Tariffs, Arbitration and price-fixing – class struggle or intra-capitalist settlement?

[The following text appeared in “The Review” section of the Australian Financial Review, 2 November 2007 , pp. 6-8. I have added footnotes to identify sources and to indicate how the demolition of “the Settlement” should proceed, for instance, in regard to price-fixing as the missing third leg of New Protection. This folder also contains the original article without footnotes.]

What about the conditions of the trade, the position of the manufacturers, the pressure of foreign competition, the possibility of a formidable increase in prices to the public? 
President of the Arbitration Court , H. B. Higgins, 1909.[1]

On 8 November 1907 , an Australian judge ruled that seven shillings a day was “fair and reasonable” as the minimum wage for an unskilled labourer. With the absorption of that Basic Wage into a Total Wage after 1967, the initial ruling might have shrunk to an antiquarian interest. Instead, during the past 15 years, the judgement has been restored to center of the political stage by chatter about “the Australian Settlement”.

Paul Kelly re-branded a cluster of topics to open his 1992 book, The End of Certainty.[2] He took a linking of arbitration for workers with protection for manufacturers as the keystone of this version. Its other elements were White Australia, government intervention throughout the economy, and faith that a Great and Powerful Friend would defend us.

The actualities of economic life rebut the claims about a trade-off between labour and capital. Those forces resisted each other and compulsory arbitration. Furthermore, the Settlement case is lopsided because it omits the importance of tariffs for the revenue, and to maintain the exchange rate. Finally, the account ignores the centrality of price-fixing in the pursuit of economic certainty. In short, the Australian Settlement is not the Big Picture.

Rather, “the Australian Settlement” is one more instance of the tyranny of clichés[3] with which debates are clogged by “second-rate public intellectuals” - to apply another of Mr Kelly’s phrases.[4] The expression owes its currency to free-trade apologists who structure the narrative of twentieth-century Australian history as a long march to the free market against the alliance between tariff touts and an Industrial Relations Club; the battle, they boast, concluded with the triumph of an open economy under Hawke-Keating whose deregulations ended certainty.

Nothing had ever been certain. Confusion, shocks and the unpredictable reigned.[5] Tariff protection, price-fixing, cartels and minimum wages were attempts to cushion the blows. The Australian economy remained open to the gales of the global economy, a tumult which neither Prime Ministers nor Judges could conjure out of existence.

“The Australian Settlement” schema gained credence in universities because historians are petrified by economics and economists spurn economic history, while political scientists and sociologists know too little of either.[6] On top of that collective shallowness, the academics share with political reporters the delusion that quoting from policy speeches charts the course of events.[7]

The treatment of arbitration and tariffs in the Australian constitution could hardly be more different. Arbitration is confined to one clause out of the thirty-nine in Section 51 which specified powers for the Commonwealth: “Conciliation and arbitration for the prevention and settlement of industrial disputes extending beyond the limits of any one State.” By contrast, tariffs dominated the Federation debates.[8] The federal movement succeeded by postponing the choice between free trade and protection to the national parliament.

As the source of revenue for all governments, laws to collect customs and excise took precedence over arbitration. The Commonwealth set up a Court of Conciliation and Arbitration in 1904, appointing a High Court judge as President. Henry Bourne Higgins occupied the position from 1907 until 1921.[9]

In the first case to confront Higgins in the Arbitration domain, he had to decide whether a manufacturer of agricultural implements, H. V. McKay, was entitled to exemption from a £6 excise imposed in 1906. Already benefiting from tariffs, McKay (rhymes with “day”) insisted on greater support against the International Harvester Company of Chicago which he accused of dumping its machines here to drive him out of business.[10]

The Tariff Commission endorsed the call, but on three conditions: that combines (Trusts) be outlawed; that price-gougers forfeit support; and that the excise duties be rebated only to firms paying “a fair and reasonable” wage. The government adopted these requirements but passed the explication of that fatal phrase to the Arbitration Court . The final stipulation became part of a scheme known as “New Protection”.[11]

