contract, establish the Telefunken system firmly, and then recoup losses on the other 20 stations which it was known the Government was contemplating. The Australian Wireless Co. got the contract alright and the first part of the plan was realised. But then the Defence Department and the Admiralty objected to the sites chosen by the Company and insisted that the stations be built further inland from the coast. The Company used this as a lever to extract more money from the Government and was successful in getting another £2,000. Further trouble arose over the Fremantle site and the company sold out for £65,000 to a larger concern.
In 1911, the Marconi and Telefunken interests merged and the new monopoly submitted extortionate terms for the construction of further stations. These were refused by Fisher, who engaged Balsillie, a young Australian wireless engineer, to build the new stations and to install a new system which be had perfected. By the end of 1912, the Government had 8 stations in operation, of which only the original two used the Marconi-Telefunken system.
Marconi then brought action against the Commonwealth Government for infringement of patent rights and summoned for permission to inspect the Government stations to verify this. W.H. Irvine, K.C., appeared for the Marconi Co. The Court on two occasions refused to grant permission for the inspection of the Government stations by Marconi engineers and mechanics. But in 1913, the Cook Ministry came into power and Irvine became Attorney-General. In the meantime, the Marconi Co. had amalgamated its Australian Branch with the Australian Wireless Co., and again made application to the Court. This time it was granted and Marconi experts swarmed into the Government stations taking photos, moulds and casts of the Balsillie system.
During the course of the protracted litigation, Irvine brought a wireless expert, called Swinburne, from England to determine whether Balsillie’s system infringed any of Marconi’s patent rights. The report was contrary to what the monopoly expected. Swinburne proclaimed that not only did the system fail to infringe any existing patent rights but that it was at least 33% more effective than any other system then known. The Cook Government shelved this report and paid Marconi £5,000 for the cancellation of patent rights which patently didn’t exist.
In September, 1914, Cook went out and Fisher came in again, the wireless services were transferred from the P.M.G.'s Department to the Naval Department. In 1916, after Hughes had become the leader of the Government the Commonwealth purchased the plant of the Shaw Wireless Co. Ltd, Randwick, for £55,000. This was a serious blow to Amalgamated Wireless, which had hitherto enjoyed a monopoly of Government orders. The “Sunö newspaper, one of whose directors was also a director of Amalgamated Wireless, launched a campaign against the Government for its purchase. A Royal Commission was held in 1917, to inquire into the whole transaction and it was established that some members of the Government were less interested in the commonwealth than they were in deriving pecuniary advantages for themselves. At least one senator, as well as the Minister for Trade and Custom had received a “gratuity” from the vendor, the Reverend Father Archibald Shaw. However, since the factory was considered to be a useful acquisition, the transaction was allowed to stand.
In 1920, the wireless stations were retransferred from the Navy Department to the P.M.G., and since certain installations had been made during the, war which were no longer serviceable in peace, these showed a loss of £35,000 per year. The Marconi Co. took advantage of this to make the Government an offer. This was discussed with Hughes when he was in London attending the Imperial Conference. On his return to Australia, Hughes produced a draft agreement whereby the Commonwealth would hand over all its radio stations to A.W.A. plus a sum of £500,000, and in return would gain the right to hold a bare majority of shares and have three directors on a board of seven. A Select Committee was set up to examine this proposal and certain minor alterations were made, after which the deal went through.
One of the terms of the agreement was that the A.W.A. would take over the existing 20 Government stations at a valuation to be agreed upon by a committee composed of two representatives of the Government, two from the Company and an independent chairman. Two and a half years later, no valuation had been arrived at owing to the failure of A.W.A. to appoint its representatives. But the Government had paid A.W.A. over this same period £88,000 to make good the losses alleged to have been incurred in maintaining the stations.
Once A.W.A. had securely established its monopoly, it began to levy tribute right and left. So extortionate were its demands for royalties, that the “B” Class commercial stations, revolted in 1927, and forced a Royal Commission. The Commission found that the discontent and dissatisfaction in the trade arose from the acts and omissions of A.W.A. It recommended that the Government reacquire its own stations on the same terms as these were taken over by the A.W.A. And that in default of this it take over all privately held shares in A.W.A. at a just valuation. However, the Bruce-Page Government ignored this report of the Royal Commission. Not only that, but it entered into arrangements giving A.W.A. monopoly control of Beam Wireless when that was perfected.
When it became apparent that wireless telegraphy was going to become a. serious rival to cable systems, the monopolists in the latter field moved heaven and earth to buy shares in wireless companies and to effect mergers to protect their mutual interests and keep up the costs of communication. In 1928, a merger company, Imperial and International Communications Limited, (since renamed Cable and Wireless Ltd.), took over Pacific Cables, The Eastern Extension Cable Co. and the Marconi Wireless Co. This coincided with a widespread demand for a penny a word service. The rates were then about 1/8 per word. In 1929, a Select Committee was set up to investigate the possibilities of the penny a word scheme and it reached the conclusion that it would pay handsomely. The lowest Rate at present is 5d. per word. 29 Furthermore, the Committee reported that Imperial Communications only protected the interests of the cable companies and would retard cheap communication with other countries.
This Committee also recommended that wireless stations should be owned by the Government and that all overseas telegraphic communications should be under Government control. But again nothing was done to implement its findings.
In 1933; a balance was struck of the Government’s gains and losses through its participation in A.W.A., and it was found that the Commonwealth paid the Company
Royalties (valued in the Company’s books at £93,000) amounting : £296,625
That it paid in the form of subsidies for the coastal stations: £358,000
Total: £654,625
That it received in dividends: £152,058
The net loss to the Commonwealth being: £502,701
From the foregoing it can be seen how the Government controls this particular monopoly like the hunter controls the bear which he has embraced. It provides just one more object lesson, and it’s the last we shall draw from the Commonwealth sphere, which should be well noted by Mr. Curtin and Dr. Evatt, and above all by the people of Australia, whose will must be the final and decisive factor deciding the course of post-war reconstruction.
“Socialism At Work"?
