He strongly supported Casey’s position. The British could ‘huff and puff’, he said, but world opinion was against them, and even the assistance of the Americans would not help in the long run: the British would be back out again in a few months. ‘We can’t help militarily,’ McMahon said. ‘We must moderate the British attitude. Casey should do it.’
In response to the bellicose jingoism of his colleagues, McMahon was realistic. The US line was correct, he argued. ‘Nasser won’t agree to [an] international convention — he has just nationalised [the canal]’.The Suez Canal, McMahon went on, was too valuable to Australian trade to have it disrupted. He recommended Australia ‘not get into any camp’.33 McMahon’s was a perceptive assessment, one that belied his inexperience with matters of foreign affairs. Much later, he claimed that it sprang, in some part, from his belief that Egypt had a right to control the canal: ‘I couldn’t understand how anyone could protest about Egypt taking over the Suez Canal,’ he said later. ‘The proper thing to do was to fit in with it, and see that you got a good deal from the Egyptian Government.’34
But his colleagues did not agree with this. Nor did they heed his assessment of the consequences. Like the public at the time, they were emotional, invested in the symbolic significance of the canal. ‘Our reaction was predictably an angry one,’ recalled Howard Beale, the minister for supply.35 Informed by memories and tales of Egypt during World War II, their reactions were to support Britain come hell or high water. McMahon’s arguments and opposition were discounted, not even rating a mention. Menzies received word of the cabinet’s support for Britain while he was in London, where he was preparing for the opening of the conference on 16 August.
The conference and its somewhat arbitrary list of invitees resolved on a series of proposals devised by the US secretary of state, John Foster Dulles. In the main, they consisted of the establishment of an international board (on which Egypt was to have representation) to manage the canal, recognition of Egyptian sovereignty, a commission that would sort out issues of compensation, and enshrining interference with the canal as a violation of the UN Charter.
On 22 August, Menzies cabled his colleagues in Australia, telling them that he had been asked to join a committee that would present these proposals to Nasser. Then, joining the committee turned into leading it. Upon the receipt of cables from Dulles and Eden asking that Menzies be spared to ‘give his personal help’ to lead the meetings with Nasser,36 an ad hoc committee meeting of the cabinet in Sydney on 27 August approved the requests. According to Menzies, his colleagues were ‘delighted’ by the request, regarding it as ‘a compliment to Australia’.37 Later, McMahon would claim otherwise: ‘Unfortunately, Menzies happened to be in the wrong place at the wrong time,’ he said.38 The opposition leaked: papers like The Argus reported unrest in the cabinet over Menzies’ ‘intrusion’ into a field better left to Casey.39
Menzies’ talks with Nasser were a failure, foundering on a mutual inability to compromise or recognise the validity of the other’s argument. They broke down completely when US president Dwight Eisenhower, with presidential elections scheduled for early November, scotched any prospect of the use of force against the Egyptians, which Menzies had suggested to Nasser might still have been in the offing. The prime minister left Nasser and returned to Australia, via Washington, on 18 September after sixteen weeks abroad — returning to the ‘rather battered home front,’ as he put it, of domestic affairs.40
Eight days later, there was a ballot for the deputy leadership of the Liberal Party. Eric Harrison, occupier of that position since 1945, had been angling to go to London for almost a year as Australia’s high commissioner. On returning to Australia, Menzies finally signed the required papers. Four candidates stood for the vacancy on 26 September: Richard Casey, Philip McBride, Harold Holt, and senator William Spooner of New South Wales. Casey’s elimination in the first ballot surprised some; Spooner’s unexpectedly strong showing surprised others. Nonetheless, Holt, then aged forty-eight, was the victor and new deputy leader.
Harrison’s departure, and the appointment of the attorney-general, senator John Spicer, to the newly formed Commonwealth Industrial Court, opened up two vacancies in cabinet. One of them, finally, went to McMahon.
