A possible solution came after the 1955 elections. Conscious of Australia’s serious balance-of-trade problems, Menzies reshaped the landscape of government departments and established the Department of Trade, headed by McEwen, with a remit to get control of trade.1 Consolidating all trade-related responsibilities, hiving off powers from the Department of Customs and Excise, McEwen’s became the ‘central policy department of a triumvirate’ of departments ‘that covered nearly all aspects of Australia’s trade and her primary export industry’. Managed properly, McEwen saw, his new department could conceivably become a counter to Treasury.2
The responsibilities left over from the abolished Department of Commerce and Agriculture became those of the new Department of Primary Industry. They were a motley lot: stabilisation schemes for wheat, fruit, dairy, and sugar; administration of Commonwealth policy on wheat, dairy, fisheries, and whaling; administration of industry boards, research grants, and marketing efforts. ‘All the chickens west of the Namoi,’ went one popular sneer. It was a portfolio perfect for a Country Party MP — but this was not in the offing, as the government’s success at the election had not extended to the Country Party. Numerically, it had emerged in a weaker position relative to the Liberal Party. The Country Party could not claim the Primary Industry portfolio for one of its own; therefore McEwen settled on the next best option. He urged McMahon’s appointment.
It is likely that this peculiar choice stemmed, as Harold Cox argued later, from McEwen’s regard for McMahon’s work ethic and discipline.3 But even if Cox’s assertion was not true, McEwen’s choice of McMahon is oddly understandable. McMahon was a city slicker, a ‘Sydney tycoon,’ Arthur Calwell had said.4 His knowledge of the country was reputed to extend only so far as the turf at Randwick. He wore suede shoes. He called himself a balletomane. What would he know about wheat and dairy, about farming and fisheries? Either he would work assiduously and do well, with McEwen’s guidance, or he would flounder and do nothing. Considered in this light, the choice makes sense.
McMahon’s new portfolio was cause for amusement, particularly in light of the other incongruous appointments Menzies made. Labor MP Fred Daly was scathing. McMahon’s only connection with the land, he said, ‘is a couple of pot plants on the window sill, a watering can, and one chook; yet he has been made Minister for Primary Industry!’5 Daly called it a matter of ‘square pegs in round holes’, but McMahon was sanguine. ‘Don’t worry,’ he would joke. ‘I have two plants on my front balcony and I know a little bit about it.’6 Whether McEwen knew it or not, McMahon did have familiarity with the country and rural matters, through his family’s extensive landholdings. He had also demonstrated to Menzies knowledge of food and wool production, and their links to Australia’s economy.7 Soft though his hands might be, he was hardly going to do nothing in the portfolio. Nor was he likely to turn down an appointment that held the allure of a position in cabinet, which had suddenly become much more prized.
In addition to a reshuffle and reshaping government departments, Menzies cleaved the ministry in two. There would now be only twelve positions in the cabinet; the remaining ministers were simply excluded from it. ‘Ministers not in Cabinet will be invited to attend and to participate whenever matters affecting their own department are under Cabinet consideration,’ Menzies decided. ‘I will also have the right to invite to a Cabinet discussion any non-Cabinet Minister who has special knowledge or experience on the particular under consideration.’8
According to McMahon, membership of cabinet was a part of the deal he struck with McEwen: ‘He persuaded me to accept the portfolio of Primary Industry on the understanding that he would ensure I would be a member of the new cabinet.’9 McEwen’s regard for him had led them to be friendly, supposedly to the point of playing billiards, going to the theatre, and dining together. ‘I became a very firm friend of John McEwen,’ McMahon later said. ‘… There was nothing we would not do if we could find amusement and, above all, if we could find opportunities we would talk together about the world’s problems.’10 It would have been an incongruous sight to behold: the gadabout and garrulous McMahon, small and balding but flashily attired, and the dour, large-framed, and strait-laced McEwen, whose sombre visage was enlivened only by occasionally wearing a maroon-coloured tie.11
Yet McEwen could not promise that McMahon would be one of the twelve. That was Menzies’ decision to make, and throughout the first weeks of January the decision was being constantly revised. On 5 January, Fadden met McMahon in King’s Hall and told him he was in the cabinet. This news seemed confirmed when Eric Harrison said the same as they walked to the Hotel Canberra in the company of Philip McBride and Athol Townley. By the next day, however, Harrison was saying that it all depended on the Country Party. McMahon went to McEwen, who implied that Harrison was scheming against him. This, too, seemed confirmed when Fadden and Hugh Roberton, a Country Party MP and soon McMahon’s successor in social services, told McMahon on 9 January that the Country Party had nothing against him at all. But the next day, McEwen came to McMahon and told him that it was in fact Fadden who did not want him in the cabinet. The motivation, according to McEwen, was jealousy. The repeated references in the press to McMahon’s expertise in economics seemed an attack on Fadden’s competence, one that would be magnified if McMahon were a member of the cabinet.