Believe it or not that’s the title of a booklet issued by the Queensland Government Printer in 1918. The subtitle is more lengthy and explicit:
“How the Queensland Government succeeded in profitably establishing State ventures where the needs of the people called for State Competition or State Monopoly.ö
Maybe the Ryan Government really thought they were implementing Socialism. If so, it was a most unorthodox variety and certainly quite foreign to the teachings of Marxism. What the Queensland Labor Party, thirty years ago, choose to call socialism, Marx, fifty years earlier than that, correctly designated as State Capitalism. And Queensland, under the rule of the earlier Labor governments, certainly ventured further along this path than any other State. But the doctrine of social ownership of the means of production was still not the chief impelling motive. The same basic factors which turned other States and the Commonwealth towards this policy, also moved Queensland. Perhaps the fact that they operated with greater force and in a wider field, consequent upon the outbreak of war, had something to do with the more expansive nature of the Government’s activities. Then there was a strong socialist sentiment in the Queensland Labor movement, a carry over from William Lane’s activities in the ’90's. This was bound to exert a certain amount of social pressure on the Labor Government, particularly since it was enjoying its first term of office.
The very first paragraph of the booklet proves that Labor in Queensland introduced no new principles, but just like Labor in other States and in the Commonwealth, merely built on the foundations already established by the Liberals.
The Queensland Parliament elected in May, 1915: during the first two years of its life has initiated certain State business undertakings, and has developed others ... In some enterprises such as the establishment of the State butcheries and the State Insurance Office, the machinery of administration has been constructed from its foundation by the Ryan Government; whilst in those of which the State Employment Bureau and the Savings Bank are typical the Ministry has consolidated, extended, and improved, in the light of subsequent knowledge, on the work of previous Administrations. 30
Whereas the second paragraph proves that there wasn’t an atom of real socialism in the whole proceedings:
Where the Government has entered into the same arena of trade, the object has not been to secure monopoly or to squeeze out of business legitimate private traders, but to protect the public by competing with the latter on fair and efficient lines. 31
And it must be admitted that this limited and utterly non-socialist objective was thoroughly and completely realised while the State undertakings lasted.
Day Labor Saves Money
The introduction of the Day-Labor system in carrying out public works is claimed as the first great “socialist” achievement of the Queensland Labor Government. Paradoxically, we find that in the first country to really introduce socialism, the U.S.S.R., the piece-work system is universal, as this is the only practical method of ensuring that the principle for socialism, “From each according to ability, to each according to the work performed,ö is observed. However, as previously noted, the Queensland measures had nothing in common with socialism, and the introduction of the Day-Labor system was a great and progressive reform, but no more than that. Under the old system, public works were let out on contract, after tenders had been called. Competition between contractors led to price cutting, which in turn led to wage-cutting, speeding-up and slummed work. The Day-Labor system was a definite advance and it soon proved it’s worth.
The surest test of the results of the working of the Day-Labor system is contained in the actual cost of completing jobs for which tenders had been called from private contractors. When the system was first adopted as a settled policy, a number of such undertakings were put in the hands of the Day-Labor Branch, and the completion of these showed a clear gain ... The total figures in connection with these various jobs are as follows: 32
Lowest Tenders: £117,292
Actual Cost: £94,005
Savings: £23,287
Cutting Timber Costs
Having embarked on the policy of carrying out its own construction jobs, the State Government soon discovered it would have to go further. At that time, much more timber was used in building construction than is the case today, and probably more in Queensland than elsewhere in the Commonwealth. The Government found it was being held to ransom by the timber combine. What was it to do? The logical answer was, acquire its own saw-mills, and this it proceeded to do. This was still not socialism. In taking this course the State was acting in the manner normal to any capitalist combine, it was obeying the laws of monopoly which makes for vertical combinations.
The merging of individual enterprises connected in any way in the process of production assumes a continually greater role. Thus, for instance, a metallurgical plant merges with a coal mining enterprise, which furnishes it with coal and coke. Further, this metallurgical and coal mining enterprise often merges with a machine building enterprise where locomotives or other machines are built. Such a merger is called a vertical combination. 33
About the middle of December, 1915, the Government acquired a saw-mill at Newstead, Brisbane, and another smaller mill at Taromeo and began to build a larger, more up-to-date mill, at Imbil, on the Mary Valley Line, about 20 miles from Gympie. It never attempted anything spectacular, and towards other timber merchants adopted the attitude of “live and let live,” being satisfied to adopt their price lists, but allowing a 5% rebate to general customers, and an additional 5% on timber bought for workers dwellings. It was claimed, however, that the saving in price was small compared with the advantage gained in quality, since the State timber was always properly dried and seasoned.
Butchers Got More Than Their Chop
A number of circumstances co-operated in rendering the direct intervention of the Government essential in the case of the retail business of meat supplies. The distribution of all commodities had been profoundly influenced by the war ... But meat prices began aeroplaning before the war started. Partly the increases were justified; but mostly they were purposely created by market manipulators behind whom was the guiding hand of the monopoly ...
Beef procurable shortly before August of 1914, at 6d. per lb. was sold at up to 1/-. State regulation of prices had gone but a short distance towards affording protection. Every effort at restriction was met with protests from retailers and producers, who declared the Price Control Boards were threatening them with ruin. There was no means of checking the accuracy or otherwise of these claims; and between the fleeced consumers on one side and the complainers on the other, the Government was placed in a false position. Ministers knew full well that an extortionate price was being charged for a necessary article of diet; but until the establishment of the State shops there was no evidence to prove any such contention. Neither were there any practical means for dragging down prices to a fair level ... 34
The Government opened seven or eight butcher’s shops in the metropolitan area of Brisbane and as many more in the major country towns. The first shop was opened in Roma Street, Brisbane, on November 12, 1915.
State operations caused a sharp and immediate fall in the price of meat. Beef, which a few months earlier had been selling at 1/- per lb., was offered by the State shop, as soon as it opened, at 7½d., and a little later at 6½ d. Competition as vigorous as this exercised a potent influence on private enterprise, and the private butchers were forced to bring their prices down ...” 35
Needless to say the State butcher shops became most popular. Before the other shops were opened, the Roma Street business averaged 2,500 purchasers, per day, whilst the average takings per customer were 2/6d. A moderate estimate placed the number of customers served weekly by “the State, when the scheme was ill full swing, at 25,000. As each purchaser was reckoned to represent a family of five, and since some were served more than twice in the one week, it was estimated conservatively that 62,500 people obtained their meat from the State; and got it at half the price they paid formerly.
In spite of the fact that it sliced meat prices to the bone, the State was able to accumulate a little fat in the process, which proved how the private butchers had been flaying the hide off the public.