MCEWEN’S absence from Australia in June was followed by another in October. In that month, the minister for trade returned to Britain to re-negotiate the so-called Ottawa Agreement. Struck in 1932, the agreement set out the trading relationship between the United Kingdom and its autonomous dominions, including, at that time, Australia. In broad terms, Australian goods — mainly primary produce — received duty-free or fixed-rate entry to the UK market; in turn, British-manufactured goods that were exported to Australia received preference against those from other countries. Of great significance to Australian industry, the agreement also restricted the amount of protection that could be given, via tariffs, to Australian manufacturing that competed with those British imports.
Initially of benefit to Australia, the Ottawa Agreement was the target of sustained and growing criticism by 1956. The balance of trade had shifted in favour of Britain, which was pursuing what John Crawford, secretary of the Department of Trade, later called ‘its traditional cheap food policy’.41 Britain was using the abundant supply of meat, cheese, butter, and fruits from other countries to force prices down. Australian primary producers, unable to compete, were finding their share of the British market was shrinking. Not only did they therefore require alternative markets for their goods, but there was also a need to nurture and protect Australia’s manufacturing sector, which McEwen regarded as vital to Australia’s prosperity. Ottawa had to be retooled and revised, industry groups demanded: ‘The time is long overdue for a complete review of Ottawa’s outdated and now one way preferential provisions.’42
During McEwen’s trip in June, the British had been intransigent. They had no desire to reopen Ottawa. ‘For five weeks we tried to get useful talks started, but were told bluntly that our proposals left no scope for negotiation,’ McEwen wrote later.43 Only after McEwen delivered a blunt threat to abandon the agreement altogether did the British begin speaking seriously. The aim of McEwen’s second trip was to finalise those discussions. He wanted a guarantee that Britain would take a quota of Australian wheat each year, and an agreement to reduce the tariff preference for British goods imported to Australia. ‘The negotiations were very protracted,’ McEwen commented, but eventually they succeeded. He and Crawford reached a deal. It was one of his biggest achievements, McEwen thought, one of the hardest earned and most valuable.44 Importantly, it was the first step in a courageous process, pursued by McEwen, to open trade with Japan.
Both parties drafted a joint statement for the press, and arrangements were made for its simultaneous release in Australia and in Britain. On the evening of 12 November, though, prior to the agreed release date and time, the statement appeared:
The Acting Minister for Trade (Mr William McMahon) announced today that the Australian and United Kingdom Governments had negotiated a new and comprehensive trade agreement which would replace the Ottawa Agreement of 1932.45
In the newspapers, the announcement was almost all in McMahon’s name. ‘Mr McMahon said two cardinal objectives sought by major Australian industry organisations had been achieved,’ wrote The Canberra Times. ‘Mr McMahon said the new agreement preserved the principle of mutual preference.’ In much of the press coverage, McEwen’s role was downplayed, as though he had merely wielded the pen, as passive as the sentence itself:
A detailed trade agreement based on these agreed principles will be drawn up early next year. They were initialed in London on November 9 by the Minister for Trade, Mr McEwen.46
McEwen was furious. The premature release had embarrassed him with the British Board of Trade, and the press reception was an insult to his considerable efforts negotiating the new agreement. Upon his return to Australia, he went to McMahon’s office in the Co
mmonwealth Bank Building in Sydney to demand an explanation. As McMahon recalled later: ‘He was under very great emotional stress and accused me of “blacking him out” of the press on the UK–Australia Trade Agreement.’
