Category Archives: History, current affairs

Sort of political, too

The Velvet Glove of Harry Knight

 

Harry Knight, from 1980 Sir Harry, was Reserve Bank Governor from 1975-82. He died in 2015 at age 95. His grandsons include brothers Dominic and Jasper Knight, who have high public profiles as an ABC Chaser Boy (Dominic) and an award-winning artist (Jasper).

I wrote this piece largely as relief from the tedium of sitting through evidence to the Campbell Inquiry into the Financial System. I also used The Age to publish my original research into the proportion of top-tier bankers who do actually wear pin-striped suits.

 

The Velvet Glove of Harry Knight

Tony Thomas, The Age, 17/11/79

Like an ancient king, the Reserve Bank Governor, Harry Knight, appears seldom in public, and then always with dazzling effect.

He dazzled everyone at the Campbell finance inquiry the other day, radiating charm, humility and a penchant for Hamlet-like introspection.

The face that launched a thousand suasions is lean and ascetic, topped by a tousle of wispy grey hair.

He clothes his slender form in a very nice suit, with broad black and grey stripes, somewhat like the convicts in Sydney Nolan paintings.

And answering questions from the committee, he chirrups away as if he has not a care in the world, but is merely bandying pleasantries with six long-trusted chums.

All that was lacking was a fireside glow and a glass of port (1905 vintage) in hand, little finger slightly raised from the stem.

In every way, he is a credit to Melbourne’s Scotch College.

Just once that day the velvet glove slipped. He was asked by chairman Keith Campbell how odften the banks came cap in hand to Harry to get a lender-of-last-resort loan.

“Perhaps you will tell me if I am too wordy,” Mr Knight began – his usual line of patter while he worked out a sensible answer, which was –

“Use of the last-resort facility by banks has been infrequent and [he smiles like a white pointer shark] excruciating to them.”

Mr Campbell: “You would be referring to the interest cost? – Yes, sir.”

The younger Mr Knight had an unusual war career. He began with the AIF as a gunner on sound-ranging duties, then transferred to the navy to do hydographic work. There was nothing effete about that job. He served on small ships that used to scoot ahead of task forces moving to landings on Pacific islands. His boat would take soundings, under the eyebrow of the Japanese, to chart the invasion route – fairly dicey work as one bank colleague put it, which won Lt Knight a DSC.
Harry Knight’s only publication is titled Introduccion al Analisis Monetariok an obscure work in Spanish not yet translated into English.

His friends in the banking world told me that it is a novel about a bullfighter’s love for a communist spy in the Civil War, who was posing as a flamenco dancer in Franco’s headquarters.

But a Reserve Bank spokesman issued a strong denial. He said it was a collection of ten lectures on central bankng that the Governor gave in Mexico while he was doing a stint with the International Monetary Fund. He’s still fluent in Spanish.

The chatty Knight style is illustrated by his denial to Keith Campbell of Reserve Bank responsibility for the reduction in trading bank share of financial markets. He said there was a tendency of people to wave the statistics at him, and while he was ‘reeling from it’, people would say to him [he raised his arm and pointed accusingly], ‘It is all your fault!’

But he had to say, ‘Now that is a bit thick’ because there were a lot of bright people in the intermediation game carving out their own shares in any event.

“If you press me and say, ‘Come on Harry Knight, tell me what proportion of non-bank growth is attributable to your activities’, I have to smile sweetly and say, ‘I have no idea’,” he said.

Like Dickens Mrs Gamp, he is prone to invent people who then argue with him, saying ‘Harry Knight this and Harry Knight that’. Harry, in the course of these bouts, awards himself the last word and the crushing retort.

‘Are you watching for squalls, Harry Knight? Squalls can hit you without your being aware of it and you have to handle them real fast’, he warned himself once.

When the Treasury’s Fred Argy threw him the usual trap question, he replied winningly, “Mr Chairman, that is a lovely question and I am very grateful for it’. It was like watching a gentleman debating with a footpad.

The initial burbling by Mr Knight is characteristic. He operates like a champagne bottle, giving off a lot of froth before any genuine liquor emerges.

Sometimes it is hard to know if he is being sarcastic or merely effusive, as when he described the State savings banks (which tend to dodge the Reserve Bank’s network of controls) as ‘lovely people’.

He would love to relax the Bank’s controls over foreign exchange, but because of the disorders abroad, he would have to say with St Augustine, ’God, make me pure, but not yet’.

He agreed people might say to him: ‘It’s a fair while, Harry Knight, since we’ve had a wave of new foreign banks here’.

“Like the Presbyterian elder, I’d reply, “That is a great difficulty. Let us look it squarely in the face and pass on.” #

 

 

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The New Hiroshima

I wrote this piece when I was 36.

Tony Thomas, The Age, 21/7/1976

 

“Rest in peace, for the error shall never be repeated.” This is the official translation on the script of the A-bomb cenotaph at Hiroshima sited directly below the explosion point.

You normally find an English subscript but the cenotaph has none. It’s the same with the other major monument, the twisted structure of brick and concrete that was once the rotund and rather pompous Hall of Industrial Promotion.

Standing beside the ruins late in the afternoon, I got talking to three of those unfailingly polite Japanese students and asked for a translation. The most fluent of the trio, Noriake Ishizu, read haltingly.

“The first atomic bomb was dropped above this building, 600 metres above. At that time, 200,000 people were killed by the atomic bomb and at the same time…”
He broke off for consultation with his friends. After all else failed, he drew a geometric picture and we realised the next word was ‘radius’.

“Radius of two kilometres was destroyed. This accident was very sad, so that many people in Japan saved a little money and repaired this building as a monument forever.”

As we wandered through the park, past the memorials to children, the statue of a family inscribed simply, ‘Pray’, and the pond of peace and the flame, we came back to the cenotaph. He translated the inscription, less elegantly but just as movingly as the official version.

“We do not repeat again this fault. Please sleep softly and easily, because we really should not repeat this sadness.”

Many of the statues are decked with ‘sembatsuru’, swathes of colourful paper flowers, strung on string like the tail of a kite.
At the children’s monument, the sembatsuru has some cards written in English. ‘War is not healthy for children and other living things. Peace. Shalom.’ That card was from a group of doctors in Okayama.

We talked with an old taxi driver, Hajime Kanmori, who said he rescued people in his truck the day after the bombing; he particularly remembered how the dead had to be burned with kerosene. He came through with strong health, but his fellow truck-driver Zenichi Tateishi was badly burned and fell ill by the ‘bad disease’.

At dawn, dozens of middle-aged and elderly people were doing exercises in the park. There was a burst of martial music and shouted ordered when someone switched on an exercise routine on a tape recorder, waking up a pair of alcoholics on a park bench.

The dome was singularly eerie that morning, with its rubble covered in weeds. I had been reading eyewitness accounts of how the bomb’s radioactivity had germinated weed seeds within days.

“Over everything – up through the wreckage of the city, in gutters, along the riverbanks, tangled among tiles and tin roofing, climbing on charred tree trunks – was a blanket of fresh, vivid, lush, optimistic green. Especially in a circle at the centre, sickly regeneration…”

My third and final visit to the park was at about 10am to see the Atomic Museum. There is a model there of a family wandering in the holocaust, which is sheer horror. But most of the other items seemed fairly clinical, except for a familiar kitchen curtain that was scorched to a uniform brown color.

The final tablet in the museum reads, “So that was how Hiroshima perished in the disastrous explosion. Men and women, young and old. For the souls of the fallen victims let us pray, rest in peace.”

In the visitors’ book, a sailor from, the USS Bonefish had added, ‘Why knock a winner? Go to Hell.’ In similar vein, a Filipino had written: ‘Millions of Filipino soldiers and civilians died too.’ Someone from South Yemen wrote, ‘A sorrowful sight’ and a Latvian wrote, ‘I hope God will forgive us.’

I was especially uneasy that morning because I had requested Ichiro, my Foreign Affairs Department guide, to arrange an interview with someone in the hospital for atomic bomb victims.

This was scheduled for 11.30am but I had no idea how I should do such an interview, had forgotten to buy flowers, and was inwardly wanting to call the whole thing off.

We drove through Hiroshima’s bustling city centre, which has the same frenetic, even manic, exuberance of downtown Tokyo or Osaka, and stopped abruptly outside a dingy building that looked more like a block of old flats.

But the waiting room, with the wooden benches and scattering of old, silent people, was unmistakably hospital-like. We were ushered into a conference room, served iced tea and told about the person we would meet by a cheerful and friendly doctor.

This was useful because the time allotted for the interview was short. Mrs Sato (not her real name) was standing outside the Hiroshima station when the bomb dropped, the doctor said, via Ichiro and above the racket of a commercial broadcasting van that was cruising down the road.

There were terrible scenes and she saw a lot of people fleeting and she followed them. She walked and walked and finally came to a farm where she had her first rest. That was the time she realised how badly she was burnt. Her skin was peeling off and she found that her lips were swollen and injured. She was terribly thirsty and suffering from shock.

Her parents came but could not identify her, so she had to identify herself to them and they took her home to Iakaya-cho where treatment began.

The doctor broke off as Mrs Sata herself was shown in. She was wearing an attractive pink lacy dress with long sleeves and showed no signs of facial scarring. She was somewhat overwhelmed by the occasion, giving deep bows to Ichiro and myself, and laughing in an embarrassed way – behind her hand.

We talked about her family for a while, but at Ichiro’s suggestion came quickly to the point.

“It was a very hot day that day,” she said. “I was going into town under military orders to help clear away demolished houses.

(Hiroshima had been hardly touched by the B29s, but in anticipation of ‘incendiary raids’ housing had been pulled down at right angles to the river to form escape lanes and to localise fires. All able-bodied girls from the secondary schools had been summoned the day before to help the work. About 20,000 of them perished and are commemorated in a memorial in the park.)

“I was standing with classmates outside the station in the open about one kilometre from the epicentre waiting for a streetcar, and quite unprotected by anything. There was a flash ten times or 100 times brighter than lightning in the sky, enough to damage your eyes, it was so bright.”

(The eyes of many people, such as anti-aircraftmen looking directly at the bomb, melted.)

“I instantly lay down on the ground, as we had earlier been told to do if anything menacing happened. I heard no sound. When I raised my head again, after about ten minutes, everything was a very dark grey with suspended ashes, like when you turn an old fire in a stove upside-down.

“I was no sure if I was in the same spot where I lay down. There was no way to tell. But I think I was about 15m from that spot.

“I was hit and burnt from the right side. Because I was a girl I had instinctively protected my face with my arms.

She rolled up a lacy pink sleeve to show the disfiguring. It began on the upper arm where a short sleeve had ended, and was more prominent about the elbow. Her ankle, where her wartime trousers had ended, was also burnt, she said.“Many people were crushed down under wreckage. I got up and followed people who were walking along the railroad. In the river, lots of people were floating. I heard cries for help from people in buildings. Most probably they were crushed down too.

“Finally I reached a primary school that was packed with suffering people, and I saw many people dying in front of me. I lost consciousness.

“Afterwards I did my best to keep my arms as clean as possible, so no germs would cause a deep infection. I did not have any grafts but the doctors had to cut my elbow and stretch it back. The moment any skin formed the doctors peeled it off again so no germs would stay inside. I was fortunate because my parents could look after me. They were living outside Hiroshima.

“Many people in Hiroshima who suffered from radiation and burns don’t like to talk about things. There are so many people nowadays who don’t know anything about what happened then, and they get scared when they see the damage to people.