As an equity lawyer, Higgins defined “fair and reasonable” by applying principles developed to set solicitors’ fees. English courts had interpreted “fair” as requiring equality in the negotiations, while “reasonable” referred to the amount. The fairness criterion implied that the wage had to be more than a labourer might accept to avoid starvation.[12] Higgins deduced that a worker freed from such inequity would expect to support a wife and three children in frugal comfort as understood by a civilised community.[13]

To calculate monetary equivalents, Higgins examined household budgets. He discerned that a family needed five shillings and five pence for “rent, groceries, bread, milk, meat, fuel, vegetables and fruit”. McKay’s minimum of six shillings per day left his labourers with only seven pence to cover essentials such as “light, clothes, boots, furniture, utensils, rates, fares”, let alone luxuries such as reading matter, tobacco or insurance. Higgins decided that McKay’s wage was not “fair and reasonable”. In its place, he set the rate at seven shillings. Higgins admitted that he had hesitated about awarding seven shillings and sixpence.[14]

Thus, the Harvester Standard lent more towards frugality than comfort, close to what we now call the poverty line. Workers had long called for “Eight hours work, Eight hours play, Eight hours rest, And eight bob a day.” Hence, not too many were enthralled by a “fair and reasonable” wage of seven shillings.

High levels of temporary and casual employment meant that few labourers averaged seven shillings across a year. They were stood down without pay for as little as 15-minute periods. Men got no sick leave, unemployment benefit and often no accident pay. Spread over twelve months, the seven shillings often meant six shillings, or less. After 1914, the workers fell further behind because of war-time inflation. The 1920-21 Royal Commission into the Basic Wage recognised a 31% shortfall between the cost of living and the Harvester Standard.[15]

Employers protested at paying the family rate to single men. Businesses claimed that they were supporting phantom wives and unborn babes.[16] In New South Wales , Judge Charles Heydon in 1912 accepted that the average number of dependent children had dropped from three to two, and limited that State’s minimum wage accordingly. Breadwinners replied that labourers’ families were still three offspring, or more.[17]

McKay had reacted to the 1907 decision by challenging the Excise Act in the High Court. A majority decided that a requirement to pay “fair and reasonable” wages was an attempt to regulate conditions of employment whereas the constitution allowed only for the preventing or settling of inter-State disputes. Thus, within nine months of the Harvester judgement, the High Court invalidated its binding of wages to tariffs.[18]

While waiting for the 1908 verdict, McKay moved to escape paying seven shillings a day, which he admitted he could afford. Three years earlier, he had shifted operations from Ballarat to the fringe of Melbourne , but outside the Metropolitan zone in order to remain beyond the writ of the Wages Boards. He now abandoned his opposition to arbitration in principle. He sought profit protection by asking for a Wages Board to set a lower wage. Unionists branded him “a free trader in juvenile flesh” for employing 15-year-old boys at two shillings a day. When his employees went for a Federal Award, he locked them out for 13 weeks.[19]

Even if the 1906 Excise Act had stood, the trade-off would have had a limited effect for both capital and labour. The notion of a Settlement attractive to a majority of manufacturers and their employees neglects the numbers involved. The 1911 census found only 12% of the workforce engaged in secondary production. The minority whose prospects might have been improved by New Protection was even smaller. Thousands of businesses faced no competition from imports. They enjoyed natural protection, even from makers in the next town or suburb. Those concerns lost out when tariffs pushed up the cost of their raw materials and equipment. Moreover, many workers in the tradeables sector had their wages set by State Tribunals with no link to protection.

The New Protection ideal of redistributing some of the monopoly profits from protection lingered through a pooling of aggregate incomes to maintain levels of employment.[20] Yet, the jobless rate hovered around 8%. Even the pooling recompense disappeared in the 1930s depression when effective rates of protection skyrocketed, wages were slashed and unemployment hit a third of the workforce.

In addition to shaky foundations, the case for a Settlement built on arbitration-protection suffers from a triad of omissions. First, it glides over the resistance to compulsory arbitration by most employers and many workers. Secondly, the account is lop-sided in regard to tariffs because it ignores their significance for revenue, the balance-of-payments and the exchange rate. Thirdly, the “Settlement” leaves out the reason why McKay had got to court, namely, the threat from price-fixing cartels.

McKay’s reaction against the wisdom of Higgins was of a piece with the near-universal resistance by employers to compulsory arbitration.[21] Capital and labour reached no settlement. Rather, they “carried on an uninterrupted, now hidden, now open fight”.[22] Indeed, the year following the Harvester judgement saw the start of an era of industrial conflict which raged until the 1930s depression gave the employers the upper hand.

Capitalists combated compulsory arbitration on every ground. They tried to destroy its constitutional basis by interpreting the words “beyond the limits of any one State”. Their lawyers argued that strikes were limited in place even if they occurred on several sites in the same trade at the one time. The exception might be the construction of a bridge across State borders. This challenge persisted until the Privy Council declined to hear a Master Builders’ appeal in 1916.[23]

Loyal to his hatreds, McKay, in 1922, joined with the retired general-manager of BHP, G. Delprat, in the Single-Purpose League to abolish compulsory arbitration.[24] Delprat’s successor at BHP, Essington Lewis, told the Bureau of Steel Manufacturers in 1924 that they needed tariffs only because compulsory arbitration kept wages so high. In June 1922, he had closed the Newcastle steel works, dismissing 5,000 men who resumed nine months later on lower rates of pay. [25] At the end of the decade, unions refrained from submitting new Logs of Claims for fear of having their wages cut as had happened to the Timber Workers.[26]

Industrial conflicts erupted into extra-parliamentary contests when governments revived secret armies to break strikes.[27] The unsettled temper of the Twenties is captured in comments from the President of the Arbitration Court , Chas Powers, and the Federal Attorney-General, John Latham.

On stepping down in 1925, Powers reported that he had refused to endorse the 39s-a-week increase recommended by the 1920 Royal Commission into the Basic Wage, restored the 48-hour week, and cut 12s a week from the wages of fitters and turners: “As to worry: Imagine for eleven years refusing requests to increase the basic wage– where men have families of more than two it is hard work to insist on them getting the basic wage.”[28]

When the Federal government decided in 1929 to abandon industrial relations to the States, Latham advised cabinet: “it should be recognised that it is not possible … by merely legal means to enforce an award to which the unions in Australia as a whole are opposed … and the States have the police forces which the Commonwealth government lacks.”[29]

From the labour side, a growing body of unionists also spurned arbitration, influenced first by the Industrial Workers of the World (the IWW, or Wobblies) and, in the 1930s, by the Communists who won leadership of most of the industry groups. Higgins had noted that the IWW-influenced United Labourers’ Union in Adelaide had sent him a “insulting telegram. They did not want any arbitration.”[30] The Wobblies penned lines to mock Labor politicians: “I know my Arbitration Act/ Like a sailor knows his riggin’s/ And if you want a small advance/ I’ll speak to Justice Higgins.” On the surface, it would seem that no one had more to gain from the promotion of manufacturing than engineering tradesmen. Yet the effect of the margins that Higgins attached to the Harvester Award depressed their earnings by some 10%. Their craft skills gave them a negotiating strength superior to any evidence in court.[31]

By focusing on tariffs as industry protection, votaries of the Settlement neglect their importance for the revenue. The men who drafted the Constitution had equated taxation with tariffs. Reminiscing in 1917, the free-trade champion George Reid acknowledged that “in the long run the revenue necessities of all the States except New South Wales would have told in favour of our opponents.”[32]

The initial Commonwealth tariff in 1901 promised “Revenue without destruction”, which meant that the rates would be high enough to keep Victorian manufacturers in business.[33] The emphasis on revenue is clear from a breakdown of the imposts. Tariffs and excise on narcotics and stimulants remained the largest sources. Industry protection was not at issue. Tariffs continued to be imposed on goods which were not likely to be produced here, for example, the 1926 duty on petrol was to fund road building.[34]

Parliamentary Labor had aims beyond increasing wages and jobs through industrial protection. The priority for the first majority Federal Labor government in 1910 was to settle workers on farms by taxing the unimproved value of land to break up the big estates.[35] Those charges also added 10% to Commonwealth revenues.[36]

The continuation of the Great European War beyond Christmas 1914 cast public finances into confusion. The Commonwealth income from tariffs shrank with imports as the tonnage of shipping halved. To fund the war effort, the government levied its first income tax in 1915-16.[37]

Peace brought no relief to the demand for revenues. The Tariff of 1920 was a revenue measure as well as a means to preserve the secondary industries that had got started during the war.[38] The Minister for Trade stressed the need to fund repatriation and to service the Commonwealth’s debts which had risen from £20m to £400m. He increased tariffs on “soap, potted meats, pickles, confectionery, sauces, and the like, because … people who insist on getting imported goods of this class can afford to contribute something to the revenue.”[39]

By 1927, complaints about industry protection caused the Commonwealth to investigate the application of tariffs. The Bridgen Committee’s report criticised the over-reliance on customs duties for revenue. This bias towards indirect taxation had two consequences. Indirect taxes were more burdensome to the tradeables sector.[40] They also installed a regressive tax regime. The over-reliance on the tariff for revenue distributed income away from the wage-earner.[41] Conservatives swallowed their free-trade principles to avoid income and land taxes. Radical protectionists criticised the tariff regime as regressive.[42]

Balancing exchange rates
The third – indeed, the pivotal - task for industry protection was to manage the balance of payments while stabilising the exchange rate. Throughout the fifty years from 1913, Australian ran the risk of becoming a Banana Monarchy.[43]

Because Australian exports were agricultural, and hence subject to the weather, their total value was unpredictable. Even when one year’s balance was in credit, the concern about next session’s income inscribed uncertainty throughout the economy. With no guarantee of export earnings to meet forward payments, each order for capital goods from overseas was risky. The trading banks maintained reserves of sterling and gold in London to tide importers over seasonal and cyclical instabilities.[44]

Australian financiers had muddled through until the collapse in export prices during 1928 provoked a double crisis. In paying for imports, the authorities ran short of funds to meet the £30m. in payments due on dividends and as interest on external public debt. The balance of trade had to be restored to support the currency if governments were to roll over loans at lower rates of interests. The conventional response was to ration funds. That shrinkage was not enough to redeem the reserves. More extreme measures followed: devaluation, tariffs hikes and embargoes. Their combination achieved the miracle of a £15m. credit balance. Higher tariffs also contributed to balancing the budget which was essential to attract loans.[45]

This crisis left no room for a Settlement between capital and labour. On the contrary, Arbitration tribunals suspended rural awards to lower production costs to boost farm exports.

The next exchange crisis struck in March 1952 as the price for wool fell. Export earnings slumped by almost a third while imports bounded up by 40%.[46]  The Menzies government subjected 98% of imports to licences, before borrowing from the IMF. The Minister for Trade and Customs explained that “import licensing was never intended as an instrument for the safe-guarding of trade in goods. It was merely an instrument for the protection of the currency.”[47]

As in the depression, the government also coped with the imbalance of merchandise trade by holding down wages and enforcing the Penal Powers of the Arbitration system. From 1953, the Court stopped adjusting the Basic Wage in line with price movements. The capacity of the whole economy to pay became the dominant principle of wage determination.[48]

The Menzies government delivered another shock to certainty on 22 February 1960 by taking nearly 90% of imports off the regime of import licensing imposed in 1951. An avalanche of imports blew out the trade deficit.[49] That self-inflicted crisis brought on yet another of the stop-go credit squeezes of the Menzies era, with more borrowing from the IMF.[50]

Shortly thereafter, mining exports and import substitution contained the upsets to the balance of payments.[51] Mounting mineral sales produced a different burden on manufacturers and farmers by driving up the exchange rate. The 25% across-the-board cut in tariffs in 1973 came when the rising value of the dollar cut effective protection by that amount.[52] Similarly, since 2001, a 75% increase in the dollar from minerals has had more impact on the competitiveness of farms and factories than do the remnants of tariffs.

Price Protection
Although the 1907 McKay hearing had its origins in opposition to a cartel, oligopoly has never featured in “the Australian Settlement”.[53] As a result, key devices to achieve certainty are missing from the Kelly legend.[54] Capitalists built their version of a settlement on price-fixing and collusive tendering through trade associations.[55] The traders called their cartels – tellingly - “Price Protection”. Every branch of industry engaged in price-fixing.[56] Employers warmed to minimum wages if they helped them to calculate costs to rig prices.[57] The world-wide movement for Standardisation also helped.[58] Businesses made little attempt to conceal their combinations. Trade journals lauded such doings as a moral positive.[59]

There was nothing “Australian” about this intra-capitalist settlement. Rather, price-fixing is part of what the doyen of US business historians, Alfred Du Pont Chandler, identified as “The Visible Hand” of management’s maximising profit through the modern corporation.[60] To the extent that any kind of economic settlement promised certainty, it came through a patchwork of conspiracies between capitalists, stitched together by price-fixing. The weakness in this arrangement remains the necessity that the players have to swindle each other.[61]

Price Protection undermined the arbitration side of any settlement by driving up the cost of living, as illustrated with examples from around the time of the Harvester Judgement. Patent medicine firms formed a Propriety Articles Trade Association in 1903 to maintain set prices for pharmacy lines, before expanding to cover other branded goods.[62] In 1909, the Queensland Association gained the support of four of the largest manufacturers to supply its members at or below cost to undercut an interloper.[63] The Southern Grocer reminded its subscribers in 1912 that “price-protection is, and must always, remain the very first and foremost plank in any fighting platform worthy of the name, and hang the public!”[64]

Capitalists pursued both vertical and horizontal integration.[65] In Adelaide , the Grocers Association denied supplies to a cash grocer in 1923 when he advertised at almost wholesale prices against Trade margins set at 25%. In 1930, “Price Protection” stopped biscuits going to a Rundle Street department store. By then, South Australian  grocers had 46.5% of their turnover within the protected price schedule.[66] West Australia ’s “Fair Prices Council” signed agreements in 1934 with manufacturers such as Kelloggs and Nestle to supply only retailers who stuck to agreed price lists.[67] State governments saw to it that no goods were sold below those minimums. In 1942, the High Court restrained a Brisbane chain store from selling Persil soap power for less than sixpence a packet.[68]

The capitalists’ Settlement was not a sharing with workers of the profits from industry protection. Rather, the workers had to fight for compensation for the costs increased by price protection, taking direct action to redistribute monopoly profits away from the price-riggers.

During the 1960s, the ACTU’s research officer, R. J. Hawke, revived the 1906 cry against cartels. His submissions to the Arbitration Commission urged the government to outlaw retail price maintenance. Getting no joy, he subverted Price Protection by taking the ACTU into partnership with a Melbourne retailer, Bourkes. The gentlemen’s agreements cracked when the unions struck against Dunlop for its refusal to supply Bourkes with tyres to sell at below the price fixed by the trade.[69]

Price Protection is only one element in the oligopolising that has underpinned the expansion of capital since the 1880s. Fear of combines and Trusts had led the drafters of the Constitution to supply the Commonwealth with power to make laws with respect to “Foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth.” In the 1890s, the corporation was novel, of dubious legality, and identified with the anti-competitive behaviour.[70]

Protecting local manufacturers against what McKay attacked as the “American Octopus Trust” had laid the grounds for setting a basic wage.[71]  By June 1909, the High Court had struck down the anti-monopoly component of New Protection. The decision nullified the Corporations Power for the next 50 years.[72]

After the defeat of the 1911 and 1913 referenda to expand the anti-trust powers, Labor legislated for the Inter-State Commission, to which the Constitution allowed powers “relating to trade and commerce”. In 1914, the Commission documented that, in the printing industry, “men of high standing in the business world” had “developed a power for mischief … not easily to be over-stated.” According to one of their victims: “The limitation in competition was not in regard of Japan , or any other country, but in keeping out any other than members of the Whole Paper Merchants Association.” The Master Printers and their suppliers blacklisted non-compliers.[73]

No sooner had the Commissioners exposed this cartel, than the High Court undermined its powers. The disappearance of the Inter-State Commission spelt the death of the mechanisms to protect the consumer - whether producers or householders - against trusts and price-fixing. One labour argument against unregulated protection was that it buttressed the monopoly sugar producer, CSR.[74]

Efforts against monopolisers revived in the early 1960s, but now via the trade and commerce power, not the corporations power. Draft Commonwealth legislation horrified the Federated Retail Confectionery, Refreshment and Mixed Business Association. Its President declared that retail price maintenance was the small traders’ defence against monopolisers.[75] (The truth in that special pleading has been confirmed by recent amendments to the Trade Practices Act which exempt small businesses from bans on collective agreements when dealing with corporations.)

The High Court invalidated the 1965 Act on technical grounds. Meanwhile, judges were breathing life back into the Corporations Power. Whitlam set up a Trade Practices Commission, which the Fraser government’s Minister for Business, John Howard, derailed; he also dumped a Commissioner who had taken his investigations too seriously.[76] However, the Fraser government used Section 45D of the Act to outlaw secondary boycotts by unions. A constitutional power conceived to break up cartels was turned against their workers. In 2,006, the High Court interpreted the corporations power as authorising the demolition of collective bargaining under WorkChoices.[77]

The path towards economic certainty has been built by cartels. Pratt’s $38m. fine and the imprisonment of a QANTAS executive in the United States are reminders of their preeminence. The absence of Price Protection from Kelly’s Settlement version of Australian history is another mark of its role as propaganda on behalf of the monopolising that masquerades as a free market.[78]

[1] 4 Commonwealth Arbitration Reports (CAR) (1910) 11.

[2] Paul Kelly, The end of certainty, The story of the 1980s, Allen & Unwin, St Leonards, 1992, pp. 1-16.

Graham Maddox provided a conspectus of earlier versions of a settlement, “The Australian Settlement and Australian Political Thought”, Paul Smyth and Bettina Cass (eds), Contesting the Australian way: states, markets and civil society, Cambridge University Press, Melbourne, 1998, pp. 57-68; see also Paul Smyth, “‘Australian Way’, Australian Settlement and the Australian Legend”, Tim Battin (ed.), A Passion for Politics, Essays in Honour of Graham Maddox, Pearson Education, Frenchs Forrest, 2005, pp. 91-101. A Symposium in Australian Journal of Political Science (AJPS), 39 (1), March 2004, blew out the Settlement until Kelly’s poorly tied parcel resembled a dump-bin outside an academic op shop.

The standard of reporting in Kelly’s account is a matter for the ethics committee of the Media Alliance. Not only did he not read the 1929 Brigden Enquiry himself, but misrepresented (p. 6) its summary in Leon Glazer’s Tariff Politics, MUP, Carlton , 1982, p. 11. That academics continue to recommend Kelly’s slovenliness to their students is no cause for wonder when their own researches often are only marginally more substantial.

For an example of Hawke’s version of Twentieth-century Australian history see his statement, “Building a Competitive Australia”, Commonwealth Parliamentary Debates, v. H. of R. 176, 12 March 1991, pp. 1761-75. Kelly served as amanuensis for the bureaucrats and politicians whose staff briefed him with banalities. 

[3] See my “The Tyranny of Cliché”, Portraits of Planning, The Planning Education Foundation of South Australia , Adelaide , 1995, Keynote Address.
[4] Paul Kelly, Australian Literary Review, 3 October 2007 , pp. 3 and 14-16.

[5] One Federation-era editor identified the problems confronting businessmen after passing “through an era of industrial and commercial progression without parallel in history … [d]uring the last quarter of the 19th century … Old methods must be discarded in favour of new. No longer will your customer suit his wants to your stocks … you must … be prepared to take your chances … These are the days of huge monopolies … we find almost continuous warfare between capital and labour. The former, in its ability to commandeer, in various ways, the commerce of the world, makes the struggle harder each year for the legitimate trader and artisan.” Australasian Hardware and Machinery, January 1902, p. 3.

[6] The lead offender was Frank Castles, Working Class and Welfare: Reflections on the Political Development of the Welfare State in Australia and New Zealand, 1890-1980, Allen & Unwin, Sydney, 1985, and Australian Public Policy and Economic Vulnerability, A Comparative and Historical Perspective, Allen & Unwin, Sydney, 1988. His influence has been dissected by Rob Watts, “Ten years on: Francis G. Castles and the Australian ‘wage-earners’ welfare state”, Australian and New Zealand Journal of Sociology, 33 (1), March 1997, pp. 1-15; and a response, pp. 16-20.

The fading of economic history was documented by M. B. Boot, “Teaching Economic History at Australian Universities”, Australian Economic History Review (AEHR), 27 (2), July 1997, pp. 158-64; the history of economic thought has fared even worse, perhaps because it is subversive to let students see that the dominant paradigm is an historical construction, as documented by Maurice Dobb, Political Economy and Capitalism, Routledge & Kegan Paul, London, 1944 edition. The conviction among Neo-Classicals that their truths are self-evident is related to their assumption that the market is universal and timeless.

[7] This approach by bourgeois scribblers towards the past is one expression of what Marx mocked as “parliamentary cretinism, which holds those infected by it fast in an imaginary world and robs them of all sense, all memory, all understanding of the rude external world”, Marx-Engels Collected Works, volume 11, Lawrence & Wishart, London, 1979, p. 161. For an exemplar of this malaise see Stuart Macintyre’s “An Historian’s Perspective” where he reduced the “context and contingency” of history to backstage manoeuverings, AJPS, 2004, op. cit., pp. 32-33.

The attempt to portray Commonwealth Arbitration as a continuation of the liberalism in Victorian tariffs and Wages Boards has to get over the opposition of Melbourne capitalists to the later. On 19 August 1901 , 400-500 employers unanimously supported the President of the Victorian Chamber of Manufacturers, F. T. Derham, in his call to “repeal the wages board sections of the Shops and Factories Acts, without delay, as their retention must have disastrous effects upon the industries and the trade of the State.” Journal of Commerce, 27 August 1901, p. 7; in addition, the Wages Boards favoured the boss more often than the wage-slave, as happened in 1910 when the Coal, Hay and Corn Trades Board set 42s 6d for drivers on a 58-hour week, Argus, 29 April 1910, p. 6a. Other Victorian employers turned to Wages Boards to avoid the Commonwealth system. Victorian Master Builders got their government to grant one to stymie the the claims of the Australian Builders’ Labourers’ Federation (ABLF) to Higgins, Victoria Parliamentary Debates, v. 130, 25 July 1912, pp. 403-9 and 7 August, pp. 619-20; in 1914, the government further obliged the MBA by enacting a minimal scheme of workers’ compensation to frustrate the provisions in the ABLF Award, 7 CAR, (1913) 210 at 213 and 234; Argus, 18 July 1912, p. 7a, 1 August 1912, p. 10c.


[8] J. A. LaNauze, The Making of the Australian Constitution, MUP, Carlton , 1972, pp. 72, 128, 152-3, 279 and 284-5.

[9] see my “Higgins and Arbitration”, E. L. Wheelwright & Ken Buckley (eds), Essays in the Political Economy of Australian Capitalism, Volume 5, ANZ, Sydney, 1983, pp. 145-163; John Rickard, H. B. Higgins, The Rebel as Judge, Allen & Unwin Australia, Sydney, 1984.

[10] Ian McLean, “Anglo-Engineering Competition, 1870-1914: Some Third-Market Evidence”, Economic History Review, 29 (3), August 1976, pp. 452-64.

[11] “New Protection” was initiated by Victorian Labor Senator Findley as an amendment to Excise Tariff (Spirits) Bill on 18 September 1906, three days before similar provisions on agricultural machinery, Geoffrey Sawer, Australian Federal Politics and the Law, 1901-1929, MUP, Carlton, 1956. pp. 47-48.

[12] 2 CAR (1907) 2.

[13] The consequences of the Harvester Judgement for women workers have fed an ill-informed debate in which Higgins is blamed for applying the laws of capitalism as if he had invented them. An example of this bourgeois feminism is Patricia Grimshaw: “And so women’s capacity to earn a fair wage, judged by criteria of equity and individual needs, was dealt a sore blow, which would bedevil their fortunes for decades.” Patricia Grimshaw et al., (eds), Creating a Nation, 1788-1990, McPhee Gribble, Melbourne, 1994, p. 200. The flaws in this approach are, first, that a fair wage is impossible for both men and  women within the system of capitalist expropriation of surplus value, and, secondly, that wage rates are not measures of the values added by workers but are decided by the socially necessary costs of reproducing their labour power, with “socially necessary” extending beyond the costs of food, shelter and leisure, to include the relative strengths of the contending classes, industrially, politically and ideologically, see Karl Marx, Wage-Labour and Capital, Current Book Distributors, Sydney, 1944; Suzanne de Brunhoff, The State, Capital and Economic Policy, Pluto, London, 1978, chapter 1.

For one account of the protections that Australian women workers received from the minimum wage and other industrial standards compared with those in the more deregulated labour markets of the US of A, see Carol Lee Bacchi, Same Difference, Feminism and Sexual Difference, Allen and Unwin, North Sydney, 1990, pp. 134-53, and my review Australian Book Review, December 1990, pp. 6-7, and also on  this site.

[14] 2 CAR (1907) 3; for the evidence presented by the workers’ wives see Charles Fahey and John Lack, “Harvester Men and Women: The Making of the Harvester Decision”, Julie Kimber and Peter Love (eds), The Time of Their Lives, The Eight Hour Day and Working Life, Australian Society for the Study of Labour History, Melbourne, 2007, pp. 65-86. John Burnett surveyed the standard of living of the English working class, Plenty and Want, A Social History of Diet in England from 1815 to the Present Day, Penguin, Harmondsworth, 1968, chapter 8.

For the domestic economy in capitalism see Claude Meillassoux, Maidens, Meal and Money, Capitalism and the Domestic Community, CUP, New York, 1981; for the use of allotments to depress money wages in the UK, see D. C. Barnett, “Allotments and the problem of rural poverty, 1789-1840”, E. L. Jones and G. Mingay (eds), Land, Labour and Population in the industrial Revolution, Barnes & Noble, New York, 1967, pp. 162-83.

[15] 1920 Royal Commission, Commonwealth of Australia, Parliamentary Papers, 1920-21, v. IV, No. 80, pp. 529-624, and No, 94, pp. 625-45.
Inflation left wages behind, but no sooner were post-war rates increased than deflation set in. For employer complaints see Australasian Furniture and Furnishings, September 1921, pp. 62-64, and Australian Cordial-Maker, July 1923, pp. 10-12.

[16] Employers estimated that they were supporting 2.1m. unborn children and 450,000 non-existent wives.

[17] Child endowment became a way around this burden on capital, helping to keep down wage rates, SMH, 20 October 1928, p. 18d; T. H. