Saturday, July 10, 2010

Jack Lang, Part 1

(The following article, in 3 parts, is a repost of a past email..  It is worth reading, although lengthy, and is a fascinating and momentous part of our history).

A dismissal by the Queen’s representative of an elected government in Australia and a global economic downturn resulting in significant adverse effects in Australia. Sounds like the dismissal of the Whitlam government in 1975 and the recent global crisis, doesn’t it? But these two events happened earlier in Australia’s history and involved a man who was both loved and reviled, Jack Lang.

I have been reading Gerald Stone’s book 1932: A Hell of a Year and I can heartily recommend it to those interested in history, particularly Australian history, and to those who think that all politicians are a bunch of dishonest, amoral, opportunistic, selfish bastards.


1932 was a momentous year: the Great Depression, the opening of the Sydney Harbour Bridge, possible rebellion by the New Guard, the Commonwealth v NSW, the Bodyline Tour, the death of Phar Lap and the passion and the conflicts of Jack Lang.

Before hearing Gerald Stone on radio being interviewed about his book I had only a sketchy knowledge of Lang. I knew that the dismissal of his government by the Governor Sir Philip Game had been used as a precedent for the sacking of the Whitlam Government and I thought that he was one of Labor’s beloved sons. The interview prompted me to buy the book. The book prompted me to read further. The reading further has prompted me to want to share it with you.

I am surprised that a movie or TV miniseries has not been made about the man, known as The Big Fella both because of his height (6 feet 4 inches or 193 cm), his actions and his approach to matters, especially in that much of his experiences have been repeated or face us again today.

Childhood:

Jack Thomas Lang was born in Sydney in 1876, the sixth of 10 children of an Edinburgh watchmaker and a mother formerly from Ireland. His parents were impoverished, his father being frequently unable to work because of chronic illness. At age 7 his father developed rheumatic fever and Lang went to live with an uncle in Victoria. His schooling finished at age 13 because of his clashes with teachers. He returned to Sydney and worked at various jobs to assist in supporting his family: selling newspapers, working on a poultry farm, driving a horse bus and serving in a bookshop.

Despite his efforts and those of his mother in selling jewellery from house to house, the poverty of the family forced them to move to the city’s slum area. In Lang’s view, much of the blame lay with the bankers who refused to assist, an outlook that affected him for the rest of his life.

Early career:

Lang had become interested in politics from the age of 14, during the banking crash in the 1890’s. He frequented radical bookshops and helped print newspapers and publications for the newly formed Labor party which contested its first NSW election in 1891.

At the age of 19 he married Hilda Bredt, the 17 year old daughter of Bertha Bredt (pictured below), a prominent feminist and socialist. This made him a brother in law of Henry Lawson (below), who was married to Hilda’s sister.



Following a stint in an accountancy practice, he became the manager of a real estate agency in Auburn, then semi rural and popular with people who wanted to escape the city. He soon set up his own estate agency and lived in Auburn for the rest of his life.

Lang was elected to the local Council and held the office of Mayor from 1909-1911.

In 1913 Lang was elected to the lower house of State Parliament, the Legislative Assembly, for the seat of Granville and served as a backbencher. Labor was returned to power in 1920 and Lang was appointed Treasurer from 1920 to 1922, managing to significantly reduce the post World War 1 deficit. To tackle unemployment he ordered a spate of roadbuilding.

From 1920 to 1927 he was the member for Parramatta.

In 1923 Labor lost government to the Nationalists, Lang then being elected leader of the State Labor Party.

In 1925 Labor was returned to government and Lang became Premier of New South Wales.

Lang’s first term:

During his first term as Premier, Lang’s government introduced a number of reforms and social programmes, including:

- state pensions for widowed mothers with dependent children under fourteen;

- a universal and mandatory system of workers' compensation for death, illness and injury incurred on the job, funded by compulsory premiums levied on employers;

- the abolition of student fees in state-run high schools;

- improvements to various welfare schemes such as child endowment.

Other steps taken by his government included:

- improvements to major roads, including the paving of much of the Hume Highway and the Great Western Highway;

- restoration of the seniority and conditions to NSW Government Railways and NSW Government Tramways workers who had been sacked or demoted after the General Strike of 1917, including Ben Chifley, a future Prime Minster of Australia;

- establishment of universal suffrage in local government elections - previously only those who owned real estate in a city, municipality or shire could vote in that area's local council elections.

His attempts to abolish the appointive upper house of the NSW Parliament, the Legislative Council, were unsuccessful.

Lang’s government lost the election in 1927.

All of the above had been carried out over a 2 year period.

Between 1927 and 1930 Lang was in opposition again.