The Auditor-General’s Report shows that for the period ended 30th September, 1916 — that is, slightly less than eleven months — the State butcher’s shops returned a net profit to the Government of £2,564/19/1. Profit was not being aimed at. The shops had been established to serve a public need, and it was intended to make them pay their way. But even under the remarkably low prices charged, the balance sheet showed the satisfactory result quoted. 36
Its success as a retail butcher led the State as a matter of course into the business of stock-raising and station ownership. Thirteen cattle stations were acquired, totalling 13,848 square miles, on which the State ran 126,033 head of cattle. The cost of this venture was £688,000, expended mainly on the purchase of stock.
In no instance has freehold land had to be resumed ... At the most the Government has paid for a few unexpired years of a lease, and for a pastoralist’s right to select for his own use, 21,000 acres from a resumed area ... 37
Cattle duffing and rustling of stock brought this venture to an untimely close, and also affected the retail end of the business.
Queensland cattle stations and butcher’s shops were complete failures. Stock disappeared from stations unaccountably and the Government found it was not able to operate butcher’s shops efficiently. 38
The illegal form of “private initiative” here scored a victory, but a more determined government would have used the law with effect.
Holing the Net of the Fish Market Manipulators
A small clique of agents in the various capital cities had got their hooks into the fishing industry of Australia. Professional fishermen and the consuming public alike were caught up in the net of these speculating profit trawlers.
For many years the fishing industry of the various Australian States readily lent itself to the harmful influences of combination in restraint of trade. In Sydney, the authorities spent some £350,000 in an effort which, for the first few years proved quite futile to liberate the trade from trust manipulation. For a long time the capitalistic organization proved too strong to be vanquished by the representatives of the people. In Pt. Phillip, great quantities of fish were thrown into the water frequently after being caught, with the object of maintaining at a high level the price of this article of diet.
Unfortunately, the conditions prevailing at Brisbane have proved no exception to the rule.
During 1916, under the conditions ruling, no less than 82 tons of fish were condemned at the market through lack of facilities of distribution, and selling operations being confined to a few speculators ...
... certain market manipulators have been able to cut the channel of trade at a point between the fisherman and the consumer in such away that neither may take full advantage of the resources of the other ... It was high time “the Government took a hand in the matter.” 39
The policy launched on by the Government has been authorised by a special Act of Parliament, which came into operation by proclamation on 2nd April, 1917. Already a receiving depot has been established and is in operation at Wynnum, where the Department is already curing fish by smoking, and retailing them, through various storekeepers scattered throughout the State. The retail price to the consumer is 8d. per lb., against up to as high as 1/3d. charged for the imported article which certainly is in no way superior.” 40
A large depot is in course of erection at South Brisbane, adjacent to Victoria Bridge. The intention is that, when this building has reached completion, the State should purchase all fish caught in Moreton Bay and its neighbourhood at a fixed scale of prices. These prices will from time to time be altered and revised when alteration is called for by changing circumstances. Fishermen will, therefore, know precisely what returns to expect for their supplies. Based on these rates, considered in conjunction with working expenses, a scale of prices will be framed for charging to retail and wholesale buyers. 41
While the scheme lasted it was a great success, but, as in New South Wales, “the capitalistic organization proved too strong to be vanquished by the representatives of the people.” Perhaps if the “representatives of the people” hadn’t had their spines filleted, and had shown a little more backbone in dealing with the sharks in the industry, the outcome might have been different.
Besting the Beer Barons
“The Government was forced to enter the hotel-keeping business by matters of expediency as well as of principle.” 42 The expediency was to provide comfortable accommodation for the travelling public in certain country districts; the principle was not socialist but prohibitionist.
The Labor Party has always been pledged to temperance. The Labor Party is pledged to prohibition insofar as prohibition appears to be practicable. Every successful effort in the direction of temperance paves the way towards ultimate prohibition
Private enterprise has brought to a fine art the business of pushing the sale of alcohol. Lounge bars, billiard rooms next to bars, attractive barmaids, counter lunches and fifty other inducements, all are established to draw and hold the possible customer ... Even the exteriors of the building are designed for a similar purpose. No other buildings are decorated on the outside with so many bright mirrors, or are lighted at night with so many brilliant lights. Experience has taught the publican that the hotel with a striking outside will produce a more vivid impression on the senses of the passer-by. The publican does not think in terms of psychology; but he reaches the result a psychologist would reason himself into, and the publican gets there quicker. The strong impression acts upon the senses of a waverer — perhaps some unfortunate victim to his own desires, who is striving to conquer himself. And so it is that, with bright colours, glittering glass, strong lights at night, and other conspicuousness, private enterprise can rake into the drinking shop men from the streets outside. Having caught their drinker, having once imparted the taste of alcohol to the customer, they fish him back out of the street by aid of subtle and manifold designs. 43
I suppose that’s one reason why they call these “the good old days!"
So the Ryan Government followed the precedent of South Australia and Western Australia, which for many years, maintained a number of hotels under State control, and built its first “pub” at Babinda, a palatial affair costing £18,000 to construct and furnish, but it wasn’t following in the footsteps of Britain’s early socialist, Jack Cade:
There shall be in England seven halfpenny loaves sold for a penny: the three hooped pot shall have ten hoops; and I will make it a felony to drink small beer. 44
The ultimate aim of the Labor Party was to make it a felony to drink beer of any kind, small or large, by introducing prohibition. But prohibition cannot abolish the drink traffic, the experience of the U.S.A. proved that. Nor will it beat the beer barons. Under prohibition these only give way to a new crop of rum runners and the evil is magnified. The solution to this particular problem is bound up with the question of nationalisation, and ultimately socialisation, generally. Under socialism, the consumption of alcoholic beverages will not be prohibited out of hand, but it will be made a penal offence to sell slop beer or to give short measure. As in the Soviet, drinks will be made lighter and more palatable and will assume their proper place in the diet of the community.
The Queensland Government’s attempt to “Nationalise the Liquor Trade” met with no success. Probably because they went about it half-heartedly, and approached it from the wrong end. Had they made a start with the powerful brewing monopolies and not let up until these had been forced to surrender, the outcome might have been different.
C.S.R. Still Gets the Sugar
The Queensland Government also had some interesting adventures into mine-owning and ship-owning, but space forbids these being dealt with here. One last example of how not to nationalise industry is, however, worth quoting. It relates to the Colonial Sugar Refining Company, Australia’s second largest private monopoly.