“I never fail to go to the memorial service every August 6. My classmates all died that day, all 240 of them.

“I am quite confident about the Japanese Government policy for peace. There is no question about it. But if a country tried to attack us from outside, I am not sure what is the right thing to do. There may be some people who would say Japan should stand up and fight back. That is what I am afraid of…but I am not sure. Because of my bitterest experience, I pray that things such as that should not happen. I am very conscious that H-bomb tests are still being conducted and I am worried about it.”

I asked about her attitude to peaceful use of nuclear power. She said it was very hard to judge what ‘peaceful use’ meant in modern conditions, but with that proviso, she did not object to ‘peaceful’ uses.

Our time was up. Mrs Sato had taken time off from her clerical job with a construction firm to meet us. We offered her a lift back but she declined.

She had seemed quite willing to tell her story but at many points I judged she was close to tears.

Next Friday morning at Hiroshima’s Peace Memorial Park, Mayor Takeshi Araki will add to the cenotaph the names of 101 more people who died of radiation diseases in 1975-76.

At 8.15am, the same time that bombardier Tom Ferebee dropped the bomb from the hatch of Enola Gay, two relatives of victims will toll the peace bell to start a one minute’s silence.

We now live in the atomic age. Ask not for whom the bell tolls, it tolls for thee. #

 

Cartel Capers in the Menzies Years

As a conservative, I’m browned off at the growing adulation of Robert Gordon Menzies. It got a kick-along in May on the seventy-fifth anniversary of his 1942 “Forgotten People” speech.

Sure, our four most recent prime ministers, with their cumulative deficits of $400 billion would make a principled Liberal pine for Menzies’s small government, fiscal conservatism and stability. And it seems churlish to disparage a prime minister who presided over 4.1 per cent real annual growth between 1950 to 1965, and a stunning 5.1 per cent real annual growth between 1962 and 1968.[1] But I’ll have a go.

Menzies oversaw the cartelised Australian economy that operated form 1949 to 1966. It continued after Menzies until 1974, when the price-fixers were driven from the temple by Whitlam’s Attorney-General Lionel Murphy. (I’m not of course endorsing Whitlam’s economic management en bloc.)

Menzies praised the thrifty and ambitious family as the driver of progress. But Menzies was complicit in, and actively supported, the price-fixing and market-sharing rings that operated in their multitudes throughout Australia at the expense of that thrifty and ambitious family’s shopping budget.

Menzies fans would say that price-fixing in those days was non-contentious and just part of the long-accepted landscape—what was good for business was good for jobs and progress—and therefore it would therefore be unfair to tar Menzies with the cartel brush. One letter-writer to the Age in the mid-1960s, A.J.E. Gourlay, a fan of the Institute of Public Affairs, put the industry’s case:

Price fixing has come to be an accepted part of our social structure, and is no more morally reprehensible than wage fixing or fixing the price of a hair cut, or the price of electricity.

Some people think it would be very nice for them if there were perpetual cut-throat competition for everything except selling a person’s services; but that is surely a very one-sided proposition.

People who put their life savings into industry are surely entitled to some protection, and a flourishing industry gives secure employment and better conditions to its employees … [2]

Brisbane industry magnate Sir Leon Trout similarly opined that the only sufferers from the price-fixing regime were “a few disgruntled people who wished to buy retail goods at wholesalers’ prices”. [3]

But it’s easy to find moral condemnation of cartels at the time, including from Menzies’s own team such as a future High Court Chief Justice (Garfield Barwick) and a future Liberal Party leader (Billy Snedden). Down near the base of the social pyramid, the June 1957 Victorian State Conference of the Shop Assistants’ Federation passed a motion condemning “the tendency to increase monopoly cartels and price-fixing arrangements as being against the best interests of the working class and in particular the shop assistants”.[4] Low-paid shop workers, who rang up sales for the cartels, were also cartels’ victims. Decades later, in 1971, Labor’s then shadow minister Rex “The Strangler” Connor, not a chap I normally quote approvingly, was describing Australia as “the last frontier for economic banditry” where business was “controlled by every restrictive device known to the ingenuity of man”.[5]

Surprising numbers of otherwise well-informed people—historians included—have no idea how our pre-1974 business sector operated. A credulous reader would (or should) get a jolt to find in Blanche d’Alpuget’s Hawke: The Early Years, on page 247:

The argument that market forces controlled manufacturers was invalid in Australia, for by the 1960s there was a system of monopolies and cartels operating: while free enterprise flourished, free competition was a figment.

She was not exaggerating. In 1967 the competition lawyer J.G. Collinge wrote of restrictive practices and price-fixing that “horizontal agreements directly affect commodities in 52 of the 56 divisions in the Revised Standard International Trade Classification”.[6]

Business’s temptation to price-fix is so strong that even in 2000 to 2004, in the modern era with a $10 million penalty per offence, box-makers Amcor Ltd and Richard Pratt’s Visy, jointly controlling 90 per cent of the market, also production-shared and organised to raise prices. Amcor got immunity by dobbing in Visy, and Visy copped an enormous $36 million fine.

The cartels for price-fixing and restrictive practices originated in the Depression, to ward off price wars generated by over-capacity. During the Second World War the government fixed wages, prices, outputs and zones, and thereafter businesses took over price controls on a private enterprise basis. As the Trade Practices Commissioner, Ron Bannerman’s first annual report put it:

Many companies are as accustomed to identical selling prices as they are to common labour rates and to common or similar prices for the materials they use … Often there is no recent experience of prices competition, occasionally no experience of it at all.

Bannerman told a Perth audience in 1971 that there was more restraint on competition in Australia through restrictive trade practices than in “almost any developed country you can think of”.[7] Even New Zealand brought in anti-cartel measures fifteen years before Australia. Iceland acted sooner than us. So did the UK, Belgium, France, Denmark, Japan, Norway, South Africa, Sweden and West Germany.[8]

Those pre-1974 price-fixes could be elaborate. With frozen vegetables, there was a national agreement among all producers involving fourteen pages of text, twenty-one pages of pricing schedules (each page with about 100 prices), fifteen pages on terms, payments and discounts, and five detailed zoning maps.[9] One prominent trade association included among its imperious rules:

To stabilise prices by controlling and regulating the wholesale and retail prices and terms and conditions of sale generally and to eliminate unreasonable and unfair competition in buying and selling by manufacturers, wholesalers or retailers and to control and regulate supplies.[10]

At late 1974, there were 2721 registered anti-competitive agreements among manufacturers, wholesalers and retailers. There were also 9289 restrictive distribution agreements (including some conglomerates writing deals for each of thousands of their distributors).[11] The registered deals had increased by 3558 since 1968.[12]

As I look around my study, the following items in the Menzies era would have involved pricing cartels: desk and chairs; books; lamps; stationery; hammer and screwdriver; building materials; heater; shoes and clothing items. If nature calls, I’d go to our price-fixed china pedestal (in one year, three of the four makers decided to lift their fixed prices by a whopping 18 per cent) or I’d apply price-fixed toilet paper.

Beyond my study, add smokes; bread; beer; chocolate; biscuits; soft drinks; ham and bacon; wholesale wine and liquor; greeting cards; classified advertising; optical goods; bicycles; sporting ammunition; paint; pressed steel baths; venetian blinds; pharmaceuticals; car parts and windshields; tyres, tubes and retreads; batteries; builders’ hardware; electric cables; ceramic tiles; concrete pipes and roofing tiles; electrical accessories; industrial safety products; welding electrodes …[13]

Here’s a grass-roots case: In 1965 the Franklins sixty-four-store chain in New South Wales mutinied against the machinations of the Chocolate and Confectionary Manufacturers Association. Franklins’ managing director, Norman R. Tieck, revealed that the association had chopped his supplies because he cut prices of chocolate blocks from 2/- to 1/9, still with a comfortable profit. The chocolate cartel was hitting “many thousands of industrial workers and housewives in their daily struggle to make ends meet”, he told the Sydney Morning Herald, perhaps over-stating chocolate as a staple food.[14]

The thousands of restrictive practices were given the government’s blessing of secrecy and provisional legality in 1965, pending public-interest examination at some distant future date. Meanwhile families and customers were none the wiser.

No one knows how much the price fixes hurt the family purse. Bob Hawke claimed in 2002 that one just one facet alone—manufacturers dictating prices to retailers—had cost Australian families “scores of billions of dollars”. A Treasury Round-Up issue (4/2008) referred to the “immense detriment anti-competitive practices caused to the Australian economy”.

In Victoria the Bolte conservative government not merely tolerated price-fixing but in respect of beer, enforced it through the Liquor Control Commission to ensure “a comfortable level of profit”[15]. As did, until 1976, the South Australian Licensing Court. Adelaide, city of churches, was also a bastion of retail price fixing, perhaps because of its small, clubby and long-standing business families. Some habits continued even after 1974. For example, hoteliers traditionally offered discounts on packs of a dozen beers in the run-up to Christmas. A leading hotelier disparaged this at a friendly lunch with three rivals on November 22, 1977. Next thing, the discounts disappeared. The prime mover was later fined $8000. Around the same time Adelaide retailers of name-brand bed linen had the convenience of a circulated price list that delivered a 70 per cent mark-up.[16]

Collusive tendering to authorities, “an elaborate pretence”, was also standard.[17] As Billy Snedden told Parliament, business was “agreeing first, who will win; second, the price; third, the higher ‘cover price’ which the others then tender”. [18] Menzies’s Attorney-General Garfield Barwick cited nineteen suppliers each bidding £27,578/14/2. Authorities were being held up to public mockery, he complained. Alex Hunter, professor of economics at the University of New South Wales, in 1963 estimated that 40 to 70% per cent of shires’ purchasing was hurt by rigged bids, as was 40 to 50 per cent of purchasing by all levels of government.[19]

 

I can insert here some personal stories, before my evidence for Menzies as guardian of the cartels.

Leaving high school in 1958, I became a cadet reporter while a pal got a chemistry cadetship with Midland’s Government Railway Workshops. The Premier, Bert Hawke (uncle of Bob), the same year launched a royal commission into price fixing. Perth had only 500,000 people but hosted no fewer than 111 trade associations, busily fixing prices and assisting with collusive tendering. Business reps made it clear they wanted not free enterprise but literally “private” enterprise, free from public scrutiny and government interference.

 

Q: Can you indicate why you are not in favour of government control and yet are in favour of private control in relation to price fixation?

Business witness: Yes, because firstly, we stand primarily for free enterprise and the voluntary conducting of our affairs without being bound by statute.[20]

 

The companies were exploiting the Railway Workshops by identical tendering on forty-six products, including sleepers, cement, electrical cables, wire, car parts, fuels and toilet rolls.[21]

Bert Hawke’s 1956 Unfair Trading and Profit Control Act was replaced by his Liberal successor David Brand in 1959. Brand banned collusive tenders only if they were “contrary to the public interest”, top penalty being a mere £500.

Around 1960 my young pal’s Midland bosses decided to do battle against the bid-riggers on high-value white undercoat and red paint for wagons. So instead of requesting standard paint, the workshop labs created chemical performance specifications for each paint item, and called for samples from bidders before considering prices. “It busted the cartel apart. We had rival paint manufacturers knocking at our door,” my pal told me.

Soon after, Perth supermarket owner Tom Wardle, branding himself as “Tom the Cheap”, took on the grocery cartel buttressing the profits of the dominant Charlie Carters and Freecorns. Wardle ran his no-frills, high-turnover stores on margins of 10 per cent compared with his rivals’ typical 25 to 30 per cent. His rivals, in cahoots with about twenty key manufacturers, cut off his key supplies, forcing him to truck in goods from other states. He cultivated his “bad boy” image as a stripe-suited felon, and even took out newspaper ads naming companies that denied him supply. When the West Australian refused the ads, he brought out his own free weekly.

His business expanded by 1969 to 185 stores and $200 million turnover in four states. He ran Australia’s third or fourth-biggest grocery chain. He became Perth’s Lord Mayor and was knighted, but went broke in 1977 over property and Swiss low-interest loans. Tom the Cheap’s saga illustrated the huge resources needed to take on the entrenched cartels.[22]

 

In 1971 I joined the Canberra Press Gallery as the Age’s economics writer. One week in March 1972 I did a ring-around of Melbourne local authorities, and was told of the following level-tender rackets: Box Hill Council—concrete pipes; Camberwell—pipes, road metal, petrol; Doncaster—pipes; Essendon—petrol, diesel and power kerosene; Collingwood—petrol; Coburg—petrol, and each make of car requested. The Coburg municipal clerk said he’d complained to Canberra for years.

A chief of a large local authority told me that on electric cabling, nails, bolts and hardware, he would get twenty-five identical bids every time. He had busted one ring by awarding supply to the same bidder every time—it didn’t help him but it hurt the rest of the ring. On another product ring, he read suppliers the riot act. They agreed to cut their price by 10 per cent. But once out the door, they quickly restored the status quo by a 10 per cent price rise. On lamp globes, he said he had split supply nine ways to frustrate the bidders, “although it was hell administratively”.[23]Looking back, I’m mystified that Victoria had an Act (from 1965) banning collusive tendering to government. Maybe local government didn’t count.

In Tasmania, a royal commission in 1965 found the customary web of cartels and collusive tenders. For beer, all hotels had to be members of the Hotels Association to qualify for brewers’ rebates. The association also fixed the retail prices of bottles at hotels. The Royal Commissioner, J. McB. Grant, reported that the Tasmanian retail mark-up on booze was nearly double that in Victoria and New South Wales.[24]

But where was the Labor Party on this issue that degraded the living standards of millions of workers? It was preoccupied with factional squabbles and the lesser issue of monopolies, with an eye to controlling or nationalising them at the first opportunity.

Some unions enforced minimum price fixes of their own. When Sydney supermarkets offered a 5 per cent discount on day-old bread in 1977, the bread delivery unions black-banned 700 stores and shut down half the bread supply to Sydney. To sustain carters’ jobs, bread-makers agreed to sell to retailers at union-specified prices minus 14 per cent, an interesting twist on the staff of life.

The Transport Workers Union in New South Wales in 1975 banned petrol deliveries to stations displaying discount petrol prices. New South Wales motorists had to pay around seventeen cents a litre extra for tanker drivers’ job security.[25]

Bob Hawke, who saw that busting price-fixing could raise workers’ prosperity just as wage rises could, vainly argued this as advocate in late 1960s national wage cases. Then in 1971, as ACTU President, he launched a joint venture with the owner Lionel Revelman of the large Bourkes store, Melbourne. This venture was aimed at busting retail price-fixes demanded by the stores’ Dunlop and other name-brand suppliers. Dunlop refused supply unless Bourkes-ACTU marked up the goods at 42.5 per cent rather than the store’s preferred 22.5 per cent. Twenty other suppliers joined the blockade of Bourkes, including Julius Marlow, Crestknit, Bata and Parker Pens. On March 17, 1971, Hawke organised twelve unions to stop all goods to and from Dunlop companies in Victoria. Two days later Dunlop’s managing director Eric Dunshea capitulated, on orders from his London directors, followed by the others. [26]

The Prime Minister, William McMahon, was caught on the hop. Any support for price-fixers was not a good look with voters. The Liberals had first promised voters more than a decade earlier to break up price rings. Even so, McMahon continued to equivocate:

 

There are many arguments for and against retail price maintenance. A lot of people say they believe in orderly marketing and that orderly marketing is the best way there is of selling goods cheaply in the shops. [27]

 

Whitlam made all McMahon’s plans irrelevant with Labor’s win in December 1972, despite Whitlam’s own cluelessness on matters economic—“The vices of a regulated economy must be replaced with the virtues of a planned economy.”[28]

Meanwhile the Hawke venture was troubled from the outset by union in-fighting. Some unions even urged their members to boycott Bourkes-ACTU because these unions had discount deals with other outlets. The joint venture limped to failure. In 2002 Hawke recalled with pride and some exaggeration about “smashing the collusive practices of big business supported as they always had been by conservative governments. And, as always, the hypocrisy of that unholy alliance stank to high heaven.”

 

It’s time now to narrow the focus to Menzies and the cartels.

I checked an armful of books and lectures on Menzies and his era and found just one discussion (by John Howard) and one mention of the pricing rings that luxuriated in Menzies’s shadow. For example, Allan Martin’s two-volume Robert Menzies: A Life—nothing.[29] Ditto Gerard Henderson’s Menzies’ Child: The Liberal Party of Australia 1944–94—nothing.[30]

Instead, we get the St Robert line. David Kemp writes in last year’s Menzies: The Shaping of Modern Australia:

 

Menzies liberalism was based on a deep faith in the capacities of each human being, in the desirability of “a fierce independence of spirit” and “a brave acceptance of unclouded individual responsibility”. These values would build a better society.

 

Kemp, in praising the Menzies ethos, scores an own goal by quoting Menzies further, from November 24, 1942, apropos of a fair deal for the public. Menzies began, “We must beware of cheap substitutes for the rule of Parliament. We must resist the rule of any sectional body, whether the employers’ association or the trades union.” Kemp’s quote extract follows:

 

There is some tendency today, as there was in the Italy of the early Mussolini, to organise the community by giving to each trade or industry a separate collectivist control of itself through the employers and employees engaged in it …

 

Thousands of employers’ price-fixing and restrictive agreements by the late 1960s weren’t far off what Menzies had decried in 1942.

The C-word  (for cartel) pops up once in that book, in the economic essay by Henry Ergas (ex-OECD) and Jonathan Pincus (Adelaide University). Neither seeming familiar with pre-1974 cartels, they remark that wage moderation, “cartels” and trade protection generated high returns for many producers, and that, reportedly, widespread collusion allowed inefficient firms to survive and efficient ones to earn “supra-normal returns”.[31] That’s all you’ll find in 390 pages, apart from a footnote.[32]

Petro Georgiou’s 1999 lecture in the Menzies Lecture Trust annual series on liberalism is one of a number showing incompatibilities between St Robert and reality. Georgiou held Menzies’s former seat of Kooyong. He said, “Alongside Menzies’ philosophical commitments to enterprise and initiative, to the incentive to prosper and create, was a commitment to social justice. A commitment embracing a better distribution of wealth …” (my emphasis).

Menzies himself remained adept at concealing his hand, generally equivocating about cartels in public utterances. Certainly, federal constitutional powers over cartels were a vexed issue, but Menzies, unlike Barwick, had been content to let sleeping dogs lie. This is from Menzies’s 1951 election stump speech (emphases added):

 

We have, as a nation, pursued a policy of increasing costs by reducing the working week, by restrictive practices, by too much inefficiency, by hot competition in wages, by vastly increased social services. I do not say that these are all bad things; some of them, on the contrary, are very good. But if we want them, we must pay for them …

 

His syntax magically conceals whether price rings are good or bad.

In the run-up years to the 1961 election, Barwick began working up anti-cartel proposals, combining moral and economic justification. By 1960 inflation (4.5 per cent) was a further incentive against price-fixing. The Governor-General Viscount Dunrossil’s parliamentary opening for Menzies in 1960 included—as a second-last sentence afterthought

 

The development of tendencies to monopoly and restrictive practices in commerce and industry has engaged the attention of the Government which will give consideration to legislation to protect and strengthen free enterprise against such a development.

 

What? “Development of tendencies”? As if price-fixing were not already saturating the economy! Economist Alex Hunter at the time estimated there were 600 trade associations at work, two-thirds promoting collusive practices.[33]

In Menzies’s election policy speech on November 15, 1961, his “supplement” on restrictive practices included:

 

It would be most undesirable to have an elaborate system of government controls which restricted true development, efficiency, and enterprise. On the other hand, the public interest must be paramount; exploitation must not occur.

 

Barwick had not yet formed proposals, he said, and when finally cabinet made some decisions, there would be six months for submissions “so that no proper consideration will be overlooked”. Not exactly fighting words against cartels.

In April, Menzies had written to his family:

 

But the men who have under my Government enjoyed unexampled prosperity for ten years and have become accustomed to high incomes and a minimum of competition, are the first to complain if they find their profits and dividends declining even by a fraction. [emphasis added][34]

 

Note that Menzies is complaining about big-business owners’ ingratitude: he was not showing any principled concern about their officially-sponsored feather-bedding. (Buttressing the cartels were effective import protection rates for manufacturing in the late 1960s of 61 per cent for metal products; 52 per cent for paper and printing; and overall 36 per cent).[35]

Still, Barwick’s 1962 proposals were the high point for the Liberals in (hypothetical) anti-cartel severity. That lawyer’s draft even cracked down on fixed fees for lawyers. But the proposals met plenty of internal opposition. As the SMH’s political correspondent wrote, “There is a lot of doubt whether the Prime Minister was really convinced either of [Barwick’s plan’s] political wisdom or necessity …”[36] It was another five years—and one year after Menzies retired—before the public got even token government protection from cartels.

A mysterious anti-cartel speech was delivered in 1962 by backbencher Billy Snedden, the future Liberal leader. He was morally outraged about what he called the multitudinous, harmful and untenable cartels victimising the “defenceless public” through “virulent and obstructive practice”. He seemed to hint at a revolt by a ginger-group of Liberals if government inaction continued.

Of restrictive practices, Snedden said that “the refinements are as exotic as the fire from a cut diamond”. Fixes were disguised as “orderly marketing” or a “code of ethics”:

 

They raise prices; they restrict production; they boycott people out of business; they prevent others from competing; they concentrate economic power improperly; and they care not for the public interest …

… agreements by one group beget similar and usually intertwined agreements by other groups in the distributive process. In its worst form it fixes prices much higher than they need be. In the lesser form it fixes prices to allow a comfortable margin of profit without the risk of a loss.

 

Sanctions by the cartels—fines and expulsions—could drive transgressors out of business through denial of supply or refusal to stock the products.

 

Businesses divide into groups, each group interlocking with others to enhance the power of collective boycotts, and sharing of market and conditions of sale …

 

He warned that if the Barwick scheme was not rapidly implemented, the Liberals faced the threat of wilder, ignorant legislation by a Labor government criminalising business people with new laws “absolute in terms and extreme in penalty”. “Not only does the public want it [Barwick’s scheme] but the nation must have it,” Snedden said.[37] There was no love lost between Snedden and Menzies, who later described Snedden as “a good junior but a hopeless leader”.[38]

John Howard in his book The Menzies Era provides his own revealing take on Menzies’s distaste for his own government’s anti-cartel push. Howard, who in the early 1960s was a mere Liberal apparatchik, writes that Barwick’s anti-cartel proposals:

 

had a rough time, with Menzies ultimately stepping in, in response to business concerns that the plan was too interventionist … All of the major organisations reacted badly to Barwick’s proposals. Menzies was specially sensitive to the opposition of the Victorian Chamber of Manufactures, which had been highly critical of the Coalition in the 1961 election campaign … By the middle of 1963 the final shape of the legislation was still unresolved … Menzies publicly hinted at major changes, saying the tabled proposals “were by no means the last word” and promised a second look at the “sweeping, clumsy and autocratic plans of the Attorney-General”.[39]

 

Did Menzies really describe Barwick’s plan as “sweeping, clumsy and autocratic”? Howard gives no source. It would be incredibly disloyal and inflammatory of Menzies towards his eminent cabinet colleague. Regardless, Howard makes no bones about Menzies undermining Barwick’s efforts.

