Tiberius with a Telephone

by Patrick Mullins

  McMahon returned to his office. For a minute, he was alone, absorbing the news. Then he called for Peter Kelly. ‘Jack has said he won’t serve with me if I’m the leader,’ he told his press secretary.

  ‘Did he say why?’ Kelly asked.

  ‘He said he didn’t trust me. That was all.’

  ‘What did you say?’

  ‘I said nothing.’39

  This was the course of action that Kelly advised McMahon to take. A slanging match with McEwen — apparently McMahon’s first instinct — would be impossible to win. Kelly perceived that McMahon had never had a chance of taking the leadership. Standing would not even be a gamble; he would lose. But in standing, Kelly thought, McMahon might also expose the paucity of his support in the party, and thus endanger his hold on the deputy leadership.

  ‘I expressed the second dilemma as circumspectly as I could, adding that if he lost the deputy’s job he could not be certain of even retaining the Treasury portfolio,’ Kelly wrote later.40

  McMahon’s meeting with Casey that Monday afternoon did not cause the governor-general to change his mind. The next day, almost forty-eight hours precisely since Holt had disappeared, with his young lieutenants, Anthony and Sinclair, looking on, McEwen was sworn in as prime minister.

  WORD of McEwen’s veto of McMahon quickly became common knowledge among politicians, staff, and the Press Gallery.41 Reporters battered McMahon with questions when he arrived at Parliament House on 19 December, and, despite repeated statements that he would not be commenting, the reporters persisted. Within the party, McEwen’s veto apparently prompted colleagues to keep their distance from McMahon. The next day, when the swearing-in ceremony for ministers serving McEwen was held, McMahon arrived first, and he arrived alone. To questions about the veto, McMahon was evasive: ‘It’s Mr McEwen’s business, not mine.’42

  Was he an outcast?, a journalist asked him much later. ‘I wouldn’t use that phrase. Not an outcast,’ he said.43 In private, he was anxious. According to Hasluck, McMahon was ‘very fluttery’.44 Howson, the recipient of several calls from McMahon during these days, noted variously that the treasurer was ‘extremely emotional’, ‘in rather an emotional state’, and in ‘a highly emotional state’.45 Later, he would be more direct: ‘McMahon was completely obsessed and incensed with what had happened. He just could not believe it.’46 Certainly, McMahon was in a dire situation. The pressure on him was immense.

  Later that evening, McEwen made the rumour public. At a press conference held in the government party room at Parliament House, journalists asked him to confirm it: ‘Mr McEwen, are you prepared to say publicly, as you have apparently said privately, that you will not accept Mr McMahon as a prime minister, as leader of the Liberal Party?’

  McEwen was blunt. Yes. The rumours were correct. He would not accept McMahon as leader. ‘Mr McMahon knows the reasons,’ he went on. ‘My senior Liberal Party colleagues not only know the reasons, but knew the reasons before Mr Holt’s death.’ When another journalist asked if McEwen would make those reasons public, the Country Party leader said he would not. McEwen was aware that Earle Page’s inflammatory accusations against Menzies in 1939 had caused much support to swing towards the putative leader, and had no intentions of repeating that mistake.47 Therefore he cited a belief that quarrelling and politicking in the midst of funeral preparations would be intolerable.48

  McMahon was in an invidious position. He was being impugned in public, yet could do little about it. What charges could he refute? What could he say? Moreover, any public spat between him and McEwen would likely see him emerge the loser. He would appear to be making political hay while a country mourned. His only option was to take McEwen on in private. His options were limited, however, to the one authority who had already declared his hand: Casey.

  Nonetheless, McMahon rang and asked the governor-general to arrange a meeting with McEwen, with Casey to act as witness. ‘I said I had no wish to be in a position, in the circumstances, to appear to be acting as umpire between them, which constitutionally would have been wrong,’ Casey wrote to Buckingham Palace. The most that Casey would do was pass on McMahon’s request to McEwen. The Country Party leader said he would meet McMahon, but only if a Country Party supporter was present. ‘I passed this on to McMahon, with no result,’ Casey recorded.49