Fadden denied it, but McMahon did not believe him. Suddenly, he was out of the cabinet and in a portfolio he had not wanted. At Government House on 11 January, when the cabinet was being sworn in, Harold Holt told McMahon that the decision to exclude him had occurred sometime after 5 January. State representation, Holt suggested, was the issue on Menzies’ mind at that point.12
On 25 January, McMahon went to Harrison to find out what had happened. Harrison told him he had been excluded from the cabinet for reasons that seemed to have little to do with McMahon personally. There was the need to represent all the states in the cabinet, Harrison said. There was McMahon’s relationship with McEwen. They were too close, and McEwen was untrustworthy, Harrison informed McMahon. ‘I would be “drummed” out of the Liberal Party if the association did not end,’ McMahon wrote later.
McMahon was angry. He had been the dupe in the machinations of others, and the manner in which it had all happened was insulting. Even the phone call from Menzies telling him he would be moved had been abrupt, he complained. ‘Your time will come — let bygones be bygones,’ Harrison told McMahon.13
The advice might have been well intended, but Harrison was not the one being pasted. The appointment made McMahon a political punch line, and his exclusion from cabinet furthered the humiliation. McMahon was part of the ‘second eleven’, as the ALP called the excluded ministers, apparently not good enough to work at the highest level.14 The press seemed sympathetic, noting the importance of agriculture to Australia’s economy, and McMahon’s training in economics. ‘Could you imagine anything more ludicrous than a country which depends almost entirely on primary production having a cabinet which doesn’t include the Minister for Primary Production?’ asked Frank Browne, author of the muckraking newsletter, Things I Hear.15 In light of these arguments, McMahon could be forgiven for feeling that his exclusion was unjustified; but it is quite likely that McMahon’s behaviour was among the reasons for his exclusion.16
Within the cramped, crowded offices of Parliament House and in the small provincial pond that was Canberra, gossip travelled quickly and character assessments were easy. This was to McMahon’s detriment. Though admired for his work ethic, he was widely regarded as a leaker and grandstander, his self-interest operating to the exclusion of modesty and loyalty. ‘McMahon, until he learned better, was over-eager, talkative, and almost clamorous in reciting the virtues that he considered fitted him for ever higher office,’ Alan Reid wrote later.17 The press found him as wanting as the bureaucrats did. ‘Harold Holt made an absolute fool of himself in Cabinet this morning,’ McMahon told the journalist Hal Myers one afternoon, while sti
ll minister for social services. The pronouncement was so abrupt and unexpected that Myers stopped speaking so as to hear more. McMahon’s voice was loud, excessively so — a by-product of his hearing difficulties — and Myers, even as he marvelled at the tirade, could not help but wonder how it might sound through the thin walls of the adjacent office where Holt himself worked.