Menzies also had kind words for the conspirators of the New South Wales Chamber of Manufactures. Opposition Leader Arthur Calwell charged that Menzies had repudiated Barwick when addressing industry chiefs at a Chamber dinner in September 1963.[40] Menzies said their submissions were “the most balanced, sensible and impressive ideas” he had heard. Calwell’s translation of Menzies: “Let Little Gar have his fun, but don’t worry, Uncle Bob will fix it, boys!”

Barwick left politics for the High Court in April 1964, and the tatters of his anti-cartel proposals, after scores of debilitating amendments, were brought in next year. Cartels were given a further two years’ grace and then restrictive practices were merely subjected to registration and prolonged case-by-case examination—except for collusive tendering, which was banned.

Menzies retired, trailing his clouds of glory, in 1966. There are many reasons to praise Menzies’s policies and achievements. But please don’t bang on about his concern for thrifty and ambitious families. He didn’t care if business combinations—economic bandits—exploited them mercilessly.

Tony Thomas was Economics Writer for the Age in Canberra from 1971 to 1979, and wrote for BRW Magazine from 1981 to 2001.


[1] J.R. Nethercote (Editor). MENZIES -The Shaping of Modern Australia. Connor Court Publishing, 2016. p135-6

 

[2] Age 10/9/65, p2

 

[3] Age 17/7/65 p5

 

[4] AGE June 24. 1957 p7

[5] Restrictive Trade Practices Bill 1971, Second Reading debate from Nov 25.

 

[6] Australian Trade Practices: Readings. Ed JP Nieuwenhuysen, Croom Helm, London, 1976, p75

 

[7] SMH 2/4/71

[8] Billy Snedden, Hansard 16/8/62 p422

[9] Pengilley, Warren: Collusion – Trade Practices and Risk Taking. CCH, North Ryde 1978, p51.

 

[10] Pengilley, Warren: Collusion – Trade Practices and Risk-Taking. CCH Australia, North Ryde, 1978, p28

 

[11]

Trade Practices Commission, First Annual Report, 1974-75, p65

[12] JP Nieuwenhuysenm and NR Norman, Australian Competition and Prices Policy, Croom Helm, London, 1976 p19

[13] Sources: Miscellaneous including Royal Commissions, CTP annual reports, court cases, press reports.

 

[14] SMH 15/10/65 p34

 

[15] Review of the Liquor Control Act 1968, Vol 2, p684

[16] Round, DK and Siegfried, JJ. Horizontal Price Agreements in Australian Antitrust. Review of Industrial Organization, Vol. 9, No. 5, 10/1994, pp 569-606

[17] CTP second annual report, p8

[18] Hansard, 16/8/62, p424

[19] SMH, 18/2/63 p2

 

[20] Karmel PH and Brunt, Maureen: The Structure of the Australian Economy. Cheshire, Melbourne, 1962, p95

[21] Australian Trade Practices: Readings. Ed JP Nieuwenhuysen, Croom Helm, London, 1976, p176

 

[22] Westralian Portraits, ed Lyall Hunt. UWA Press, Perth 1979 pp287-95

[23] Age 10/3/72.

[24] Australian Trade Practices: Readings. Ed JP Nieuwenhuysen, Croom Helm, London, 1976, p31

[25] Tony Thomas, Age 28/4/1977 p21.

 

[26] Age 20/3/71, SMH 19/3/71, D’Alpuget, Blanche, Hawke: the Early Years, p277-86

 

[27] Age 1/4/71

 

[28] Age 26/11/65 p3

 

[29] Martin AW, Robert Menzies, A Life. Carlton, Vic. : Melbourne University Press, 1993/1999.

[30] Henderson, Gerard: Menzies’ Child- The Liberal Party of Australia. Harper Collins, Sydney, 1994

[31] J.R. Nethercote (Editor). MENZIES -The Shaping of Modern Australia. Connor Court Publishing, 2016. p152 and 158.

[32] Economist and regulation specialist Dr Alan Moran argues that cartels are not important in explaining inefficiency since they tend to implode from their internal tensions or can be undermined by new competitors. But cartels aided and enforced by government (e.g. the former two-airline policy) can have persistent harmful effects. Moran says that despite import protection, there is no evidence of super profits being earned, possibly because gains were leached off to organised labor. (Interview, 4/6/17)

[33] Australian Trade Practices: Readings. Ed JP Nieuwenhuysen, Croom Helm, London, 1976, p177

 

[34] Robert Menzies A Life. Vol 2 1944-1978. A W Martin, MUP 1999, p432

 

[35] Industries Assistance Commission, 1976, Assistance to Manufacturing Industries. AGPS Canberra.

[36] SMH 30/10/62

 

[37] Hansard, 16/8/62, p421-4

 

[38] Henderson, Gerard: Menzies’ Child- The Liberal Party of Australia. Harper Collins, Sydney, 1994 P186

[39] Howard, John, The Menzies Era. Harper Collins, Sydney 2014, p276

 

[40] SMH 17/9/63, p4

The Discordant Life of Paul Robeson

I’m one of a dwindling band who can say, “I heard Paul Robeson sing.” These days most people under sixty would respond, “Paul who?”

To answer that question briefly, Robeson (1898–1976) was the son of a former slave. He took up the cause of Negro liberation (like most of his race in the US at the time, he referred to himself as a Negro) from the 1930s, while achieving greatness in sport, acting, and especially singing folk and protest songs in his magnificent bass. He was also a militant Stalinist.

I was twenty when Robeson ended his 1960 tour of Australia at Perth. At 2 a.m. on Friday, December 2 he accepted a railways union invitation to sing at the Midland Railway Workshops at lunchtime. By noon, in a remarkable feat of logistics, the unions had mobilised a throng of 2000, including me. Robeson was a big black man wearing a curious black beret, delivering beautiful deep music from the back of a truck outside the workshop gates.

It was just coincidence, but my mother Joan the following year was with an Australian communist delegation to China and Russia, and in Moscow she was lodged at a dacha for the elite outside the city. She discovered that Robeson was secreted away in the same dacha complex. The unlikely explanation she was given was that he was being hidden from potential CIA evil-doers; he was actually hidden to conceal from the world the mental breakdown that began in the wake of his Australian tour.

When my mother died in 2008, my jobs included selecting the funeral music. After batting away numerous well-meant suggestions from third parties, I settled on Robeson singing “Deep River”. (I didn’t know then that “Deep River” had also been among the music for Robeson’s own funeral.) I gave the funeral director a CD including that track, and it played fine. But the funeral director let the CD run on to the next track, which to my horror was Robeson singing “The Killing Song”, from his 1935 movie Sanders of the River. Given that my mother had spent her life as a peace activist and stalwart of the Australian Peace Council, the lyrics were awful:

On, on, into battle, 

Mow them down like cattle! 

Stamp them into the dust! 

Kill, shoot, spear, smash, smite, slash, fight and sla-a-ay!

I flinched as the verses rolled on, but no one was paying attention, they were too busy chatting.

The favourite CD in my collection is Paul Robeson, The Legendary Moscow Concert. It was “legendary” in half a dozen different ways, some to Robeson’s credit, some not. That concert evening encapsulates many of the paradoxes of Robeson as a great man, a great talent, a great fighter, and a great hypocrite.

Angered by the toxic racism of the pre- and post-war US, Robeson made himself a champion for the thousand times more toxic regime of Joseph Stalin. Robeson’s lifelong principle was always to laud and never to criticise the Soviets. This was not the self-delusion of other “political pilgrims”; Robeson knew first-hand of the reality and lied through his teeth about it for the good of the cause.

The story of that concert in Moscow on June 14, 1949, is dramatic enough, but the back-story twists and turns like an over-plotted work of fiction.

Robeson was invited to perform at the Tchaikovsky Hall, Moscow, as part of celebrations for the 150th anniversary of the birth of Pushkin. Meanwhile Stalin, in his final spasm of butchery, was working up the “doctors’ plot” as a presage to a holocaust of Russia’s remaining Jews. The “plot” was that Jewish doctors were poisoning high-ranking party patients. The doctors were, unsurprisingly, confessing under torture. When a couple of them held out, Stalin commanded the interrogators to “Beat, beat, and again beat!”—a rare instance of the Lubyanka’s thugs being criticised for half-measures.

Robeson was friends with the Moscow theatre director Solomon Mikhoels and the poet Itzik Feffer, both Jews. He met them, in company with Albert Einstein, when they were fund-raising in the US in 1943 for the Soviet war effort.

In Moscow he was troubled by evidence of anti-Semitic purges, and asked his Soviet minders to arrange for him to meet Mikhoels. Robeson knew Mikhoels had mysteriously died—he had taken part in a memorial service for Mikhoels in New York. His minder said that Mikhoels, sadly, had died of a heart attack. The reality was that eighteen months previously, the MGB in Minsk had set up Mikhoels one evening via an agent, jabbed him with a poisoned needle, then bashed his temple in, shot him, and ran over him with a truck, leaving his body in the snow by the road, along with the body of their own unlucky agent. Stalin’s daughter Svetlana overheard Stalin on the phone directing that “car accident” be cited as the cause of death, although Robeson’s minders cited heart attack.

Robeson then insisted on meeting Feffer, who in fact was in the Lubyanka awaiting execution. Feffer was roused from his cell bed, tidied up, sent home to be dressed, then brought to Robeson’s hotel room. The room was bugged and, in any case, Feffer’s family were hostages for his good behaviour.

Feffer alerted Robeson—who spoke fluent Russian—to the facts by gestures and notes on scraps of paper, while conversing about innocuous matters. On one scrap of paper Feffer wrote, “Mikhoels murdered on Stalin’s order”. As for his own future, he drew his hand across his throat.

Robeson had to work out a discreet way to save his friend’s life. He had a powerful position—his farewell concert the next night was being broadcast live throughout the Soviet Union, and he had untouchable stature as a US friend of the regime.

His solution was to use the concert to send a coded message to Stalin himself, endorsing Mikhoels and Feffer by name, and the Jewish community in general. He could get away with it because the purge had not yet become explicitly anti-Semitic and he couldn’t be expected to know all the secret rules governing public behaviour.

The capacity audience included party bigwigs and Jewish intellectuals, both groups now living in fear of the midnight arrival of MGB vans. (The point of Stalin’s terror was its arbitrariness.)

Late in his concert, Robeson, in Russian, said he would dedicate a special encore, the song of the Vilna Jewish partisans, to his dear friend Solomon Mikhoels, “whose tragic and premature death has saddened me deeply”. He added to the shock by speaking of his pleasure at meeting Feffer, who he said was well and hard at work on his memoirs. There were gasps of astonishment—many there would have known Feffer was on death row. Robeson then said he would sing in Yiddish the song of the Vilna partisans, first translating into Russian a verse, “When leaden skies a bitter future may portend” that ends, “We survive!”

The audience was in an unbearable emotional state. Their very lives were on the line and here was Robeson fearlessly albeit indirectly deploring the purge.

After his unexpected encore, one brave woman stood up and applauded; the whole hall then erupted in waves of frantic applause. People broke down, weeping, or flung themselves tearfully into the arms of strangers.

Stalin waited three years, then executed Feffer anyway. The censors locked away the tape of the concert for half a century; it was released only in 1995, after the demise of the Soviet Union, minus Robeson’s provocative comments. The tape generated the CD, and with the CD I can now read the cover notes about Mikhoels and Feffer written by Paul’s son Paul Jr (1927–2014), and hear Robeson’s Yiddish song. I can also hear the first seconds of the fifteen-minute storm of applause, the rest of it snipped by the original censors.

But this rounded story, which so impressed me initially, unravels. First, Feffer had in fact been an NKVD/MGB informer since 1943, but got caught in the meat-grinder himself. Under interrogation, he falsely accused a hundred other Jews, but at his trial he had the courage to express pride in his Jewish identity.

Second, how was Robeson going to handle his knowledge of Stalin’s murderous ways, while remaining an advocate for the socialist paradise? He chose to lie about it, to deny the undeniable. On his return to the US, he told a reporter from Soviet Russia Today that allegations of Soviet anti-Semitism were wrong: “I met Jewish people all over the place … I heard no word about it.” He said the Soviets “had done everything” for their national minorities. “Everything” in reality included genocides of Cossacks, Ukrainian peasants, Crimean Tatars, Kalmyks, Volga Germans and many other minorities.

In his book published in 1950, a year after his Moscow concert, Robeson wrote:

The Soviet Union’s very existence, its example before the world of abolishing all discrimination based on color or nationality, its fight in every arena of world conflict for genuine democracy and for peace, this has given us Negroes the chance of achieving our complete liberation within our own time, within this generation.

He never again publicly mentioned Mikhoels and Feffer, nor criticised Stalin, whom he saw as safeguarding the interests of the downtrodden, especially Robeson’s “own people”.

Shortly after his Moscow concert, Robeson told Paul Jr the truth, but swore him to secrecy about it during his (Paul Sr’s) lifetime. An account of the Moscow hotel meeting with Feffer leaked, via the widow of film director Sergei Eisenstein. Paul Jr vehemently denied the account as “wholly false according to my father’s personal recounting of these events to me”. Paul Jr was also lying, but he recanted and told the truth in 1981.

Robeson viewed the Soviet Union as his “second motherland”, and even thought “first” might be more accurate. He began his visits to Russia in 1934, getting dizzying  veneration and opportunities, contrasting with the America of Jim Crow. He was even inspired to place Paul Jr in a Moscow school.

Paul Jr admitted that his father knew of the Ukrainian famine during his visit, but told him in 1937 that he couldn’t undermine the anti-fascist Soviet Union. Paul Robeson didn’t just ignore the Stalin-created Ukrainian famine, he lied his head off, telling the Daily Worker:

I was not prepared for the happiness I see on every face in Moscow. I was aware that there was no starvation here, but I was not prepared for the bounding life; the feeling of safety and abundance and freedom that I find here, wherever I turn.

Robeson’s position on the purges in the late 1930s was ambiguous. At the height of the terror he sided against the victims of the regime:

I can only say that anybody who lifts his hand against it ought to be shot! It is the government’s duty to put down any opposition to this really free society with a firm hand and I hope they will always do it … It is obvious that there is no terror here …

In 1952, when he’d become a pariah in the US, Robeson received the USSR’s highest honour—the Stalin Prize, worth US$25,000, an enormous sum in those days.

Even after Khrushchev’s denunciation of Stalin’s crimes in 1956, Robeson never criticised the dead vozhd (boss). When the Soviets invaded Hungary in 1956, Robeson supported them.

Robeson’s pro-Soviet advocacy turned US blacks against him, often in ways harrowing and humiliating for Robeson. In one 1951 incident in a Harlem bar, he told a famous black pitcher for the Brooklyn Dodgers, Don Newcombe, that Newcombe was one of his heroes. Newcombe responded, “I joined the army to fight people like you.” They nearly came to blows. One account has Newcombe being led out of the bar by one of Robeson’s quasi-bodyguards with a switchblade.

The nadir of Robeson’s career was his April 1949 speech at the Congress of the World Partisans of Peace in Paris, involving 2000 delegates, Picasso and luminaries such as Nobel-winner Frederic Joliot-Curie. The repercussions included the US government withdrawing his passport, trapping him in America from 1950 to 1958 and encouraging his blacklisting as a concert performer, which cut his income from US$100,000 a year to barely $5000. (Robeson did his 1960 Australian tour because he was offered a fee of US$100,000.)

So what did Robeson say in Paris? Immediately after the speech Associated Press reporter Joseph Dynan filed his report, which was picked up throughout the US press. It had Robeson purporting to speak on behalf of the 14 million US Negroes to the effect that they wouldn’t fight for the US against Russia in the event of a war. Mainstream Negro organisations disowned Robeson and protested their loyalty to the US. Robeson found himself isolated from both black and white America.

Dynan’s report quoted Robeson thus:

I bring you a message from the Negro people of America that they do not want a war which would send them back into a new kind of slavery … It is unthinkable that American Negroes would go to war on behalf of those who have oppressed us for generations against a country which in one generation has raised our people to the full dignity of mankind.

Robeson’s supporters claimed he had been stitched up by Dynan’s false report. They cite other, less damaging versions of his impromptu speech, such as the following, after translation into French and then back again into English:

We shall not put up with any hysterical raving that urges us to make war on anyone. Our will to fight for peace is strong. We shall not make war on anyone. We shall not make war on the Soviet Union.

There were half a dozen reports of the speech, all different. The closest to Dynan’s, in the UK’s Daily Worker, read:

It was unthinkable for himself and for the Negro people at home, that they should go to war in the interests of those who have oppressed them for generations, against a country which had shown there was no such thing as a backward people.

To me, as a reporter who has done hundreds of similar conference reports, the Dynan version is the most plausible. The role of a wire-service reporter is to get an accurate report filed as soon as possible. Dynan went straight from the hall after Robeson spoke, to write and despatch his copy. Dynan was an experienced professional and recent war correspondent in Italy. It’s a silly idea that he would delay to concoct a version to damage Robeson. The phrases in Dynan’s version are authentic Robeson. I’ve heard some of them on a tape of a private speech he gave in Perth eleven years later. Dynan couldn’t invent this Robeson-speak; he must have heard it.

Call it coincidence, but communist leaders elsewhere were expressing similar or more aggressive sentiments than Robeson. In Australia, for example, a month before the Paris conference, CPA general secretary Lance Sharkey said that “if Soviet Forces in pursuit of aggressors entered Australia, Australian workers would welcome them”. Sharkey got a three-year sentence for sedition.

Robeson provided only a muted denial of the AP report, saying that he was referring to Negro people globally as war-averse, not just to US Negroes.

The major controversy for half a century was whether Robeson was a Communist Party member or merely a supporter. He lost his US passport from 1950 to 1958 because he refused on principle to answer the question, “Are you now or have you ever been a member of the Communist Party of the USA?” Witnesses who testified that he was a member were attacked by Robeson supporters as government shills. Robeson’s sympathetic biographer Martin Duberman concluded in 1988, “On the most obvious level, he was never a member of the CP-USA, never a functionary, never a participant in its daily bureaucratic operation …”

But in reality Robeson was a CP-USA member for decades. The party had decided he would be more effective for the cause if his membership remained secret—disclose the fact and you’d be expelled. When CP-USA general secretary Gus Hall was serving an eight-year sentence in the 1950s on McCarthy-era charges of conspiracy to advocate the violent overthrow of the US government, Robeson campaigned for his release on civil liberties grounds, without of course disclosing his own party membership.

But in 1998, on the hundredth anniversary of Robeson’s birth, Gus Hall announced, “We can now say that Paul Robeson was a member of the Communist Party.” Robeson’s membership was, he said, “an indelible fact of Paul’s life, [in] every way, every day of his adult life”. Robeson’s most precious moment, Hall said, occurred:

when I met with him to accept his dues and renew his yearly membership in the CP-USA. I and other Communist leaders like Henry Winston, the Party’s late, beloved national chair, met with Paul to brief him on politics and Party policies and to discuss his work and struggles.

Paul Jr, himself a CP-USA member from about 1948 to 1962, was a practitioner of dissembling. But when his father was outed—along with himself—he put it succinctly: “If people want a politically correct hero, then Paul Robeson’s not the man.”

Robeson’s reputation has come full circle, from guarded respect up to 1945, vilification for most of the Cold War as a Soviet stooge, and now respect again, especially from the liberal media. A recent profile on America’s PBS television gave him a twenty-one-gun salute, managing to make no mention of either communism or the Soviet Union. I must say the contradictions involved with any assessment of Robeson make him a tough subject to handle.

Forty of Tony Thomas’s Quadrant essays have recently been published by Connor Court as That’s Debatable—60 Years in Print

Memories of a Bolshevik Baritone

The world didn’t know it and neither did I, but Paul Robeson’s free concert at the Perth’s Midland Railway Workshops was one of his last performances. Today, all these years later, even his affection for Stalin cannot diminish my affection for that rich, deep and wonderful voice

robesonPaul Robeson’s Australasian concert tour in late 1960 was not a high point of his career. He didn’t want to come – he preferred Ghana. He came only because concert promoters promised him $US100,000-plus for about 15 concerts over two months, equivalent to about $A1.3 million  today. His wife, Essie, wrote that they could “clean up some fast money, and then he can retire, and do only what he wants to do.”

For youngsters under 60 and unfamiliar with Robeson, he was the son of a one-time slave, an All-American football player, actor, singer, orator and activist for Negro emancipation. He was also a Communist love-struck for the Soviet Union. For many people, his  adulation of Russia and Stalin took the gloss off his prodigious voice (“carpeted magnificence”) and talent.

Robeson’s finances had been wrecked when the US government withdrew his passport from 1950-58, confining him to the US and blacklisting him as a performer. Before the ban he’d been earning a princely $US100,000 a year; after the ban he was lucky to make $US5000.

I heard Robeson sing on the last leg of his tour, on December 2, 1960 at the Midland Railway Workshops, 18 km north-east  of  Perth. I think this was the second-last concert of his long career, the last being his formal concert at the Capitol, Perth next evening.

My only other Robeson involvement was a month ago, when I found in Perth’s Battye Library a tape of Robeson giving a long private talk to the Perth branch of the Australian Peace Council.   I spent a few hours transcribing it for other researchers.

Listening, I got a real feel for his personality and philosophies, especially as he wasn’t self-censoring. Even in prose, his voice was full of music and he had an actor’s ability to make his anecdotes about his punch-ups on the football field come alive.  Sometimes, to illustrate a point, he’d break into snatches of song. These qualities disappeared as I reduced his performance to mere text on a page.

He told the Peace Council, “I was asked to go out at lunchtime to see the railway workers, sing to them, I said I would, it would be pretty rough to be in WA  and not go to the workers. I came from toiling laboring people. On the backs of my forebears was built the primary wealth of America, from which everything else had to flow.”

The chair of the Peace Council reception seemed to be a  church minister, judging by his Biblical allusions .[1] At least three ASIO agents were present to file reports. One table comprised Communist stalwarts, such as author Katharine Susannah Prichard, CPA (WA) secretary Sam Aarons and wharf leader Paddy Troy. Robeson joined their table briefly to chat with Aarons, whom he first met in pre-war Spain during the civil war.