  Amid preparation for the memorial service for Holt, which government leaders from all over the globe were attending, the lobbying for votes began. Paul Hasluck would be a candidate, as would Les Bury, the minister for labour and national service. Billy Snedden, the minister for immigration, held off announcing his candidacy, but was nonetheless sounding out support. And then there was John Gorton. ‘I’m not too good at this,’ he said to Jim Killen, when he called to seek support for his bid.50 Luckily for Gorton, he had proxies working on his behalf to gather support and clear obstacles, such as the need to transfer from the Senate to the House. To effect this, potential contenders for Holt’s seat, which Gorton would require, were leaned on and urged to make way.51

  McMahon was trapped. His peers were not standing by him. His ministerial colleagues were not offering him support.52 They had little sympathy for him, and they held a high regard for McEwen.53 Howson had already told McMahon of his belief that McEwen was not bluffing. Mounting a bid for the leadership, Howson intimated, would be futile. When McMahon asked for advice on confirming this, Howson advised him to turn to the people who had gotten him the deputy leadership two years before.54

  Those people — most notably, the Packer press — were about to make their influence felt. Reid began to probe at the charges, still being made in private, about McMahon’s connections with BIG.55 Meanwhile, a holidaying Sir Frank Packer was ringing his trusted columnist, David McNicoll, to find out what was happening. On the first day, McNicoll recalled, Packer’s first question expressed his preference clearly: ‘What about Bill McMahon?’56

  As the week neared its end, it seemed that McMahon would not have a chance. Certainly, he seemed to think so. On Friday 22 December, after the memorial service at St Paul’s Cathedral, Melbourne, McMahon went to the Southern Cross Hotel, where many other MPs were gathered, and told Clyde Packer that he was not going to run. McEwen’s veto, he said, was the reason.57

  That same afternoon, a group of Liberal Party–machine people — including the federal president, Jock Pagan; the New South Wales president, Fred Osborne; the New South Wales general secretary, John Carrick; and the Victorian president, Robert Southey — were meeting in the party’s headquarters in Melbourne to discuss the leadership. Some were of the view that McEwen should be persuaded to stay on as prime minister. In the evening, the talks shifted to Pagan’s room at the Menzies Hotel. Members of the federal executive were in attendance. The talks were long, lasting until two-thirty in the morning, resolving only when the Victorian Liberals vehemently scotched any prospect of a merger between the Country and Liberal parties and any prospect of McEwen staying on.58 Yet, even then, there was pressure to have the matter reconsidered. On 29 December, the Victorian MP Sir Wilfrid Kent Hughes, in a column for the Melbourne Herald, argued that McEwen should be invited to stay on. When asked to elaborate, Kent Hughes happily complied.59 Privately, the idea also enjoyed the support of David Fairbairn, minister for national development.60

  Over Christmas, the manoeuvring continued. Some sought to posture. Some sought to make deals. With McMahon apparently out of the race, Packer swung his support, on advice from McNicoll and Reid, towards Gorton.61 But Packer was keen to see McMahon protected: ‘Well, see Gorton,’ he said to McNicoll. ‘Ask him if he’ll have Bill as Treasurer. Let me know how he reacts.’62

  Gorton was spending the break at Billy Wentworth’s Pittwater home. Of the three approaches that Packer emissaries made, it was the last that proved decisive.63 In the New Year, McNicoll visited and had a chat with Gorton. If Gorton won, McNicoll asked, would he keep McMahon in the Treasury? Gorton got the messa
ge. He understood that the support of the Packer press was contingent on his answer. He told McNicoll what he needed to hear — and, according to a later aide-mémoire by McMahon, told McMahon that he would be retained in the Treasury.64

  Menzies was roused to intervene. Supporting Hasluck’s candidacy but despairing of his refusal to canvass for support, the retired prime minister perceived that McMahon was ‘playing for preservation’ and that there was an opening. He telephoned McNicoll, and urged him to support Hasluck.65 When McNicoll pointed out that Gorton had all but guaranteed McMahon would stay at the Treasury, Menzies sought to say the same of Hasluck. ‘Call him and say, “I’ve just been talking to Menzies and he says you’re willing to have McMahon as Treasurer”,’ Menzies told him. ‘I’m sure he’ll say yes.’

  Hasluck was called and, indeed, said as much.66 It did not change anything. Gorton was the pick of the Packer press.

  Back in Sydney, McMahon was contemplating his position. The urge to confront McEwen publicly had not wholly vanished. In the days following Christmas, Peter Kelly was summoned to McMahon’s home. McMahon was having drinks with friends. He handed Kelly an eight-page aide-mémoire that detailed his feud with McEwen. Kelly was horrified. ‘You’re not going to release this, are you?’ he asked.

  McMahon told him just to read it. After he had done so, Kelly sat with McMahon and suggested changes. McMahon agreed to some, but declined others. Sonia asked Kelly if he thought McMahon needed to respond to McEwen’s veto. Kelly knew his reponse would be unpopular, but stated it anyway. ‘No,’ he said, ‘I don’t.’

  McMahon’s friends were voluble in their disagreement. Notably, Norman Cowper and Jack Cassidy were both present, and both disagreed with Kelly. Not to be dissuaded, Kelly found the time to warn McMahon: ‘You know if you release this you’ll lose the lot, don’t you?’

  McMahon brushed him off. ‘I understand you.’ But it was not the time.67

  ‘There was a lot of pressure on him to stand for leader after Holt drowned,’ Kelly said later. ‘A lot of pressure — from family, his doctor [George Halliday].’68 But the pressure, Kelly thought, was misplaced. If McMahon stood for the leadership, and lost, the prospect that he could lose everything was very real. ‘It was very strong pressure,’ Kelly said.69

  A few days later, McMahon telephoned Kelly to tell him that Sonia’s advice was that he should stand. Kelly disagreed and said so. And when McMahon told him that Sonia was the best political judge he knew and that he felt bound to take her advice, Kelly gave up. ‘If she’s the best political judge you know, you should take her advice,’ he said.70

  Rumours that McMahon might stand in spite of McEwen’s veto spread quickly. Press sympathy for the treasurer had been surprisingly generous, even outside of the Packer press. On 29 December, all newspapers gave prominence to a statement issued by BIG spokesman Colin Chapman that denied McMahon had anything to do with the group’s work.71 McEwen denied that BIG had anything to do with his veto. The coverage made the Country Party leader aware, nevertheless, that remaining silent about his reasons for vetoing McMahon could backfire just as easily as public accusations could. Moreover, the provocations of some journalists rankled. According to Fitchett, McEwen told Angus McLachlan, editor of The Sydney Morning Herald, that he would not take any more attacks on his actions and character: ‘I can, I’ll take a lot as a minister, but I will not take this sort of stuff, my character, my reputation being impugned by men like Newton and The Review while I am prime minister, and I am prime minister. I might only be prime minister for a fortnight, but I am Prime Minister of Australia.’72

  Cannily, shrewdly, McEwen decided to use his friends and the resources of his office. ASIO officers allegedly broke into McMahon’s home in Sydney in search of ‘politically damaging material’;73 on 4 January, on the same day that The Daily Telegraph ran an anonymously authored and immensely flattering profile of McMahon,74 The Australian published an equally laudatory and anonymously authored profile of McEwen, contending that it was contrary to the public interest to deny McEwen the prime ministership simply because he belonged to the Country Party.75 Suspicions spread quickly that the paper’s proprietor, Rupert Murdoch, had written the editorial in aid of his friend McEwen. ‘I remember Murdoch telling the editor of The Australian [Adrian Deamer], after Holt’s death, that we had to support McEwen — and not McMahon,’ recalled Alan Ramsey.76 That regard for McEwen prompted a front-page article two days later, which offered a well-sourced explanation for McEwen’s veto. ‘It was a beat-up of immense proportions,’ McEwen’s biographer wrote.77 Using ASIO-sourced intelligence, the article claimed that McMahon’s ‘close association with an agent of foreign interests’ was the main cause. That agent — Maxwell Newton — had ‘sought to constantly undermine Australia’s tariff policy and Mr McEwen, as the man behind it, to the detriment of Australian industry,’ the article stated.78

  The accusations prompted public denials from Newton, and days of claim and counter-claim from all involved. He had attended these meetings as a working journalist, Newton insisted, and denied claims that McMahon or the Treasury had funded his trips to the IMF and World Bank meetings. Rokuro Sase, of the Japanese Trade Centre, wrote to newspapers to deny that any of Newton’s work for it was of a political nature.79 Newton’s contract with the Japanese External Trade Organisation (JETRO) was leaked and published.80 McEwen’s hand in all this was never particularly hidden. His press secretary readily confirmed — both to newspapers and to government staff — that the allegations about Newton were the spur for McEwen to veto McMahon.81

  Whatever their veracity, the articles had the effect of halting any kind of move from McMahon to contest the leadership and, in fact, exposed him to a last-minute danger that he might be removed from the deputy leadership. Could someone with these accusations against him really continue in the Treasury? Hasluck, writing later, thought that McEwen’s actions should have finished McMahon forever:

  The decent thing that might have been expected of him, after having been placed under such a cloud, would have been to offer to stand down both from the Treasury and from the deputy leadership. In any case, he seemed bound to lose both offices.82

  That McMahon remained silent seemed cause for suspicion, despite Reid’s claim that any response would entail breaking cabinet solidarity — thus giving grounds for McEwen to seek his dismissal.83 For others, the prospect that McMahon might stand for the leadership, and thus endanger his hold on the deputy leadership, raised the possibility of McMahon’s departure from Treasury — which could leave McEwen with ascendancy in economic policy. This could not happen.

  As the date for the vote drew close, the prospects of the candidates running became clear. Billy Snedden prompted ridicule with his announcement that he would be running ‘as a leader on the wave-length of his era’.84 Les Bury had announced he was standing — and then had gone hiking with his family in the Snowy Mountains. With undisguised support from Menzies and the considerable respect of many colleagues, Hasluck had resolutely refused to campaign for the leadership and sent only a typically understated letter announcing that he would put his name forward.

  The contest, as Hasluck had suggested in December, was between him and Gorton. Building on considerable support from fellow senators and Victorian MPs, Gorton brightened his prospects by adept use of the media. He appeared on a quiz show with Barry Jones, was photographed swimming and lazing on a beach, and in television interviews on Channels 7 and 9 presented himself as a straightforward, wry, charming, and knowledgeable man. Gorton emerged a much-strengthened figure. The public liked him. His colleagues believed his natural talent for television and his laconic approach would ensure he was a potent political asset.85

  THE date of the ballot, 9 January, arrived with little certainty about who would prevail. Consensus among the party and the press was that it would take at least two ballots for one of the candidates to acquire a majority. No one had such support that they c
ould win immediately.

  While meeting with MPs before the ballot, McMahon made no attempt to disguise the fact that he would be voting for Gorton. He thought Gorton would win. The extent to which McMahon’s statements affected others is debatable, but certainly it is true that pro-McMahon MPs would have an important role to play.86

  At two-thirty, the eighty-one Liberal Party parliamentarians assembled in the government party room. McMahon sat at the table at the front, pale, his arms folded, looking drawn and reserved. In front of him was the long statement he had drafted to read at the meeting. Also on the table were the ballot boxes. Behind him, on his right, Hasluck, Gorton, and Bury were squashed into a couch, facing the party. Tony Eggleton ushered the press in to take photos and record film. ‘Only two minutes, chaps,’ he said. ‘That’ll be all you’re allowed.’ The candidates and the members made idle conversation, affected nonchalance. The smoke from Bury’s cigarette fluttered like a feather in the afternoon light. After two minutes, the press was sent out: ‘Right,’ called Eggleton. ‘Thank you, gentlemen.’87

  The doors closed, and McMahon opened the meeting. Some were surprised that he was chairing, and dissatisfied with the way he proceeded to do so. Kent Hughes believed that ‘arrangements’ had been made to smother all business besides the election of a new leader. Still wishing to see McEwen remain prime minister, he had asked Dudley Erwin to put a resolution to this effect on the agenda, ahead of a ballot for the leadership. The request had not been met: his resolution was set down the agenda.88 Les Irwin’s wish that the party discuss McEwen’s press statements was similarly set down the agenda. According to Reid, there was the potential in this early stage of the meeting that a move would be made to spill the deputy leadership.89

  McMahon moved a motion of condolence for the Holt family. After a minute’s silence for Holt, he moved on. ‘We come now to the purpose for which we were called together today. We meet to elect the leader of the Liberal Party, who under well-established Constitutional practice will be called upon by the Governor-General to become the Prime Minister of Australia.’