The author of Socialism at Work tells us:
The industrial and commercial dislocation which resulted from the war brought no more menacing set of conditions, in Australia, than those which overshadowed the nation with the likelihood of sugar famine ... Overseas prices were rising; and big shipments leaving the Commonwealth promised to increase local rates, whilst prospects for the 1915 cane harvest were very poor ...
But the Governments of both Queensland and the Commonwealth acted. A bold policy of nationalisation was embarked on; and so marked was the skill with which the details were worked out and the method applied, that the whole business of treating and distributing sugar passed into the hands of the representatives of the people so smoothly that the wheels of the industry suffered no check.
And who do you think were the “representatives of the people” on this occasion? None other than the C.S.R.
The Government took over and began working the machinery of private enterprise, turning the owners of the refineries and other instruments of manufacture and distribution into agents for the Commonwealth, at a fair rate of remuneration. ... 45
... Practically, the Colonial Sugar Refining Company and the Millaquin Refinery were turned into agents of the Government ... 46
Without the slightest trace of cynicism it can be said that the position was just the reverse, the Governments were converted into the agents of the C.S.R., and they are still wallowing in its syrupy grip today. At the time the Agreement was entered into, in 1915-16, the capital of the C.S.R. was £3 million, built up out of profits on an original capital of £150,000. Today its assets are £27 million, and it is a poor year when it does not add a million more. This is certainly one form of “nationalisation” that the monopolists will raise no objection to.
After Federation a protective duty was imposed on imported Sugar, at a rate of £6 per ton on cane and £10 per ton on beet sugar. This was raised in 1922 to £9/6/8 and £14 respectively.
In 1902 the Commonwealth Excise Tariff Act imposed an excise duty of £3 per ton on manufactured sugar, but allowed a rebate of £2 where white labour was used. This Act remained in operation until 1913, during which period £6,591,870 was collected in excise and over half that amount — £3,899,541 — was paid back in rebates to the manufacturers. Nearly all the refineries in Australia are owned by the C.S.R.
During the last war, in July, 1915, the Commonwealth Government placed embargoes on the import and export of sugar and took over control of the industry. The price of raw sugar was fixed at £18 per ton, nearly £3 per ton above the previous ruling price. With various price alterations, this policy lasted till June, 1923. An increase to £21 per ton was followed by a recommendation of the Piddington Royal Commission (1920) of a further increase of £1. Shortly afterwards, however, the Hughes Government increased the price to £30/6/8 per ton. The reason given was the rise in wages, but, working on the basis used by the Royal Commission, this rise would only have necessitated a rise of price to £26, not £30/6/8. In 1920 the wholesale price of sugar also rose, from £29/5/- per ton to £49, and the retail price from 3½d. to 6d. per lb. This fell again in 1922, but only to £42 per ton wholesale and 5d. per lb. retail.
Financial and marketing control of sugar was handed over by the Commonwealth to the Queensland Government in 1923 under certain conditions. These conditions included reduction of the raw sugar price to £27, per ton, and of refined sugar to £37/11/4 per ton wholesale and 4½d. per lb. retail. This was further reduced to £37/6/8 wholesale in 1925. The embargo on imports was continued.
During the period 1923-1930, ruling world prices for sugar varied from £10/10/6 to £36/3/8 per ton. These are the prices at which sugar could have been imported into Australia (excluding duty) at a time when the fixed Australian price was £37/6/8 — higher than the peak price of foreign sugar.
And the C.S.R. is not the only monopoly to receive Government assistance. The directors of B.H.P., for all their scorn of Government enterprise, have never been too proud to let the State help them to increase their profits.
The Newcastle Iron and Steelworks Act of 1912-13 empowered the State Government to grant a 50 years’ lease of 34 acres of waterfront land to the B.H.P. The Government also undertook, without cost to the Company, to dredge and maintain a channel, 500 feet wide and 25 feet deep at low water, from Newcastle Harbour to the Company’s wharves. It also filled in, with sand and silt dredged from the channel, the mangrove swamp which covered much of the Steelworks land.
Other concessions had been made even before the Steelworks were established. In South Australia, the B.H.P. Hummock Hill to Iron Knob Tramways and Jetties Act leased a strip of land 34 miles long for a tramway and gave the Company the right to construct and operate the line. John L. Lewis, father of Essington Lewis, was in charge of passing this bill.
In New South Wales, two bills were before the State Parliament to enable other companies to supply water to Broken Hill when, in 1892, B.H.P. brought in a bill with the same object. They persuaded the other companies to withdraw their bills and after an interview with the Premier (Dibbs), they got him to set aside a Government night to force the B.H.P. Bill through all its stages. Members of the Government pledged their help in every possible way.
In Tasmania, the State Government built a railway line in 1916 to connect the newly opened B.H.P. limestone quarries at Melrose with Devonport. The Mersey Marine Board of Devonport dredged the Harbour and extended and improved wharf facilities to meet the needs of the Company.
In 1941, the South Australian Government began construction of the Morgan-Whyalla pipeline, to provide water from the Murray for the B.H.P. port. The pipeline is to be 240 miles long and its construction was estimated to take three years.
Many concessions have also been made in railway freight charges. As early as 1888 the B.H.P. General Manager’s Report stated: “The South Australian Railway Department and the Silverton Tramway Company have made some important reductions in our freight charges, and I am still asking for further concessions.” In New South Wales also, rebates on freight are granted to the B.H.P. Total freight paid by B.H.P. and its subsidiaries in 1940-41 was £1,199,294; of this, rebate was allowed on £586,549 and amounted to £220,774 — 37% of the amount on which rebate was allowed and 18% of the total freight charges.
Thus even the B.H.P. monopolists in the intervals of extolling the virtues of “private enterprise” and “individual initiative,ö can occasionally be magnanimous enough to accept the help of the poor, “inefficient” Government.
The Great Brickworks Swindle
South Australia, Western Australia and Victoria all have interesting examples of Government enterprise to show. In the latter State these
represent an investment of over £205 million with an annual income of about £25 million. They comprise most of the transport services and undertakings known in Australia as developmental, such as irrigation and closer settlement, metropolitan or municipal services ... They constitute possibly the largest and most comprehensive use of State power outside Russia. 47
However, to deal with all these instances would require a fair sized book, so unfortunately they will have to be omitted, as will reference to the New South Wales State Timber Yards, Bakeries, Trawlers, etc. We draw our narrative to a close with a brief survey of the history of the N.S.W. State Brickworks, partly because they represent one of the most successful ventures into State ownership, which can’t be overlooked, and partly because they were the most recent to perish at the hands of corrupt politicians and the monopolists they serve, and the memory of their passing still rankles in the minds of the people.
The State Brickworks were opened up on Crown land in 1911. We’d have probably had a State Iron and Steel Works too, only this infant project was aborted by the B.H.P. before it even saw the light of day. 48 In 1912, Holman, who had not yet revealed his true colours, told the House that:
At the present time bricks were being made at the Government works at, approximately, 22/- per thousand. In a few months, the Manager hoped to be able to bring the price down to 20/- per thousand. The bricks were now being handed over for use in Government departments at 5/- per thousand less than the Combine’s prices ... Although the price was 5/- per 1000 less the Government works showed a profit of 80%. 49
The brickworks continued to expand and prosper.
For the year ended 30th June, 1928, they sold more than 60 million bricks, private consumers took 80% of the output. The price charged was 14/9 per 1000 below that of private competitors. The original capital had been repaid, large sums had been spent on extensions, arid the undistributed profits were £135,695, the reserves were £123,510, and the cash in hand £53,858. 50
The State Metal Quarries and Monier Pipe Works also prospered and helped to keep down building construction costs. There was constant agitation on the part of the private brickworks against the Government concern, all the old charges of “unfair competitionö were levelled against it. These were varied with complaints that it must be running at a loss to sell so cheaply.
But it was much harder to make these latter charges stick, in view of the obvious facts. The Auditor-General’s Report for 1936-37, after the undertakings had already been disposed of, reveals in retrospect that the Brickworks were far from being unprofitable. The gross income from November, 1911, to 23rd January, 1936, was £2,532,402, of which working expenses, costs of administration, etc., absorbed £2,077,969, and a sum of £149,630 was provided for depreciation, leaving a trading profit of £304,802. Of this amount £101,707 was paid to employees as bonuses, leaving the share of profit accruing to the undertaking at £203,094, to which is added £19,699, interest on invested funds, making £222, 793. 51
The Brickmasters got their chance when the Stevens Government was returned to office. In 1932 the Government announced it was not in favour of State trading, and followed this up in July, 1933, with a definite decision to sell the remaining State Industrial Undertakings.
So malodorous were the circumstances under which these enterprises were disposed of that a Royal Commission was held. The Monier Pipe Works were sold to the Renshaw Syndicate which was supposed to consist of former employees of the undertaking. Tenders had, of course, been called, and the Tender Committee which had been set up reported that
The tenders of the Hume Pipe Co., £33,278, and the Renshaw syndicate, £30,999, are both satisfactory offers. That of the Hume Pipe Co. is higher by £2,279, and for this reason we recommend its acceptance.
But the Hume Pipe Co. didn’t get the Works; these went to the Renshaw syndicate. It was alleged that this syndicate was merely a “dummy” for Sir Sydney Snow, a prominent backer of the U.A.P. and a director of Metters Ltd., whose works abutted on the Monier Pipe Works, and who were anxious, it seems, to acquire part of the latter’s land. It was revealed in evidence that Sir James Murdoch, another prominent backer of the U.A.P., had subscribed £1,500 to the Renshaw syndicate, while another member of the Consultative Council of the U.A.P. was a director in the real estate firm which carried out the valuation on behalf of the Government. The Royal Commission found that the charges of graft and corruption were not proven.
In the case of the Brickworks: the Government had earlier appointed a person to carry out investigations of the Brickmasters’ complaints about the effects of competition from the Government yards. In July, after three months’ investigation, this representative forwarded a memo to the Government, stating that he had had offers from three groups of Brickmasters to buy the Government yards providing some agreement on price could be reached. One month later the Government announced that the Works would be offered for sale by tender. No tenders were received at this stage; the Brickmasters had apparently not come to an agreement as yet among themselves as to what price should be offered. Tenders were again called in 1935 and two were received, one being from Brickworks Ltd., a company formed for that express purpose by a combination of the private brickowners. In the meantime the Government’s agent had become consulting accountant to Bakewell Bros., and, in September, 1935, actually became a director of that firm Bakewell Bros., along with other private yards, were financially interested in Brickworks Ltd. Sir Archibald Howie, another prominent member of the Consultative Council of the U.A.P., was also mentioned as being interested in Brickworks Ltd. Needless to say, Brickworks Ltd. had their tender accepted. Again the Royal Commission found that there was nothing reprehensible in the conduct of any of the parties concerned.
No sooner had Brickworks Ltd. taken over the State Yards before prices were advanced in true monopoly style and have continued to soar ever since. 52
So ends the first chapter in the story of State enterprise in Australia. The apologists for private enterprise never tire of dinning into our ears that the past failures of State undertakings only go to prove how impossible it is for the State to manage industry efficiently. From the facts revealed in the foregoing chapters we see that the opposite is the case. State ownership, even under capitalism, has demonstrated its superiority over private enterprise in one field after another. It was their efficiency, rather than their inefficiency, as Mr. Scullin so correctly pointed out in the debate on the Woollen Mills, which doomed these undertakings.
When the State itself has been changed, when real social ownership of the means of production has been established, industry and agriculture will be run more efficiently than ever before, and Australia will become a real “Workers’ Paradise.”
What the Nationalised Enterprises Have Proved
From the foregoing examples, it will be seen that the capitalist class was incapable by itself of pioneering and building Australian economy. It was compelled to lean heavily on the governments — in sharp contrast to its repeated denunciations of the toilers when they have asked governments to do something to relieve their situation.
So-called private enterprise failed miserably to cope with the problem of developing a modern railway system in an Australia of great distances and small population. But the moneyed class agreed to a state capitalism in regard to railways which meant they received their pound of flesh at the expense of the government and the public funds which had to meet the loss on the railways. Today, the railways would be paying handsomely were it not for the enormous interest burden which still has to be paid to the bondholders. The railways are an outstanding example of the limitations and inadequacies of capitalist private ownership of industry when viewed from the standpoint of the rapid development of the nation and of its economic resources.