Former Tasmanian Labor Senator Bill Morrow (1888-1980) had invited Robeson to Australia when they met at top-level soiree in Moscow of the World Peace Council in 1959. At least one of the two — Robeson — was a secret Communist Party member. Morrow, originally a railways worker,  faithfully followed the Communist line, but membership was never proved.  A 1951 speech of Senator Morrow against Western intervention in the Korean war was re-broadcast by Radio Moscow. As with Robeson, the government withdrew his passport. A bio-essay for the Senate by Audrey Johnson says Morrow met “outstanding figures in the peace movement” including  Zhou Enlai (peace-loving Mao’s offsider) and in 1961 Morrow won the   Lenin Peace Prize. Morrow also helped organize Robeson’s concert for construction workers at the embryo Sydney Opera House, where “huge, burly men on the working site were reduced to tears by his presence and his inspiration”. A high-quality film of the event is available on youtube.

Robeson came to Australia fresh from being lionized in East Berlin. He told the press there,  “The very basic thing to consider is what forces want peace and who the people are that say, ‘Get your bases out of here, you folks from the Pentagon…Let’s sit down with Khrushchev, we know that he is honest when he says, ‘We want disarmament in the world.’ Two years later, Khrushchev was deploying nuclear missiles in Cuba.

robeson germanThe  GDR gave him the German Peace Medal , an honorary doctorate,   honorary membership of the Academy of Arts, and the Robeson-only Order of the Star of International Friendship.  When the GDR’s top man, Walter Ulbricht, pinned it on his chest (left), “a mighty storm of applause broke out” and the  5000 in the hall joined in singing, “One great vision unites us.”[2]

Robeson’s Australian tour, in contrast, started badly when he got into verbal stoushes with eastern states reporters who queried his support for the Soviet crushing of the 1956 Hungarian revolt. He replied that the revolt was by ‘fascists’:

The Russians would ‘hammer out the brains’ of any country, including America, which took arms against them,  he said. In such a conflict, he would side with Russia. Wife Essie lamented that Paul ‘is angrier than ever  and it makes me shudder, because he is so often angry at the wrong people, and so often unnecessarily angry.’ He told an Australian friend that he was afraid to walk the streets in Australia – “He didn’t believe that the people here loved him”.  Essie gave her own interviews, taking pains to be gracious and friendly. But she wrote, “He resents everything I do, no matter what. So, I’m up to here. Period.”

A concert in Hobart was cancelled by sponsors. His promoters were in a panic that his interviews could alienate  wealthy concert goers and jeopardise returns. However, the NZ leg of the tour went smoothly after promoters asked the NZ press to avoid politics. The rest of the Australian tour, especially Adelaide and Perth, also went well.

By the tour’s end in Perth he was exhausted, though he pledged to return to Australia to take up the cause of his black brothers, the Aborigines, subjected to discrimination “in its most loathsome form” and even “extermination”. Arriving back in London from Perth he was so depressed that he took to lying on the bed in a darkened room with the curtains drawn. At one point the phone rang, with Fidel Castro on the line, and Robeson said he couldn’t come to the phone. A few weeks later Kennedy launched the Bay of Pigs invasion.

In March, 1961, Robeson abruptly departed London for Moscow — and slashed his wrists about 3am after a rowdy party in his hotel room. There were indications that some young people at the party had begged him to intercede for loved ones in the Lubyanka Prison, requests which could have put him into insoluble conflict. Other accounts reject that he was disillusioned with the Soviets. His son, Paul Jr (1927-2014), rushed to his bedside, but after 12 days  in Moscow, Paul Jr had a nervous breakdown of his own, hurling a big chair through the hotel window and nearly throwing himself after it. Paul Jr blamed CIA poisoners for the father-and-son breakdowns.

Robeson returned to London, where psychiatrists subjected him –  inexplicably –  to no less than 54 electric-shock treatments. Alarmed friends moved him to East Berlin, where he improved under a more humane treatment regime –  rather the reverse of  UK/East German stereotypes. He died of a stroke in his US home in 1976.

The above account provides some context for his Midland, Perth, concert. (The non-public-record intimacies are drawn from Martin Duberman’s  excellent but somewhat uncritical 1995 biography[3]).

The Midland workshops floor conditions were Dickensian, such as absence of safety gear amid the noise, smoke and dirt.  Key union reps were Communists, elected for their professionalism rather than their politics. Despite the odd fracas, management-union relations were not too bad, both sides doing a bit of play-acting.

My schoolmate from Perth Modern School, Mick Thornber, was a cadet there in the chemistry labs.  He says there was an attractive culture of good fun mingled with a can-do approach to difficult tasks — the tradies could do jobs, from making a split pin to reconditioning of a Crossley diesel loco’s 10-metre crankshaft.

“When the engine drivers marched through 100-strong to stop-work meeting, we in the lab would go outside and cheer,” he says.

A senior design clerk roasted his troops for unauthorized use of the photocopier to print sheet music. He blamed an accordion player because the paper that had jammed the machine emerged in concertina pleats. Similarly, a turner called Ron filled out a form to borrow a two-wheel trolley, reason “Moving house on weekend”. He got a rejection back: “A two-wheeled trolley would not be large enough for such a task.”

When Robeson came, Mick was working with fellow chemistry cadet Bruce Laffer, also from my school year. I was a third-year cadet at The West Australian (and CPA member 1958-62).  We were all 20.

Mick says, “Bruce was looking out the window of the lab which overlooked the entrance where Robeson arrived. He recognized Robeson there at the gate and said ‘Wow’ and was jumping around  stirring up everyone in the lab. We hurried out to see what was going on, and my first surprise was to see my friend  Tony Thomas in the crowd, probably with his notebook out [actually, I was off-duty that day]. There were only about 20 present initially, mostly management types who’d been forewarned about Robeson’s arrival.

“Then he cupped his hand to his right ear to get his pitch right and started to sing. That’s what I won’t forget, his voice was so powerful and it carried over the fence right into the workshops. The guys inside heard this singing and downed robeson midlandtools and poured out of the workshops.   Some of the Dockers’ barrackers can let go with the decibels but nothing like the power of Robeson’s voice.

“I do seem to remember he started by standing on a wooden box . The move to a truck tray must have followed that. (right)

“We thought it was funny as hell, Robeson mocking the management, who were actually reasonable fellows.”

Bruce Laffer adds, “We were too young and immature to get any sense of the workplace politics.”

So why wasn’t Robeson allowed inside?  The order came from the chief mechanical engineer, Bill Britter. He was within his rights, as the government had laid down that visitors could only speak inside if they were candidates for an imminent election. The unions had recently been taking liberties by inviting ad hoc Communist speakers, and Britter seems to have banned Robeson to re-assert his authority.[4]

We three all got some key memories wrong. Robeson did have a loudspeaker set up on the truck and he did have a pianist – although his contract specifically forbade accompaniment to ensure concert ticket sales weren’t undermined. Robeson told the crowd that they would get for free what wealthier Perth people would be paying high prices for at the concert at the Capitol Theatre on Saturday night. He may have reasoned that the tour was virtually over and the contract restrictions didn’t matter.

The key organizer of the meeting was unions rep Colin Hollett. I don’t  know what his politics were, but he was a long-time Robeson fan. He knew of Robeson’s penchant for worksite concerts and was angling for management approval for a fortnight before Robeson’s arrival. Hollett went to the Robeson’s hotel the day they arrived, but Paul was out and he asked his wife Essie, whose formal name was Eslanda, if Paul could sing for the Midland workers. She said, “He’s busy now, but I’ll mention it to him later.” Colin went home, and at 2 am he rang Colin and said he’d love to sing that day.”

In a splendid feat of organization, Hollett immediately got a telephone ring-around under way. But Britter maintained his ban, so Hollett had to launch a second ring-around  at 9am for the noon event.

They lined up a truck, public address system and facilities for the massive turnout, and the Mayor of Midland, Wal Doney, agreed to join Robeson on the truck and take him to a civic reception afterwards, a rare example on the tour of official endorsement. Robeson, in turn, must have organized his illicit piano and pianist, Larry Brown. “Half of Midland came and there were thousands there,” Hollett said.

Perth was still a sleepy city – the Pilbara boom was still five years from inception. Visitors of Robeson’s global stature were not frequent, and it seemed to me newsworthy that he gave his Midland concert from the back of a truck to an audience of about 2000. Maybe half were the workshop workers.  (The whole population of Midland was then 9000, now 4000 – the Workshops shut in 1994). However, my employer The West Australian, chose to give red-ragger Robeson only a pic and five bland paragraphs on page 14 next day. Sixteen years later, The West ran a respectful US-sourced, 25-paragraph Robeson obituary across three columns, saying his career “was virtually destroyed in anti-communist witchhunts of the 1940s and 1950s.” Today he is an icon for the liberal media, which airbrushes out his Stalinist pieties.[5]

As I write this, I have a Robeson CD playing, to remind me of what really counts about Robeson – his glorious voice celebrating the sufferings of his people.

Tony Thomas’s new book of Quadrant essays, That’s Debatable – 60 Years in Print, is available here. 

 

[1] The Australian Peace Council had invited Robeson to Australia in 1950 but the passport ban made it impossible. The parent World Peace Council, of which Robeson was a member, was outed in the Mitrokhin archives in 1999 as an anti-Western disinformation vehicle  90% financed by the Soviet Union

[2] “Days with Paul Robeson” – GDR booklet, 1960, in  Battye Library’s Robeson box.

[3] Duberman, Martin, Paul RobesonThe New Press, 1995

[4] The visit is outlined in a 2006 history of the workshops. The history drew in turn on Fremantle Labor MLA Simone McGurk’s radio interviews of the key participants when she was a media student at Murdoch University in 2002.

[5] On Stalin’s death in 1953, Robeson obituarised, in To You Beloved Comrade: “Forever will his name be honored and beloved in all lands. One reverently speaks of Marx, Engels, Lenin, and Stalin — the shapers of humanity’s richest present and future.  Yes, through his   deep humanity, by his wise understanding, he leaves us a rich and monumental heritage. … How consistently, how patiently, he labored for peace and ever increasing abundance, with what deep kindliness and wisdom.”

COMMENTS [7]

  1. Geoffrey Luck

    Tony continues to surprise us with his important contributions to the historical record. Journalists of today: Note the detail, the lack of “unnamed sources.”

  2. Richard H

    Perhaps it is because I am from a younger generation (born after the events described in this article), but I find there is something quite distasteful about this kind of misty-eyed reminiscence of a celebrity apologist for a mass-killer.

    As the article mentions, Robeson was the son of a one-time slave. This makes all the more repellent Robeson’s praise for Stalin and a system dedicated to the enslavement of all humanity.

    • Jody

      The singing of Robeson seemed to become a clarion call for the oppressed. Not for him the sonorous choirs of the Welch mining valleys or the plaintive chants of country and western; he blended music with politics but, in so doing, revealed his profoundly reckless naivete.

  3. johnhenry

    “I said I would, it would be pretty rough to be in WA and not go to the workers”

    Just wondering: Might that tape of Robeson speaking with the Australian Peace Council have been a bit scratchy? Could he have been referring to the WPA, the Works Progress Administration (later renamed the Work Projects Administration) established by the Roosevelt government c.1935?

  4. a propos

    Paul Robeson’s rendition of the”ol’ man river” from the “Showboat” was sublime.His political naïveté was something else entirely. Just to illustrate – here’s an anecdote from one of his visits to the then USSR, where he agreed to perform. He presented a program , including Negro spirituals as well as some Hebrew songs. The latter were declined with some alacrity by the organisers, people with “clean hands and warm hearts” as KGB was described at the time. Robeson was suprised at the ban and, after asking for the reason, was explained, in the best traditions of the Soviet obfuscation that there are no Jews in The USSR. “How many negroes do you have?” – Robeson wanted to know. THe answer is unknown.

  5. en passant

    Excellent article that balances Robeson’s talents with his failings.
    By all means condemn the bad, but celebrate the good.
    After all, Heydrich had a very dark side but was quite a virtuoso on the violin …

  6. denandsel@optusnet.com.au

    Without wanting to be too pedantic, Bolshevik bass would be more accurate than Bolshevik baritone because Paul Robeson had a bass voice rather than a baritone voice. He voice was magnificent, but his politics were as base as his voice was bass.

Summers in Winter

How could an online magazine featuring adulatory cover stories on Julia Gillard, David Morrison, Tim Flannery, Elizabeth Broderick and lots of the modern left’s politically correct pinups fail so dismally? It’s a mystery, especially after the free publicity lavished by the ABC

anne summers gillard coverPoor Left luvvie Anne Summers AO. Her luvvies have Left her, and she’s $180,000 in the red. She writes to me, as one of her 576 financial supporters[1],  that her irregularly-published Anne Summers Reports (13 issues) and her Anne Summers Conversations (eight) have folded. Even her cover story on failed prophet Tim Flannery[2] failed to profit. Imagine that!

That’s after we donors provided close to $100,000 all-up.[3] Anne says she achieved a lot, “especially considering the size of our team and how little money we had”. She goes on, “Regrettably, my search for a partner has not been successful and we do not have the funds to be able to continue … One final ask. Sadly we are in debt. I have an overdraft and other debts of $180,000 which I need to get rid of. If you feel able to help me reduce this I will be extremely grateful.”

Anne (we’re on first-name terms) has also canned her Illuminate project, “our proposed investigative series of high-quality writing about important subjects in Australian society. This series had been part-funded by the Cultural Fund of the Copyright Agency for which we thank them. (Sadly, we had to return the grant).”

Our call to the Copyright Agency to discover how much authors kicked in unwittingly to Anne’s project has so far not been returned. (The Copyright Agency has form in backing Leftist dud publications. It has lavished at least $146,500 on Meanjin, for example, including a whopping $64,000 donation in 2010. Recent grant recipients are listed here).

Source of Anne’s financial downfall was paying her writers, artists and photographers, and a part-time salaried assistant. “If we could not afford to pay for these, we could not afford to publish,” she says. “We had hoped the events might subsidise the magazine, but that turned out to be unrealistic.”

Anne launched Anne Summers Reports in 2012 with the help of a fawning interview by Richard Aedy on ABC Radio National soliciting donations of $10,000 from high net worth individuals. The ABC provided her venture with a special waiver from its guidelines forbidding commercial advertising. [4]

Aedy and Summers – whose partner, Chip Rolley, is editor of the ABC’s The Drum — were very persuasive. As a high net worth individual myself,  I emailed Summers, hinting at one of those $10,000-plus personal donations in exchange for a position on her advisory board. Within minutes Summers was in touch about my “most welcome offer”.  We never consummated our liaison and a frustrated Anne gave me an unflattering  pen-portrait in the March, 2013, issue.

The magazine attracted 16,500 subscribers. “I am touched to report, new people are signing up even as I write this. It is clear that many people crave the sane, factual, relevant magazine we were proud to produce,” she says. But subscribers’ cravings, obviously, haven’t extended to paying anything.

Advertisers were less attracted, indeed almost invisible. One of the three advertisers she thanks is the taxpayer-funded Australian Film, Television and Radio School.

Anne says modestly that her ticketed Conversations “will live forever as testament to our vision”. Apart from Gillard and Flannery, Anne’s “Conversation” partners included General David Morrison, now “guy”-bashing Australian of the Year, and almost certain winner of the Daily Telegraph’s blogger Tim Blair’s Frightbat of the Year 2016 contest.

Another conversationalist was Elizabeth Broderick, ex-Human Rights Commissioner and author of loopy but neverthe-less-implemented proposals to feminize the Australian Defence Forces, hitherto afflicted, Broderick reported, by a “warrior culture”.

The magazine has had such emetic cover stories as beauteously-photographed Julia Gillard; ‘“General Morrison’s revelation – ‘This was not the Army that I loved and thought I knew’”; “Seriously, Cate Blanchett”; and the University of Queensland’s number-tickling smiter of climate deniers John Cook.

Anne’s literary suicide note yesterday did not mention her three-day conference about herself last September, tickets going for $330. That event celebrated her authorship 40 years ago of, as I recall, Damned Whores and God’s Police.  The list of engrossing sessions included “Viva La Vulva”,  “Sex workers, sluts and deviant women” and the epochal “Feminism Today: From Suffragettes to SlutWalkers and beyond”.

Actually, there were 14, not 13 issues, of the magazine, which featured, Anne said, “meticulous editing”. The  bumper 90-page Issue No 13 last August 20, “our strongest yet”  had to be e-pulped  because of mysterious “errors”. It was re-published four days later as “we hope! – an error-free copy”, Anne apologised.

Vale Anne Summers Reports. Vale Anne Summers Conversations. And vale Anne’s $180,000.


[1] $3

[2] Flannery 2004: “Sydney could glimpse its future by looking at the devastating impact that global warming had already had on Perth, which he said was likely to become a ‘ghost metropolis’.” Warragamba Dam is currently 98% full and Sydney is on flood alert.

[3]  Anne also had 21 “angels” giving her monthly stipends. They were led by ex-governor-general and Bill Shorten’s mother-in-law Quentin Bryce.

[4] 15.2.2  Publicity for individuals, organisations or products should not be given, and the presentation of identifiable or clearly labelled brand products or services should be avoided. For example, contact details or repeated references to the trading name must not be broadcast or published, nor the place where goods or services may be purchased. 

COMMENTS [5]

  1. Mr Johnson

    For years, the Left have been demanding more and more free stuff. Just damned frustrating and awkward, when it extends to their own product.

  2. Augustusoz

    “.. subscribers’ cravings, obviously, haven’t extended to paying anything.” Exactly. If Anne et al didn’t think about the fact that “Why should I pay for it? Someone else should pay for it” is the standard leftist position, then she/ze/they/it deserve everything they ended up getting. Or not getting.

  3. Jody

    Poor old Anne; somehow she’s mentally never left Deniliquin. She always gives me the impression she’s just arrived from there into the big city and recently discovered what ‘feminism’ means – and she’s having some of it. All the while she’s a country girl with tarts on her mind.

    Well, I won’t be having what she’s having!!

  4. en passant

    Surely, just surely she could get a $60K ‘Arts’ grant by promising to stack shelves somewhere until she has paid back the remaining $120K?
    To pay off the rest she could promise never to publish or be heard again in public. With that promise in writing the debt would be gone in a flash.

Nauru’s Case Study in Corruption

The phosphate deposits that for a few brief and gloriously mis-managed years made the island nation one of the richest plots of real estate in the world are all but gone. That’s a pity, as you will find more decency and honesty in a pile of bird droppings than amongst the basket-case state’s larcenous elite

nauru IIIn the Fawlty Towers episode featuring the German guests, Sybil warns Basil, “Don’t mention the war”. Similarly,  all parties in Australia’s federal election campaign whisper, “Don’t mention the corrupt and vicious governance of Nauru”. Focusing on how corruptly Nauruans govern Nauru  would detract from the Coalition’s success story of stopping the boats.

Labor’s Bill Shorten, meanwhile, is trying to persuade Australians that he would continue stopping the boats, likewise by quarantining the boat people on Nauru (and, if legally permitted, PNG’s Manus Island).

The Greens, along with starry-eyed clerics and do-gooders, hate the Pacific Solution. They want us to welcome boat people regardless of numbers, whether 50,000 or five million. Their arguments focus not on the Nauru regime but on the cruelty of Australia’s offshore internment camps. (The occupants nonetheless seem to enjoy high-standard education, medicine, internet access, diet, leisure activities etc., all at vast cost per head to Australian taxpayers).

Personally, I agree that the Pacific Solution  stops the boats and related drownings. I just don’t like the unintended side-effect of bankrolling Nauru’s local elite.

This essay covers Nauru, not Manus. But for the record, 466 detainees (including about 50 children) were on Nauru last May 31, and  847 were on Manus.  Combined costs for the two centres are about $1b this year.  Assuming the next Australian government continues to stop the boats, the detention costs will fall to a projected $400m over the next few years.

The history of Nauru’s roller-coaster to 2012 of rags, riches, rags and riches again is covered in my book That’s Debatable (May 2016)[1]. Further inspection of the past four years’ Nauruan politics doesn’t suggest the appearance of any broad sunlit uplands. For example, Nauru’s Minister for Justice, Border Control and Finance is Mr David Adeang. In April, 2013, in the garden of their home, Adeang’s wife Madelyn burnt to death.   A brief police statement said she was carrying a bucket of petrol that ignited. But there has never been a coronial inquiry. The island’s resident magistrate and coroner, nicely-named Australian expat Peter Law, considered the police statement “woefully inadequate” [2]  and began preparing a coronial inquiry.  Adeang in January, 2014, ordered Law’s arrest and deportation.  Law told the ABC that there were no crime scene photographs or witness statements. Local police investigating the death were “scared of Mr Adeang”, Law said, and unwilling to interview the powerful politician.

Nauru’s chief justice was another Australian expat, Geoffrey Eames QC. “I was proposing to fly to Nauru and the government simply told the airline company not to give me a ticket as my visa had been cancelled,” Mr Eames said, naming Adeang as the visa canceller. Eames then resigned his post, telling the media:  “The police obviously did not have the enthusiasm to conduct an inquiry. That’s a pretty alarming state of affairs.”

Adeang’s PR agent, Lyall Mercer, threw a hissy-fit when asked by the ABC for comment, and Adeang himself failed to respond.[3]

How Adeang and his cronies came to power is a story in itself. The island nation’s president to 2010 was Marcus Stephen. But the hidden force in Nauru politics has long been Gold Coast-based conglomerate Getax Australia, the main purchaser of Nauru’s remaining phosphate. Like any business, it prefers to buy cheap and sell dear. In 2008, when then world phosphate price was near $400 a tonne, Getax was paying as little as $43 a tonne. In its early years with Nauru phosphate, it was reportedly turning over $150-200m year trading the phosphate to India for fertiliser.

Marcus Stephen would not play ball with Getax. The company’s response was to dangle an $25 million loan to the semi-broke government at 15% interest, allegedly in the expectation of a defaulton some onerous clauses. Default would enable Getax to take over the phosphate industry, putting it commercially in what you might call a dream scenario. President Stephen rejected the loan offer.

The leaked emails show Getax in January, 2010, financed a lavish 14-day overseas junket for half the members of Parliament. Three of Stephen’s MPs from the junket then voted against him, creating a 9-9 Parliamentary tie and crises involving new elections. Quite a few MPs on pay of $150 a week somehow managed to buy upmarket boats and cars and roll out handsome sums to heads of voting families, according to  Stephen.  Adeang’s forces finally brought down the Stephen government in mid-2013.

New President Baron Waqa was fingered in the leaked emails  as getting $60,000 in Getax cash in 2010, with various other MPs accepting $30,000, allegedly as campaigning assistance for the impending elections.[4] Adeang, according to the alleged email trail, was getting $10,000 a month from Getax in 2009 and 2010. Adeang complained in a July, 2010, email that those who received the payments were “not focused enough on the work at hand”, being more interested in “shopping, horse-betting, the national airline refusing to transport all their cargo to Nauru, and other rubbish.”