Lang’s second term:

The Depression

The Great Depression took hold in 1929 and hit NSW hard. More than one in five adult males was without a job in 1930.

A NSW dole camp during the Great Depression

In 1930 economic thinking on how to deal with the depression was quite different to economic thinking and strategy today. There was no economic stimulation, no government grants, no trying to get money flowing and people spending. Instead, the thinking was to reign in the budgets and spending. Governments cut their spending, cut civil service salaries and cancelled public works.
Lang’s view on the economy was the reverse of the then current economic thinking, the views of the Federal Government and of the Prime Minister, James Scullin. Ironically, Scullin was also Labor, as was the Federal Government. Lang was also opposed to the suggestions of retrenchments and government spending cuts made by Bank of England representative and adviser to the Federal Government, Sir Otto Niemeyer. According to Niemeyer, thrift and good management, a balanced budget and elimination of deficits, would be the cure, would inspire business confidence and renewed investment. His policy favoured cuts in public works, cuts in social services and government spending, and cuts to wages and pensions, irrespective of such policies causing much more unemployment, more business failures and more factory closures. Nonetheless that was the thinking of the day. The opposite view, that more public spending was needed to revive stagnant economies, had been propounded by more radical economists such as John Maynard Keynes but was not yet accepted. At a meeting with Niemeyer in August 1930, the Prime Minister and the leaders of the States fell into line with Niemeyer, the agreement becoming known as the Melbourne Agreement.

James Scullin

Sir Otto Niemeyer

Jack Lang
Gerald Stone writes that although Niemeyer was undoubtedly sincere in wanting to help Australia out of its depressed economy, he had a serious conflict of interest in that “he was also on a mission to protect the hundreds of millions of pounds in British loans accumulated over the years, making sure they continued to return regular dividends until they could be repaid in full.” (Stone, page 14).

In 1930 the economic and social climates were quite different to what they are today. Gerald Stone points out in his book 1932 that Australia still acted with deference to England and still regarded itself very much subordinate to the English Crown and the King.

Furthermore, Australia and the Australian States were heavily indebted financially to England:
Amid the hardships of the depression, many other nations were finding it necessary to delay payment on their borrowings or default on them altogether. Britain itself had persuaded the United States to grant a 40 per cent reduction in the amount due annually on its mountain of war debts. The British, though, did not see fit to offer any such concession to Australia. Their loyal Dominion down-under still paid premium rates on some £90 million - $6.3 billion - in war loans accrued during 1914-1918. Perverse as it may seem, most of that money was borrowed to repay the ‘Mother Country’ for the expense of billeting, feeding, equipping and transporting the young Australians sent to the killing fields of Gallipoli and France in her defence.

- Gerald Stone, 1932

(Note: Unless otherwise sourced, indented quotations are from Gerald Stone’s book 1932)
Lang opposed the measures proposed by Niemeyer and Scullin. In October 1930 he was elected to government again on a platform of opposing the Melbourne Agreement, carrying out extensive public work to create jobs, overturning earlier cuts in public service pay and finding markets for farm products. He won 55 of the 90 Legislative Assembly seats.

As Premier, Lang refused to cut government salaries and spending; passed laws restricting the rights of landlords to evict defaulting tenants and paid the legal minimum wage to all workers on relief projects.

The Premiers’ Plan and the Lang Plan:

By February 1931 the Federal Government and the State Premiers had come to the realisation that the Niemeyer proposals would need to be implemented in stages. This strategy was known as the “Premiers’ Plan” and it also called for even more stringent cuts.

Lang was wholly and totally opposed thereto, both because he believed it to be the wrong strategy for economic recovery and because of the adverse consequences that would flow from it for much of the population.

At the Premiers’ Conference in February 1931 Lang proposed his own radical plan for economic recovery. Known as the “Lang Plan”, it called for:

- repudiation of interest payments to overseas creditors until domestic conditions improved;

- the abolition of the Gold Standard to be replaced by a "Goods Standard" where the amount of money in circulation was linked to the amount of goods produced; and

- the immediate injection of £18 million of new money into the economy in the form of Commonwealth Bank of Australia credit.

Stone points out that at that stage £36 million, over $2.5 billion, was leaving Australia every year to meet interest charges. This was enough to put half the nation’s unemployed back to work.

Quite simply, Lang wanted to default until conditions improved, to look after Australia’s own first and British bondholders second.

The Prime Minister and the Premiers rejected the Lang Plan.

The Premier of Western Australia, Sir James Mitchell, declared that:
I desire to disassociate myself from every word and every sentiment uttered by Mr Lang. Australia would be discredited in the eyes of the world. It is repudiation. I know the rate of interest is too high, but we have agreed to pay it. We must pay it.
His view was a common one. Australia was legally required to pay the interest to Britain and therefore could not default therein or repudiate the debt. To do so was illegal and shameful.