The many examples of nationalised industry which we have quoted indicate clearly enough that government enterprise has demonstrated here in Australia its superior efficiency and that the jibes about the “government stroke” are the inventions of politicians and editors who serve profit-making institutions. The history of Australian nationalised undertakings, let it be again emphasised, proves that often these undertakings were strangled by governments representing big business interests, not because of their inefficiency, but because of their very efficiency the government enterprises were limiting the rate of profit and exposing the profiteering tendencies of a number of big business groupings.
Other countries have had to face the same problem, for example New Zealand, where the Labor Government performed a fine piece of work in providing houses, at reasonable rentals, for the people.
That private enterprise and its reactionary governments have been unable to provide jobs for the people needs no proving on our part. Always there has been what is heartlessly termed the “industrial reserve army” of people without jobs whose numbers in the periodically recurring depressions have reached catastrophic proportions. Industrial unrest in wartime, even when the national existence of Australia was threatened by the fascist powers, largely has its roots in the bitter memories of depression; which generated cynicism and a widespread belief that the post-war years will witness a return to the drab, soul-deadening conditions of pre-war times with its harsh struggle for existence. The part of monopolists and armament profiteers in the promotion of war should be too well known to require detailed analysis here.
The people, after their heroic exertions and sacrifices, are asking something better than this. They know that if the future control of our economy is left in the hands of a few key monopolies that these, in their frenzied rush to make profits, will create a new purgatory for the masses when victory has been achieved.
The Communist Party, in its recently published plan for Victory, Peace and Security, has endeavoured to place before the Australian people, the labor movement and the governments, a plan which, if effected, will meet their desires for a better Australia for themselves and their children. In this general plan the nationalisation of key industries (iron and steel, banks, mining and transport) occupies a central place.
The nationalisation of these key industries, we contend, would place the people in a much better position to plan our future. It would relieve the government of pressure by powerful financial economic-groups who desire a national post-war policy that serves their own narrow, selfish interests without heed to the needs of the mass of our citizens.
The labor movement must move forward. It cannot and must not stand still. The working class cannot content itself with electing governments to keep things as they are, adding only a few minor reforms which, however valuable in themselves, do not basically alter the economic, social and political set-up of the country. The present Labor Governments were elected by the people because they desired a change from the old conditions of muddle and poverty. With the support of the board labor movement, the Trade Unions and the Communist Party, these Governments, particularly the Curtin Ministry, have accomplished a good job in organising and leading the country in the war of world liberation from fascist tyranny. But there still exist the economic and social conditions which generate rear for the future in the minds of our people.
The labor movement must give the lead for preventing post-war depression; it must indicate the path to economic security, well-being and prosperity for Australia. Stand-pat policies, failure to meet the needs of the people because of fear to undertake drastic alterations in our economy, spells a catastrophe for the labor movement and eventual downfall of the existing Labor Party administrations. This in turn would mean turmoil and poverty in an Australia gripped by the throat by reaction.
It is plain the Labor Governments must act firmly and decisively in order to attain the goal of security demanded of them by the majority of electors.
Nationalisation is the Logical Next Step in the Advance of the Labor Movement
Let us, then, consider what nationalisation means. Firstly, let us be clear that it does not mean “Socialisation,” the term used for Socialism in the statement of the objective of the Australian Labor Party.
Nationalisation is State Capitalism. Capitalist relations still remain. The State is the employer instead of the private capitalist. Actually it is a more efficient and higher organization of capitalism.
“Socialisation,” interpreted as Socialism, means that the capitalist class has been abolished: it no longer legally owns the financial institutions, the secondary industries and vast landed estates as its private property.
A classless society is arising. The working class allied with all other toiling sections, has become the “ruling class.” Social and economic conditions are rapidly transformed. Production is for use and not for profit. No one can live idly on rent, interest or profit. Each will contribute to society according to his or her talents and each will be rewarded according to work performed.
Having a clear conception of the difference between Socialism and Nationalisation enables us to understand more clearly what is the next step in Australia’s advancement and what it means.
Nationalisation is a more highly organised form of capitalist economy; it is the last form of capitalism, there are no further economic forms, Lenin pointed out, intermediate between capitalism and socialism.
Viewed in this historical light, State Capitalism or Nationalisation is a transitional form preparing the way for a socialised economy. Of course, we cannot set a date-line, we cannot define the time factor in exact terms and say whether a State Capitalist period will last for a year or a generation because we cannot define the exact point at which the conditions will have ripened sufficiently to demand complete socialisation. This depends to a large degree on the organization and political consciousness of the people; on international conditions, the remaining strength of reaction and so on.
On what terms should nationalisation be carried out? Do we want the ultra State Capitalism of the New South Wales and other railways carried into the nationalised industries? No, this should be avoided. Compensation, if it is necessary for other than small shareholders, should be made in such a manner that we will avoid the necessity for repaying the bondholders over and over again without end.
It is true that monopolies exist in other than key industries, but the nationalisation of the iron and steel, coal, banking and transport industries, added to those already in Government possession, including the new war industries established by the Federal Government, would place nationalised industry and the Government in the dominant position, enabling us to plan our economic future and the nationalised industry to play the leading role in the industrial development of Australia.
In the political fight for nationalisation, the labor movement will win an ally in the small and middle-sized business people and factory owners. They are being squeezed out of existence by the monopolies and combines. In a hundred and one ways the monopolist deprives the “small man” of his independence and either liquidates his business or turns him into a dependent of the monopolist concern. The monopolist often despotically dictates the prices he shall charge and the rate of profit he shall be allowed. Opposition is crushed by means of financial and economic pressure. The “small man” would therefore support the labor movement in the nationalisation of monopolies.
Beside the nationalised industries and Government economic planning the way of housing, irrigation, railway unification, road and rail building and so forth, there will be plenty of room for smaller industry and industrial enterprises. Here real “private initiative” can fully develop and make an essential and valuable contribution towards the all-round raising of the living standards of the Australian people and their social well-being. The Communists do not (nor does any other section of the labor movement) visualise nationalisation or national planning to mean the extinction of the smaller enterprises and the expropriation and impoverishment of the smaller owner. On the contrary, we can foresee a period when, freed from the domination and unfair competition of the trusts, they will flourish under the rule of the labor movement.