The ABC claimed that the emails show Mr Adeang soliciting an additional $665,000 in Getax payments for himself and other Nauruan politicians.

The emails also reveal a plot to overthrow the Nauru government in 2010. Adeang, in the opposition in 2009, allegedly told former Getax director Ashok Gupta[5]: “We can create a new business relationship that can take this country to a higher level of development and, of course, taking also your business to even more success”. He continued that he had the support of a number of other MPs prepared to desert the government.

“We give you full authority to mobilise or lubricate the MPs to secure the vote and win the battle,” Ashok Gupta allegedly replied.

Adeang also allegedly suggested Getax could take over the island’s phosphate business entirely: “It will not be easy. But as a business in the long term it may be ideal.”

Getax director Gupta[6], asked Mr Adeang to prepare a “full business proposal” but was stymied by the Nauru government.

Former president Sprent Dabwido – recently locked up for a month — views any selling out of the island’s only national asset as “close to treason”. It  would cripple the island, merely so that Adeang could get $60,000 or so for campaigning, he charged.

Nauru’s police commissioner at the time was expat and  former Australian Federal Police officer Richard Britten. He began an investigation into the alleged bribes and was promptly dismissed by the Waqa government. Both the NZ and the Rudd Australian governments expressed concerns about the alleged bribery.

Waqa, Adeang and Getax have denied they did anything wrong, describing the bribe allegations variously as a slur, ridiculous and offensive.  The allegations involved Nauruan domestic affairs and were of no interest to the people of Australia, a Nauru spokesman said. The Justice Minister does not like the Australian press. He said last year, “The Australian media approaches us with great arrogance and an air of racial superiority, which is highly offensive to us. They do not show us the respect of a sovereign nation and, in return, we have little respect for them.”

Expats – mostly Australasian – have filled most of the difficult official positions on Nauru. If they annoy the politicians, they get sacked and deported. It’s happened to dozens of them.

The Waqa government has now Soviet-style laws involving  seven years goal for ‘stirring up political hatred’. Five opposition MPs are banned from attending the previously 19-member Parliament (because they had “criticized the government”). The Waqa government now enjoys quasi-dictatorial power.

All this was too much for New Zealand, which had been providing $NZ1.1 million a year for the Nauru justice sector, largely to support independent expat investigators and judiciary. Last September, with unanimous Parliamentary support, it stopped its funding because it didn’t want to be tainted by association with Nauru’s disregard for human and political rights. In contrast, Australia’s foreign minister Julie Bishop, mindful of our detention centre’s needs, issued only mild criticism.[7]

So far, the Waqa government has

  • Arrested   former Nauru president and current MP Sprent Dabwido at a rally[8] and held him and another opposition member in custody for a month. Dabwido was released after suffering a heart attack.
  • Cancelled the passport of opposition MP Roland Kun, who is already banned from Parliament. The passport ban means he can’t see his family in NZ, where he is the breadwinner. Nor can his family return from NZ to Nauru (Kun’s wife Katy Le Roy, was legal counsel to the Parliament).
  • Raised the fees for election candidates by 2000%, deterring   low-income people from standing.
  • Imposed a prohibitive $8000 non-refundable Visa application fee for journalists, effectively keeping them off the island. The Australian’s Chris Kenny did get to the island last October, the first journalist to be accredited to visit since 18 months previously, and achieved some good scoops. [9] In February this year the Nauruan government claimed an ABC  journalist had  misdescribed himself as eligible for a tourist visa. It then booted tourist-visa passengers off a Nauru Airlines flight from Brisbane but refunded their fares. The ABC denied it had ever sent a journalist in tourist-mufti to Nauru.
  • Raised business visa fees to $8000,   deterring Nauruans wanting expat legal help. Some visa applications from lawyers have been rejected outright.
  • Appointed three new judges whom Waqa claims will vigilantly investigate past corruption.
  • Told its internet provider, Digicel, a year ago  to shut off access to Facebook and prevented Digicel’s general manager returning to  the country. The US protested but Australia didn’t. The Nauru government claimed to be combating Facebook pornography but the ban also stifles political comments.

The New Zealand Law Society’s rule of law committee president Austin Forbes QC described the Nauru situation as totally unsatisfactory:  “MPs being held in prison, not allowed to leave the country, chief justice sacked, not allowed to have a lawyer come into the country to defend anyone charged with an offence — you have to do something.”

Just how much detention-centre cash Nauru politicians are now acquiring for themselves and their country is hard to say. Joanna Olsson, the Nauru Information Office director, emailed Quadrantyesterday (16/6/16) that she doesn’t yet have e-copies of the Nauru budget papers “and will take a while to get (them) from parliament. Will let you know when we have them.” Australia’s Foreign Affairs Department has disclosed that total Nauruan revenue this fiscal year is about $115m, including detention centre windfalls.

Nauru has supposedly set up, or plans to set up, a trust fund to “bank” profits from the centre to spend in future lean  years. I’ll believe that when I see it. (Nauru once had a trust fund of phosphate profits that, strangely, simply disappeared).[10]

Our billion-a-year on detention centres is nearly all “boomerang money”, going back to Australian suppliers – e.g. Transfield, contractors and staff, and well-remunerated public servants.    (All costs per capita of detainees  are rising because we’re trying to give them comparable medical and education as in Australia).[11]

Last year our big-ticket  items on Nauru were garrison and welfare, $320m; charters, $25m; escorts $9m; healthcare $25m; family and child support $26m; and visas $15m. Plus $35m for departmental staff and supplies. Australia also pays for  side deals involving Nauruan administration, police and infrastructure. Nauru charges Australia extortionate visa fees  of  $1000 a month per detainee.  That would be $6m collected this year and a higher amount in previous years. The business visas at $8000 a pop are another nice earner.[12]

Nauruans have about 600 jobs thanks to the centre.  That’s more than one job per detainee. Until last October, Nauruans paid no income tax, but now top earners pay (or are supposed to pay) a flat 10% rate. On the other hand, the Australian cash bonanza is causing inflation and  eroding welfare and fixed incomes.

Nauru’s debt  from the squander-era has become a surprisingly low figure, largely because a lot of debt from the failed Bank of Nauru has been written off. An official study recently put debt at under $30 million, and it could be fully paid off in a year or two. However, there is also more than $50m in Yen debt that is subject to litigation. So worst case is debt in the range $50-100 million.

Nauru does not have political parties. Instead, the population of 11,000 is governed by “elders” of the dozen clans represented by the 12 points of the star on the Nauru flag.  Traditional culture involves unlimited respect and obedience to these elders. Not one has ever been held to account for the waste and corruption of the island’s previous multi-billion-dollar windfall.[13] The elders’ concern for clan welfare is suggested by the fact that a decade ago, a quarter of kids were stunted from malnutrition and half the kids under five were anaemic. Next to nothing had been spent on local health, education, infrastructure, and development. Social conditions continue to be appalling, with low education levels and  health, heavy smoking, obesity (80% of Nauruans – possibly a world top proportion), diabetes (40% of adults) and booze-fuelled wife-bashing. At election time, poor families are suddenly given wads of cash, so I suppose that’s trickle-down welfare.

It’s significant that Australia’s aid program even now is targeted to what DFAT calls “poverty reduction” and training of Nauruans for proper jobs  still being done by expats.

The Nauruans are cavalier about their high birth rates (3.70 children per mother, one of the highest in Oceania[14], despite living on a micro-island where even drinking water has to be shipped in. Their best asset is their ridiculous status as an independent republic, ninth smallest by population (11,000, one-tenth the number of my Mooney Valley shire here in suburban Melbourne) and sixth-smallest  by area (a Rottnest-sized 21 squ km). This enables them to trade their vote in the corruptUnited Nations and international agencies such as AOSIS — 43 small island states acquiring First World guilt funds by pretending they are drowning from climate change.[15]

Our official aid to Nauru runs at about $25m a year, equal to nearly a quarter of the Nauru government budget. That aid for infrastructure and services is supposed to be quarantined from Australian spending on detainees.

The aid comes with a warning that programs will stop if it’s mismanaged, with DFAT insisting that “the Governments of Nauru and Australia will maintain a zero-tolerance approach to fraudulent and corrupt actions against Australia’s development program with Nauru.”

Good luck with that!


[1] “The Naughty Nation of Nauru”, pp229-238

[2]  Law said of the petrol-bucket theory, “It was about three or four paragraphs of a description about what they [police] say had happened, and what they say had happened was dependant on what they had been told by people they’d spoken to.

ABC reporter: Which was the Justice Minister?

Law: That was the Minister for Justice, yes.”

[3] The ABC, including ABC Fact Check, deserves full marks for its sustained and aggressive coverage of Nauruan internal affairs.

[4] “Documents obtained under freedom-of-information laws by Fairfax Media reveal that in 2013, AFP investigators running an Operation codenamed Zurzach uncovered strong evidence that senior Nauruan politicians had been bribed by a Gold Coast mining company, Getax.” SMH 8/6/15

[5] Ashok Gupta is listed by ASIC as director of Getax Australia Pty Ltd , registered at Bundall Qld., from 1997 to 2001.

[6] Amit Gupta is listed by ASIC as current director and secretary of Getax Australia Pty Ltd. He became director in 1997 and secretary in 2001.

[7] Incredibly, a federal government agency issued a report a year ago on outcomes of financing the  training of lawyers and court administrators on Nauru. It did at least admit that one course never finished because of “in-country circumstances”.

[8] According to the Nauru government, it was an illegal ‘riot’.

[9] Kenny this week told the ABC “(Nauruans) are offended when people criticize their island. I understand that. They love their island…they are very proud of it, they  choose to live their lives there. We should be fair to the Nauruans and not run down their country” [at 23.30mins].

[10] A big waster of the original Nauru fortune was Air Nauru, that used to lose $40-80m a year. It was relaunched as Nauru Airlines, now with five Boeing 737-300s and nine destinations – Brisbane plus Fiji and seven tiny islands.  This is becoming comparable with the old Air Nauru, which at its peak had seven planes and 19 destinations.

[11] Note the brouhaha by demonstrators and staff at Brisbane Children’s Hospital last February when a detainee’s toddler with burns was taken there.

[12] There is some poetic justice in Nauru screwing Australia. We administered Nauru from 1920 as part of a “sacred trust” handed down by the League of Nations. The “sacred trust” in practice involved creating a British Phosphate Commission (BPC) to sell phosphate to Australia, Britain and New Zealand at a third of the world price, with royalties to Nauruans at a halfpenny a ton.

[13] For example, a police chief bought himself a yellow Lamborghini to traverse the island’s 24 kilometres of paved road, but he was too fat to get into the car.

[14] The Nauru Bureau of Statistics estimates the population will increase to 20,000 in 2038

[15] Her Excellency UN Ambassador Marlene Moses of Nauru was previous AOSIS chair to 2014, current chair is   the  disreputable state of Maldives.

COMMENTS [1]

  1. en passant

    Tony,
    It is many years since I had dealings with Nauru through Air Nauru, and it was a difficult relationship. What you are exposing is nothing new, but let me add: in the 1980′s the Oz government (as well as the UK) paid $m’s in compensation for the environmental damage that had resulted from the ‘guano’ phosphate mining. I believe that part of this money was used to buy Nauru House in Collins St in Melbourne, the rest was appropriated by deserving souls or squandered. So, on a regular basis since then the Nauran government has thrown insults at Oz and demanded endless compensation for what is apparently (from your expose) the result of political malfeasance and a purely commercial transaction.