One young Victorian politician let his feelings be clearly known:
If Australia is to surmount her troubles by the abandonment of traditional standards of honesty, justice and fair play, it would be far better for Australia that every citizen within her boundaries should die of starvation during the next few months.
The speaker was Robert Menzies.

Much later, in 1968,Lang stated:
They wanted us to extract that money out of the blood of the people who toil. They didn’t only want to reduce wages. They wanted to reduce salaries. They wanted to reduce the incomes of everybody in Australia to pacify the hunger of bondholders in a foreign country. I would not agree to it - they were not Labor principles!

(ABC: 100 Years - The Australian Story.
Lang defaults in payments:

In March 1931 Lang declared that NSW did not have the funds needed to pay the $51.1m interest due to two British banks in April. The Federal Government made the payments due, the Commonwealth Government having become responsible for State debts in 1928 under an amendment to the Constitution. It then took NSW to Court to get its money back. NSW made the payment to the Commonwealth.

Within the Labor Party the internal divisions deepened. Not only was there a philosophical split between Lang (State ALP) and Scullin (Federal ALP), there were also internal dissensions within the Federal Labor government itself. Five Federal MP’s and two Senators from NSW defected and formed a party called “Lang Labor”. In October 1931 Federal Labor Lang supporters voted with the United Australia Party (formerly the Nationalists) and brought down the Scullin government. This worsened the split between Lang Labor, as that group was now referred to and called, and the supporters of Scullin, now referred to as Federal Labor.

The United Australia party formed a Federal Government under Joseph Lyons.

Lang and the controlling faction of the NSW branch were expelled by the Federal ALP, not being readmitted until 1936.

Joseph Lyons

Jack Lang

At a leaders conference in January 1932 to assess progress in implementation of the Premiers’ Plan, Lyons rebuked NSW for not having achieved the 20% cut required in spending, noting that NSW was the only State with a family endowment scheme whereby families received a payment for each child, and the only State to provide a widows’ pension. Lang viewed these two social services as one of his greatest achievements and replied “Not even the most soulless bondholder would snatch his interest out of the mouths of undernourished children.”

That night Lang sent a memorandum to Lyons advising that NSW would not be able to meet the bill for $70m due to British and US lenders 4 days hence. He requested a loan from the Commonwealth for $35m. This was refused by Lyons and the other State Premiers. In effect they said it was Lang’s problem if he defaulted. Lang left the conference, declaring to a reporter “I had the door shut on me and the key was turned. They are treating New South Wales as an enemy country.”

Lang defaulted on payment of interest due on the British and American loan bonds, electing instead to continue payments to those on the dole, widows and parents.

In February Lyons gave in. Whether it was because the Lang candidate in an East Sydney by-election just scraped in or because it was felt that the NSW default tainted all Australia, Lyons paid the debt, but not in the way that Scullin had done one year earlier. In 1931 the Commonwealth had paid the debt and made NSW repay the Commonwealth on threat of court action. This time the Commonwealth proceeded differently. Lyons and the new UAP government passed the Financial Agreements Enforcement Act 1932, which gave the Federal Government the power to seize any and all of a State’s income, from whatever source such income came. This seizure of funds and income would remain in force until the debt was paid.

Said Lyons:
It is a new action of a type never before contemplated. But that’s because it was believed every Government in Australia could be relied on to live up to its obligations. At any time a dishonourable Government could bring disaster upon a state. In the interests of the whole of the people of Australia it is desirable that this should be obviated. …. The whole basis of the financial structure will be undermined if it is possible for a State to refuse to meet the obligations it has solemnly entered into. It is vital, both in the interests of the Commonwealth and the States, that the possibility of a repetition of what Mr Lang has done should be rendered impossible.
Lang’s reply in a speech to the New South Wales Parliament was short and sweet:
"If it’s war they want, they will get it!"
The New Guard:

Although widely admired and like by the general population of New South Wales, the Big Fella, as he was affectionately known at the time, had his enemies, including:

-  the members of the Federal Government;

- members of the middle class and the affluent in NSW, who feared the loss of their assets and incomes in the belief that Lang was a closet Communist (notwithstanding that he had been an avid anti-Communist for the whole of his political life), and who felt threatened by Lang’s proposals to:

           --  add an emergency tax of 25% on families earning more than twice the basic wage ultimately unsuccesful); and

            --  the addition of a 10% levy on all NSW mortgages.

- the New Guard; and

- George V, the King of England, and his representative in NSW, the Governor Sir Philip Game.