According to McMahon, two officials from the Department of Trade had given him a copy of the press statement. His only role had been to suggest an alteration in the sequence of paragraphs in the statement, he said. He was not responsible for how the press interpreted or reported the news. Moreover, McMahon told McEwen that he had followed instructions: ‘As the agreement between us was that I did what I was told by the officials I issued the document presented to me.’ According to McMahon, McEwen accepted this explanation: the trade minister supposedly departed the office ‘still in a rage’, but saying it was ‘not completely’ McMahon’s fault.47
Other accounts indicate that McEwen did not believe a word of it. ‘A later investigation ordered by McEwen could find no record of the department having sighted the statement before it was issued,’ wrote McEwen’s biographer, years later. Moreover, it was the last occasion on which McMahon ever ‘acted’ for McEwen in any capacity.48
It was unwise to cross McEwen: he was a good hater. Though capable of sentimentality with those close to him, the tall Victorian was ruthless with opponents, prone to nursing grievances and exacting retribution. Evidence would suggest, however, that he did not view McMahon as worthy of the status of an opponent. He was a pest, yes — but an opponent? Informed that McMahon had dressed down one of his officials and declared him unfit for his job, McEwen was amused more than roused to anger. ‘Well, you’re in distinguished company,’ he told the official.49
For his part, McMahon regarded this period as the formative phase of McEwen’s dislike for him. This was the seed for their later feuds — and it all stemmed from McEwen’s jealousy, anger, and pride. In McMahon’s eyes, he had done nothing to earn this enmity. He was blameless in everything that went on. ‘Continuous complaints were made to both Menzies and Holt about me,’ McMahon wrote later. One complaint apparently occurred after McMahon had an eye operation:
Menzies called me into his room and said that McEwen has complained that a great friend of his has informed McEwen that I had informed him that McEwen was suffering from cancer. Menzies suggested that I should go and see McEwen before Cabinet. I refused and said — ‘If that’s the kind of friend he has and the kind he trusts I don’t want to have anything to do with either of them. Anyway, why should I make explanations when I have never said anything like this at all.’50
The pettiness of the incident is palpable. The insecurity of the man who recorded it is evident. McMahon was sensitive to his status and his dignity as a minister. He would not respond to scuttlebutt. He wanted to exercise his power. It was McEwen who was causing problems, not him.
The conflict with McEwen was more than simply one of personality. The need to re-negotiate McEwen’s industry stabilisation schemes saw them clash repeatedly, and exposed substantive, policy-based differences. These stemmed from ‘the intention of Mr McEwen to exercise his influence on a Junior Minister in an area in which Mr McEwen’s Country Party interests were involved,’ McMahon wrote later.51
In January 1957, when McMahon mooted a five-year plan for the dairy industry, McEwen responded by referring to ‘the issue of functional responsibility’ between him and McMahon.52 He perceived a ‘real political consequence’ in McMahon’s recommendation that the Australian Dairy Industry Council’s request for an increase in subsidies be rejected in the new plan; nonetheless, the request was rejected.
Three months later, the Dairy Industry Council had reviewed its case and McMahon took it to cabinet. ‘In effect, [it] amounts to a request for substantially greater assistance than in earlier proposals,’ he wrote. He noted why the industry wanted the subsidies to increase: the drought in northern New South Wales and Queensland meant dairy farmers there were doing it tough. But Victorian producers, he went on, had increased their production of butter to more than make up for it. And while the case could ‘fairly be made out for additional assistance to some sectors of the butter industry’, he wrote that ‘it is quite impossible to devise a price stabilisation scheme which will give additional assistance to those sectors of the industry in need of it without giving the same assistance to others less in need of it’. Overall, McMahon’s analysis was pessimistic.
The core problem, he wrote in his submission and reiterated in cabinet, was that there were areas of Australia ill-suited to butter production, and some producers’ holdings were too small to allow for an economically efficient industry. ‘The need is rather for greater efficiency and/or the retirement of some of the marginal producers … If the government goes into a further five year scheme much on the same lines as the present one it will only serve to perpetuate the present state of the industry.’53
Cabinet approved his recommendation to reject an increase, but McMahon’s wish to overhaul the industry went nowhere. The agreement he recommended to cabinet and presented to the House in May maintained much of the framework of the deal that McEwen had struck five years before. The subsidy for 1957–58 was maintained at the preceding year’s level, £13.5m, and measures to address the problems of geography and weather were absent. The most notable and perhaps enduring of the features that McMahon introduced was to allow the Australian Dairy Produce Board to use stabilisation funds for research and ‘sales promotion’, in order to maintain and even expand the market for goods from the dairy industry — especially for butter producers, who faced competition from the increasing consumption of margarine.54 Overall, however, the effects of his failure to overhaul the dairy industry would linger for another decade.
McMahon’s work thereafter tended towards establishing and funding industry bodies that could increase efficiency and better promote the industries to the world. He was able to establish and fund the Australian Wool Testing Authority to assess and certify the quality of production;55 he obtained renewed funding for the Wool Research Trust by proposing, and obtaining, a contribution from the industry itself to go along with the Commonwealth’s pound.56 Then he did the same for the wheat industry, establishing state-based committees to distribute research funds in order to draw on developments in soil fertility, field and crop rotation, wheat breeds, and mechanisation.57 By 1958, after McMahon had negotiated a new stabilisation plan for the wheat industry, he had only to provide funding for a similar research body for the dairy industry, which he duly did in September.58
THE changes in the ministry that had begun with the departures of Harrison and Spicer continued during the remainder of the parliamentary term. Howard Beale left to become ambassador to the United States. Philip McBride and Arthur Fadden each announced they would not contest the next election. Both would retain their portfolios until then, but Fadden would resign the Country Party leadership in February 1958. There were replacements for each, but the most significant and notable was that of Sir Garfield Barwick, the lawyer widely lauded for his work on the 1945 Airlines Case, the suit against William Dobell, the bank-nationalisation case, and the Petrov Affair. His decision to stand for Beale’s seat of Parramatta upended all ideas of seniority and hierarchy within the government — at least, according to the press. Frank Browne was particularly sweeping in his analysis of what it augured:
For Harold Holt, it means no leadership. For the New South Wales cabinet aspirants it means no cabinet. All in all, to the Liberal federal politicians, the entry of Sir Garfield Barwick means exactly what the acquisition of a Derby winner means to the other stallions at a stud. Prosperity for the stud, but the first steps towards the boiling down for the other stallions.59
Labor made similar noises. When Barwick appeared in the House after winning the March by-election, Labor wit Jim Cope was heard calling across the chamber to Holt: ‘Bad luck, Harold.’60
Not all such approaches were successful. Supposedly with Menzies’ blessing, McMahon approached John Ker
r during this period to see if he would be interested in seeking preselection for the Liberal Party for the Senate. Kerr thought little of the offer: he only wanted to be in the House.61
Throughout the year, the government seemed hardly troubled by the prospect of the pending election. It was happy with its record in office. Fadden’s August budget — his last — contained few initiatives. It was all about maintaining growth and stability. ‘We can point to a great estate, in good repair, amazingly developed, sensibly managed, respected and trusted all round the world,’ Menzies said.62 Yet unfinished business nagged. The Commonwealth Bank had still not been reorganised properly; a host of other Bills relating to banking were held up in the Senate. There were grounds for a double dissolution, but Menzies demurred. He would not allow any opportunity for Labor or its breakaway groups, such as the emerging Democratic Labor Party, to gain power in the Senate through the proportional voting system.
Nonetheless, the emergence of the DLP as a viable political force — fielding 113 candidates, all directing their second preferences to Liberal and Country Party candidates — cruelled any chance of the ALP winning office at the election, whenever it was called. The ructions from the split were persistent, and the divides too big to bridge. Even Evatt’s offer to vacate the Labor leadership after the election, in exchange for those vital second-preference votes, could not do it. Senator George Cole, the putative leader of the DLP, wanted more: Labor had to abandon socialism, put an end to union unity tickets with communists, withhold recognition of Communist China, and end its opposition to the ‘Industrial Groups’ that Evatt so disliked.
All of these issues came up on 14 November, when one of the first televised election debates in Australia was held in the ATN Channel 7 studios in Sydney. Notwithstanding the criticisms of him, it was testament to his talents that McMahon took part. With him seated around a table beside Holt, opposite Evatt and Calwell, the debate was low-fi and adjudicated by Angus Maude, editor of The Sydney Morning Herald. None of the men was practised in television appearances, and their body language betrayed discomfort, wariness, and impatience. Evatt, recovering from a recent bout of pneumonia, was hunched over the table and made his arguments only to Maude, facing the editor’s way so that he appeared, to the television viewer, in profile. Holt sat straight, visibly tapping a finger on his chair, glancing every so often at his wristwatch, which he had placed on the table in front of him. Calwell shelled the debate with coughs, folded his arms, massaged his knuckles, and spoke in an aggrieved rasp, usually to the floor.
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