Nationalisation means a big step towards genuine political democracy. While finance and industry are owned by private groups, democracy remains hamstrung because these oligarchs are generally able to impose their will on both governments and people. With nationalisation the labor movement and governments, freed from interference by the “economic royalists,” will really be in a position to implement the economic and social programmes on which they seek the suffrages of the masses and on which they are elected. Alas, only too often in the past have these programmes remained but paper programmes and the masses have found their electoral power was ineffective in face of the grip of big business on the financial and industrial nerve-centre of our country.
Nationalisation of essential industries places the elected representatives of the people in a controlling position so that, in such a nationalised economy as we have in mind, the people, through their representatives, would have the substance and not the shadow of real power.
This means a genuine democracy in which the people would wield real power over the destinies of the nation and the welfare of its citizens.
In control of these vital industries, the government and people could proceed at once to plan, really plan, for post-war reconstruction; to really meet the grave danger of industrial dislocation when the war ends; when the industries today producing the munitions and equipment to keep our army in the field are no longer required for this purpose; when other industries, today working in top gear as a result of increased wartime demand, will commence to slacken; when something like 1,500,000 of our people, whose energies are today absorbed by the war machine, will be seeking employment in civil occupations; when practically the whole economy has to be readjusted to meet peacetime needs instead of wartime needs. The nationalisation of vital industries is necessary in order to provide a secure basis for the plans of reconstruction of our life demanded by the great problems confronting us as a result of the above-mentioned factors.
The mere fact of nationalisation in itself could mean but little unless it is seen as the starting point of a thorough reorganisation of the industries concerned, that is to say, giving the governments elected by the ballots of the people the power to act, to undertake areal reorganisation which aims at the achievement of a greatly increased standard of living and model working conditions. Take the mining industry as an example of what is meant. Due to past neglect and mismanagement and the failure to develop the industry along modern lines on the part of the coal barons, the industry was ill-equipped to meet the heavy demands of the war. This is the basic fact at the bottom of the unsatisfactory position that has existed in the coal industry during the anti-fascist war.
This situation created a fairly strong demand for the nationalisation by the Curtin Government of the coal mining industry. Dealing with the nationalisation of the industry, Mr. H. Wells, President of the Miners’ Federation, had the following to say about it being the starting point for a complete reorganisation and elimination of the present obsolete methods of coal production:
Nationalisation can bring order and progress to the coal industry, if it is seen as the starting-point for the reorganisation of the mining industry, but only to the extent that the whole problem is understood and tackled. It is not enough that the Government, using the people’s money, buys the industry from the present coal owners, or, alternately, guarantees them a return and profit on their capital. If the industry is to be continued in its present form, managed by the present managements with its lack of direction, research, development and planning, it cannot meet its requirements no matter who technically ‘owns’ it.
These comments by Mr. Wells illustrate the point we are making as to seeing nationalisation, not as a fairy’s wand, but as a starting point for a general reconditioning and expansion of industry in order to meet the demand of the people for a new and better life in the post-war years.
There are numbers of people who have distorted ideas as to the power of banks to “create credit.” Some of these occupy quite prominent positions in the labor movement and therefore should know better. It is axiomatic that the over-straining of credit or using the printing press to inflate the currency leads directly to an inflationary crisis which means prices skyrocket and, as the currency depreciates, the savings of the people are in effect confiscated. Such are the economic laws of capitalist society and to recognise their existence does not mean to approve any more than to recognise the existence of disease indicates approval of the existence of disease. While rejecting the wrong notions of various types of currency cranks, the Communists in their policy demand the nationalisation of the banks and their incorporation with the Commonwealth Bank to form one national State Bank. Such a government-controlled State Bank would mean that deposits and small savings would be at the disposal of the country to be utilised when necessary for the furtherance of plans, for post-war reconstruction, instead of at the disposal of financiers who use the people’s hard-earned savings to exploit them.
Another aspect is the taking over by the governments of land, of big estates, especially in the vicinity of land-locked country towns, for the purpose of the settlement of soldiers and other people who are prepared to cultivate it and also for those whose holdings are too small to provide a comfortable living standard. Overstocking and over-cultivation, the get-rich-quick methods of Pastoral Companies and banks who have a big proportion of the best lands under their control, is causing erosion and “dust-bowls”; Australia’s fertile soil is blown by the winds to Fiji and New Zealand! Another glaring example of the destructive, not “efficiency,” capacity of big capitalists’ methods. Nationalisation of land and complete reorganisation of the methods of utilisation of the soil and the pasture is the only way to end this vandalism of the land capitalists. And we do not mean the confiscation of the farms of small farmers. On the contrary, nationalisation means more land placed at their disposal.
Australia, as we have seen, is a classic land of nationalisation. Without government enterprise, it is clear, Australia, despite the propaganda of the so-called “free-enterprisers”, could not have reached its present economic levels. Consequently, the idea and tradition of governmental control of industry is fairly deeply impressed on the majority of Australian minds, particularly those of the working class. Its popularity is undoubted, as witness the stress laid on it by various types of demagogues. The A.L.P. members and the Trade Unions favor nationalisation. In seeking for a line of advance in accordance with Australian tradition and political understanding and which can unite the labor movement, there can be no doubt that nationalisation fits in with these considerations.
Nationalisation is the next step, the line of advance of the labor movement, which, pursued boldly and firmly, removes the danger of stagnation, cynicism and an eventual disastrous temporary setback for the labor movement. Nationalisation is necessary for post-war economic planning, it will revitalise and strengthen the labor movement. Nationalisation will make Socialism, the goal of the Australian labor movement, the more readily understandable to the mass of Australians and, therefore, the easier of attainment.
The problem of nationalisation is a political problem. It demands a strong labor movement and a strong government based securely on the firm foundations of the mass popular movement.
We believe, too, that the decisions of Teheran and the policies flowing there from indicate the methods by which international peace can be preserved for a long period at least, and indicate also the international measures aiming at combating depression and achieving economic security and higher living standards in all democratic countries. We believe the fight for the Teheran policy in Australia must be led by the labor movement and governments based on a broad national unity consolidated around the labor movement; a progressive labor government which will cement international friendships and carry through the essential economic and financial reforms needed to make Australia prosperous.
To achieve these aims: to repulse the reactionaries, to maintain labor governments, demands the maximum degree of unity and co-operation within the labor movement itself. The Communist Party has long recognised that vital fact and has, consequently made it a keynote of its policy and has consistently stood forth as the champion of labor and national unity. The programme of labor and national unity for a better post-war life demands a strong Communist Party. Strengthening the Communist Party, a dynamic force of the labor movement, means to strengthen the labor movement as a whole.
During the war the leaders of the Labor government have opposed immediate nationalisation. Whether that will remain their attitude in the post-war we do not know as no definite statement has been made by leaders of the Federal Government or State Labor Governments as to their attitude to this question in the post-war period. A number of Labor Party people in the Unions and in Parliament supported nationalisation in recent times. It is undoubtedly a major aim in the Australian Labor Party’s written objective.
However, nationalisation as we have seen, is a fundamental feature of the history of A.L.P. governments and is the desire of the rank and file. Brian Fitzpatrick’s History of the Labor Movement points out that no less than six representative conferences of the A.L.P. declared by resolution for nationalisation of the land. The British Trade Union Congress at its 1944 Conference has declared for post-war nationalisation of the essential industries. The Curtin Government has won applause for its plan for nationalising our vital aircraft industry.
During the war crisis the Communist party has not raised the issue of nationalisation because it believes that all the energy and thought of the Australian people must be concentrated on the speediest possible victory over fascism.
The workers have elected Labor Governments. They have already commenced, with the election of Fred Paterson, to send Communists also to Parliament. The labor movement must therefore commence to implement its programme. The Federal Government mayor may not have full power to nationalise key industries. There can be no question of the power of the State Governments to do so. United action on the part of the Federal and State Labor Governments, supported by the labor movement, without doubt can nationalise the vital industries. True, in Victoria and South Australia there remains reactionary governments, but with effective work by the labor movement these can be defeated in their State elections. It can be done, despite limitations in the Federal Constitution and the defeat of the referendum, which did not raise the issue of nationalisation, by means of Federal and State co-operation. Dr. Evatt has assured the people that despite the defeat of the Referendum, considerable powers of nationalisation are possessed by the Federal Government under the Constitution. These powers must, in the post-war years, be exercised. And it can be dope through parliament and the strength and influence of the organised labor movement leading the democratic majority without resort to any form of violent action on the part of the labor movement.
Nationalisation is the path of advance for the Australian labor movement. Nationalisation is essential so that thorough reorganisation and planning of our economy needed to banish doles and poverty may be accomplished and so assure our citizens a prosperous life.
Notes
1. The Rich Get Richer, by Brian Fitzpatrick, p. 37
2. Official Year Book of the Commonwealth of Australia, No 34, 1941
3. The Administration of Government Enterprises, The Economic Record, May 1929
4. Australia’s Government Bank, by L.C. Jauncey, pp. 14- 15
5. The Annals of American Academy of Political and Social Science, November 1931. p. 196
6. Political Parties and their Economic Policies, F.W. Eggleton in The Annals of American Academy of Political and Social Science, November 1931. p. 243
7. State Socialism in Victoria, F.W. Egglestone, p. 31. London: P.S. King and Son, 1932
8. Labor and Industry in Australia, by T.A. Coughlan, Vol 2, p. 831
9. Ibid. p. 845
10. Ibid. p. 843
11. Ibid. p. 844
12. State Socialism in Victoria, F.W. Egglestone, p. 112
13. Official Year Book of the Commonwealth of Australia, No 34, 1941. pp. 98-104
14. Coughlan: Labor and Industry in Australia, Vol 2, p. 842
15. Australia’s Government Bank, L.C. Jauncey, p. 54
16. Short History of the Australian Labor Movement, Brian Fitzpatrick, p. 122
17. Australia’s Government Bank, L.C. Jauncey, p. 60
18. Ibid. p. 84
19. Imperialism, V.I. Lenin, Selected Works, Vol 5. p. 49
20. Ibid. p. 48
21. Vide: The British Empire in Australia, Brian Fitzpatrick, pp. 444-445
22. Lenin on Australia, Australia Marches On, p. 7
23. Hansard, Vol. 88, page 11,098
24. Vide The story of the Commonwealth series by D.J. Amos, F.A.I.S. E.J. McAlister and Co, Adelaide, 1940. This series of pamphlets, which deals with the Commonwealth Shipping Line, the Commonwealth Bank, etc. although written with a strong Douglas Credit bias, contains a wealth of valuable information
25. Hansard; Vol. 100, p. 1969
26. The Commonwealth and the Attorney-General of the Commonwealth Vs the Ausralian Shipping Board and Another, 39 Commonwealth Law Reports, 1926-27, p. 1
27. Hansard, Vol. 86, p. 6907
28. The Rich Get Richer, by Brian Fitzpatrick, p. 34
29. Cable and Wireless Rates — (1) Ordinary Messages. As from 25 April, 1938, the Cable and Beam Wireless Rates per word for telegrams exchanged between Australia and British Empire countries were reduced to the following levels: Urgent, 2/6; Ordinary, 1/3; C.D.E. (5 letter code), 10d, (minimum 5 words); Deferred, 7½d (minimum 5 words); Daily Letter Telegram 5d (minimum charge 10/5, as for 25 words) — Commonwealth Government Year Book No 34, 1941. p. 139
30. Socialism at Work, p. 5. Anthony J. Cumming, Government Printer, Brisbane. 1918
31. Ibid
32. Ibid., p. 10
33. Political Economy — A Beginners Course, Leontov, p. 198
34. Socialism at Work, p. 26
35. Ibid., p. 27
36. Ibid., p. 30
37. Ibid., pp. 37-38
38. Economic Planning in Australia , W.R. Maclauran, p. 15
39. Ibid., p. 40
40. Ibid., p. 42
41. Ibid., p. 42
42. Ibid., p. 74
43. Ibid., pp. 76-77
44. Shakespeare, The second Part of King Henry VI
45. Socialism at Work, p. 59
46. Ibid., p. 65
47. State Socialism in Victoria, F.W. Egglestone, p. 1
48. Australian Labor Leader, H.V. Evatt, Chap XLII. — For an account of how the State Iron and Steelworks were dropped in favour of the BHP
49. Ibid., p. 304
50. Economic Record, May, 1929, p. 14
51. NSW Auditor-General’s Report, 1936-1937, Part 11
52. Before they were disposed of the State Brickyards were selling bricks at 53/- per 1,000 compared to 73/- at private yards. Immediately they were taken over by private enterprise the price was raised to 73/-. The price of bricks today is 98/- per 1,000 and still rising