McMahon went on and on, ending only after claiming that he should be prime minister after Menzies. ‘To me the idea of Bill McMahon as Prime Minister was ludicrous,’ wrote Myers. ‘He had ability; his weakness was character.’ That weakness was on frequent display: seeking to cultivate the journalist Angus McLachlan, McMahon promised to support anything the Herald might want in cabinet. McLachlan was outraged: ‘How can you respect a man like that?’ he asked.18 Graham Perkin, a tyro journalist working as the number two to The Age’s Ian Fitchett, could recall McMahon giving him a story while standing next to him at a urinal, and the next day joining Menzies in criticising Perkin for running it. ‘I hope you are ticking him off for that appalling piece of reporting,’ McMahon said to the prime minister, in Perkin’s presence. ‘It was irresponsible, not the sort of thing you would expect of a reporter from The Age.’19
Fred Osborne, still smarting from the way he had been betrayed five years before, was similarly unimpressed. He found it difficult to have anything to do with McMahon, he said later, and though counselled to patch it up, Osborne simply could not do so. He could not get past his disapproval of McMahon’s character, the flaws of which seemed to be constantly on display. He knew this was a political mistake on his part. McMahon was entrenched in the ministry by now, and his seniority among the Liberals from New South Wales was improving. ‘I should have made my terms with him,’ said Osborne later, ‘but I didn’t.’ Counselled to do so by William Spooner, Osborne tried, but felt repulsed. It was no good, Osborne decided. ‘I can’t have anything to do with him at all,’ he said. ‘No good.’20
Whatever the initial tenor of the relationship between McMahon and McEwen, it was fraught within a few months. McMahon was not content to be idle in Primary Industry or to be a substitute for McEwen. His resolve to exercise his ministerial powers brought him into conflict with McEwen, who was stung by what he saw as McMahon’s overstepping of responsibilities and his foray into an area sensitive to the Country Party.
The first of their arguments, according to McMahon, came when he authored a cabinet submission on the dairy industry and butter production: ‘On that matter Sir John McEwen and I had our first real quarrel.’21 During the meeting, McEwen called him out of the cabinet room. ‘If you go on with this submission,’ McEwen said, ‘I will fucking murder you.’22 McMahon immediately sought advice from Menzies. Speaking outside the cabinet room, he told the prime minister what McEwen had said. Menzies told him to persevere with the submission, but when it was not reached at the meeting, McMahon decided not to persist with it — ‘at that time’, he noted.
It was only then, McMahon wrote later, that he became aware that restrictions and caveats had been placed on his power as a minister. At a meeting prior to his appointment, McMahon wrote later, Menzies, Fadden, McEwen, and Holt had agreed that he ‘would not have the power of recommending policy decisions made by Mr McEwen. This decision was never conveyed to me whilst I was Minister for Primary Industry.’23 Was this true? Perhaps. Certainly, there was little clarity over how far McMahon’s remit ran.
In April, McEwen and McMahon argued in King’s Hall over the handling of a Fisheries Bill and a Dorothy Dixer on the likelihood of a stabilisation scheme for the dried vine fruits industry.24 Tensions over the question of responsibilities were palpable. McMahon claimed later that in the confrontation in King’s Hall McEwen said that if he was not allowed to have his way, he would do McMahon in. McMahon brokered a peace by getting McEwen to agree to have their respective permanent heads meet to sort out who had jurisdiction. But the tensions were still evident, even in the House a month later. ‘I should like an assurance from the Minister for Primary Industry that he will put this on his plate or on the plate of the Minister for Trade, who has been handling this Bill,’ said Hugh Leslie, a Country Party MP, during debate on the Fishing Industry Bill. McMahon moved to assert himself on this matter immediately: ‘The administration of this Bill will be within the jurisdiction of the Department of Primary Industry.’25
Saying so was easier than doing it. The hazy lines of responsibility between Trade and Primary Industry, and the overlaps of their interest in policy, called for a close working relationship between McMahon and McEwen, which simply did not exist. McMahon wanted power for himself; McEwen was reluctant to allow him to exercise power in an area that had so long been his own.
The stabilisation plans that McEwen had worked on while minister for commerce and agriculture were a case in point. They ensured that producers of wheat, dairy, meat, and fruit remained viable and received equal recompense for their goods, whether sold abroad or on the domestic market. Despite the ‘lot of torment’ involved, McEwen believed they were among his ‘more substantial achievements’.26 Many of them involved Commonwealth guarantees, subsidies, and bounties intended to promote stability and greater economic efficiency; though these had been earmarked for progressive reduction, little had been done to enforce those reductions.