If it is true that one is best judged by the strength and quality of one’s enemies, then Lang must have been near the head of the queue.

The New Guard was a paramilitary organisation under the leadership of Colonel Eric Campbell, a WW1 veteran. Although it had chapters in other States, it was mainly confined to NSW, having been formed in February 1931 as a response to the perceived Communist threat posed by Lang and his followers. The New Guard was a fascist organisation which had as its stated principles

- loyalty to the British throne and support for the British Empire;

- sane and honourable government in Australia;

- suppression of disloyal/immoral elements in government, industry and society;

- abolition of machine politics;

- maintaining individual liberty.

50,000 strong just in Sydney, at least one quarter of its membership consisted of men trained and proficient in weaponry with combat experience. It was credible threat and one that gave concern to Lang. Membership of the New Guard was organised on military lines with regular drill parades and military exercises. The organisation had ranks and maintained a large private arsenal.

The New Guard saw itself as a guardian, as the name implies, against Communism and revolution. It was their belief that in the event of revolution, they would protect the population, the major installations and the State services. Its activities soon descended into thuggery and street violence as it intimidated speakers, disrupted meetings and confronted Lang supporters at Lang rallies.

It is ironic that for an organisation dedicated to preventing revolution, the New Guard itself conspired to forcibly remove Jack Lang from office.

Its greatest fame came with the opening of the Sydney Harbour Bridge.

Sydney Harbour Bridge:

The construction of the bridge had been authorised by legislation passed in 1922 during Lang’s first term of office.

Construction was completed in January 1932 and thereafter various tests under load were carried out. The Sydney Harbour Bridge was ready to be officially opened.

Ordinarily the official opening of the ridge would have been conducted by the Governor, all the more so in that the company which had carried out the construction, Dorman Long & Co Ltd, was English. Not so, said Lang, I will open it. This snub reportedly angered the King George V, who instructed his Governor to speak to Lang and have it reversed. Lang refused to reverse and advised that he would open the Bridge, Sir Philip Game reporting accordingly to His Majesty. Stone observes in his book that whilst there is no record available of the communications between Lang and Game, and between Game and London, there is a letter from Game’s wife, Lady Gwendolen Game, that touches on it:
I am so thankful to tell you that shoals of telegrams have arrived from Home for Philip and that he is allowed to leave things as they were. His Majesty has sent a personal message that it was all right. So we feel very relieved and thankful and hope he has forgiven Philip.
To the further consternation of the Governor and in defiance of protocol, Lang declared that he would open the Bridge wearing his ordinary clothes, not a top hat and black frock coat. It reportedly peeved His majesty as much as Lang’s refusal to let Game open the bridge.

The situation was ultimately accepted, grudgingly, by Buckingham Palace, but not by the New Guard.

Having already collected 400,000 signatures on a petition to George V seeking his intervention by dismissing Lang, it now proposed more direct action, to kidnap Lang and forcibly remove him from office by way of a coup.

Sir Philip Game

King George V

Lang refused police protection or to vary his habits. The New Guard failed to make good on its threatened coup or even to disrupt the opening ceremony. That was left to a lone New Guardsman, Francis de Groot who, on 19 March 1932 at the point in time that the ribbon was to be cut by Lang, cut the ribbon with his sword from horseback and declared the bridge open "in the name of the decent and loyal citizens of New South Wales." His first two slashing attempts had failed so he had grabbed the ribbon with one hand and sawn it through with his sword near the hilt. As De Groot was led away, the ribbon was rejoined and Lang officially cut it.

Lang cuts the ribbon.
Sir Philip Game is shown to his right, wearing the uniform with the hat with feather.

  De Groot declares open the Bridge

Having declared that if the Federal Government wanted war, he would give it to them, the Federal politicians were understandably worried that Lang might use the occasion to make a speech attacking them or justifying his own actions. Troops were placed on alert in case of rioting.

Instead of creating division or using the occasion for self-justification, Lang delivered a speech dedicated to reconciliation, comparing this bridge symbolically to the bridge of the founding of the Commonwealth in 1901:
The achievement of this bridge is symbolic of the things Australians strive for but have not yet achieved. Just as Sydney has completed this material bridge which will unite her people, so will Australia ultimately perfect the bridge which it commenced just over 30 years ago. The statesmen of that period set out to build a bridge of common understanding that would serve the whole of the people of our great continent. That bridge, unlike this, is still building. The builders of that bridge, as the builders of this, meet with disappointments which make the task difficult sometimes - often delicate. But that bridge of understanding among the Australian people will yet be built.
When King George V heard about de Groot’s sabre cutting of the tape he slapped his thigh and happily exclaimed “Well done, de Groot.”

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