The Money Men by Chris Bowen (superbooks4u .txt) 📕

Caucus meeting devoted to the issue was long and rancorous. The federal executive of the ALP approved the adoption of the plan by the narrowest of margins: seven votes to five.

On 18 June 1931, Scullin rose in the House to move the legislation to implement the cuts associated with the Premiers’ Plan. He did not need to explain himself to the opposition, but he did need to justify his government’s change of heart to his own supporters. He accurately blamed the banks, which ‘had not made available the credit requested … the Commonwealth Bank had indicated to the Government that the limit of its overdraft had been received’.35 Theodore also spoke in the House to justify this volte-face. He was subdued when explaining that the government was not able to secure the finance to continue with a policy of reflation; there was no vitriol or even criticism of the Commonwealth Bank or the trading banks. But with the ALP capitulating and accepting the orthodox conservative economic policy, the government let slip its last opportunity to alleviate the effects of the crisis. Labor could no longer provide a compelling reason for it to stay as the government. The end was near.

The Government Falls

Given everything that happened in the tumultuous two years of the Scullin government, it seems fitting that it fell due to a bitter split, and that the catalyst for the end involved an accusation against Theodore.

By the last months of 1931, Lyons, Fenton and four other members had formally left the ALP and joined forces with the conservatives. Indeed, Lyons had been made leader of the new UAP and the opposition. But it was the followers of Jack Lang who brought the government down. Lang’s key devotee in the federal Labor Party, Jack Beasley, accused Theodore of arranging for political supporters in his inner-city electorate to receive priority treatment in an employment-relief project on Sydney Harbour’s Cockatoo Island. The Lang forces moved for a parliamentary inquiry. Scullin refused. Beasley then moved an adjournment of the House, which was a test of confidence in the government. The defection of the Lang forces combined with the earlier defection of the Lyons group meant the government failed the test, and Scullin called an election for December 1931.

The people passed harsh judgement on Labor’s disunity, as they always do. No doubt the policy paralysis that went with the government being unable to agree on and stick to a settled economic strategy was a significant factor in the defeat as well. Particularly lethal in NSW was the now formal split with Lang Labor. In that state, the official federal Labor Party managed to win just three seats; Lang Labor won four, one of which was Theodore’s Dalley, where he amassed 10 000 fewer votes than the winner, Sol Rosevear. On election night, Theodore took in the results, told his son he’d been defeated and quietly announced he was ‘done with politics’.

Afterwards

Throughout Theodore’s post-political life, several attempts were made to lure him back into politics. Both Curtin and Chifley made overtures to him to return to the federal Caucus. Even his enemy Lyons invited him to enter the UAP Cabinet in 1939, as World War II was dawning, to coordinate ‘all national resources for the country’s defence’.36 But Theodore was too successful at business and too scarred by the memories of politics to entertain a return. He had embarked on business ventures with the Packer family—initially with RC Packer and then his son, Frank Packer—and was instrumental in the founding of the Australian Women’s Weekly and the revitalisation of Sydney’s Daily Telegraph. He also developed a successful mining venture in Fiji.

Theodore did, however, accept prime minister Curtin’s request that he become director-general of the Allied Works Council in 1942, taking responsibility for the coordination of Australian industry to ensure its maximum contribution to the war effort. He refused a salary for the job, saying it was a matter of national service. Perhaps inevitably given his temperament and fame, his tenure was controversial. He threw himself into the task but was criticised by elements of the Lang faction still in the government for being too strident in his work, and also for appointing lieutenant Frank Packer as the council’s director of personnel. In 1944, the acute crisis having passed, Theodore resigned and returned to private business, with Curtin’s very real gratitude for his service.

Theodore died in Sydney in 1950.

An Evaluation

Australia was fortunate that when the worst possible economic conflagration hit us, we had a treasurer who was imaginative enough and intelligent enough to develop an innovative response. We were unfortunate in that the government he was a member of was too disunited to see his plans followed through, and powerful interests in the banks and parliamentary opposition were determined to stymie him.

It is understandable that Theodore would fall back on the orthodoxy in his early days as treasurer, as he dealt with the beginnings of the economic crisis. But he quickly developed his thinking and was one of the first elected politicians in the world to advocate and seek to implement an expansionary fiscal policy.

Theodore was thrown from office at a critical time in the crisis. Whether Theodore had received a financial benefit from the Mungana transaction was never proven. That the establishment of the Campbell Royal Commission was a political manoeuvre designed by conservatives to remove Theodore from the fray is uncontestable.

His return to the Treasury portfolio saw him put forward a plan that history has judged as sensible and necessary—it was Australia’s chance to avoid the worst of the Depression. Yet again, a combination of opposition from Lang and obstruction by the Commonwealth Bank blocked his plans from being implemented.

Theodore’s surrender and his implementation of the Premiers’ Plan are perplexing. He adopted and advocated a plan that he knew was at the very least inferior to his own, and likely counterproductive as well. It is unlikely that he would have succeeded in implementing his plan had he resigned from the Cabinet