As the minister now responsible for these agreements — many of which were to expire in the next three years — McMahon was in a position to begin forcing reductions, or, at the very least, resisting requests to increase the generosity of the agreements. In June, McMahon took to cabinet the Dairy Industry Committee’s request for a £100 increase in the owner-operator allowance for dairy producers, but recommended it be rejected out of hand. ‘A favourable decision would immediately bring similar requests which would be hard to resist from other industries … This would further produce increased pressure on costs of living and add further to the inflationary pressures against which Government policy is being directed.’27 At the same meeting, he recommended that the government begin reducing the bounty paid under the agreement.28 McMahon had chosen his moment well. McEwen was in London, accompanying Menzies at the Conference of Commonwealth Prime Ministers. Without McEwen there, cabinet approved both recommendations.29
MENZIES was in North America when one of the great crises of the 1950s erupted: the nationalisation of the Suez Canal by president Nasser of Egypt. Motivated by the need for funds to complete construction of its High Dam at Aswan, aware of the anti-British sentiment that was leaching into the government, and mindful that British troops had just been withdrawn from the canal zone, Nasser saw an irresistible opportunity. Control of the canal could be taken from the remaining British civilian contractors, and the ensuing revenue from the canal’s use could be diverted to ensure construction of the dam.
Planning of the operation was meticulous and the execution flawless: Egyptian officers were given sealed instructions that could only be opened when Nasser gave the code word. When he uttered the name of the canal’s French designer, Ferdinand de Lesseps, thirteen times in a widely broadcast speech delivered in Alexandria on 26 July, his officers opened the envelopes and followed the orders they contained. Troops occupied the controlling offices for the canal. Martial law was declared in the canal zone. The company that operated the canal was dissolved and a new one, run by the Egyptian government, established in its place. The speed of Nasser’s action stung the British and French governments, both of which regarded the nationalisation as the illegal seizure of a strategic and geopolitical resource.
Menzies received a cable from the British prime minister, Sir Anthony Eden: ‘We cannot allow Nasser to get away with this act of appropriation.’30 While claiming it was a last resort, taking the canal back by force was clearly on Eden’s mind. Within forty-eight hours of Nasser’s announcement, more than 20,000 British reservists had been called up, and British troops were being massed in Libya, along the Egyptian border. A joint communiqué from Britain, Fra
nce, and the United States called for a conference to discuss the ‘international management of the Canal’. Menzies decided he would be there for it.
The cabinet, with Fadden as acting prime minister, gathered in Canberra on Tuesday 7 August to discuss the crisis. McMahon was there. Many of his colleagues arrived angry and knowing little more than what they had read in the press. At the meeting, they were given copies of cables that revealed the situation to be more perilous than had been disclosed to the public. Belying their public show of diplomacy, the British seemed intent on using military force to retake control of the canal; the Americans were willing to apply political pressure to the Egyptians, but would not be involved in any military action; and, from the cables read by cabinet, Menzies seemed willing to countenance Australian involvement in military operations.31
The minister for external affairs, Richard Casey, presented a position paper that outlined Australia’s limited options and, indeed, its limited involvement. No Australians held shares in the nationalised company. No Australian oil imports came through the canal. The canal’s significance to Australia’s commercial interests was ‘important’ but not ‘vital’. Casey was not in favour of a British resort to military force, and his two years as the UK’s minister of state in the Middle East had left him sceptical about British imperialism and its attitudes towards former colonies. He was critical of the nationalism and the fervour with which Eden had responded to the crisis. Publicly, Australia had to stand with the British, Casey said, but privately matters were different. ‘Eden has to be weaned away from [the] threat of force,’ he told the meeting.32
Casey’s argument attracted only two supporters, no more: Philip McBride, the defence minister, and McMahon. McMahon was scathing about how things had unfolded and the current direction of events. He suggested that Menzies was ‘out of place’ in attending the conference, which had been called at a foreign minister level. ‘Casey should go,’ McMahon said.
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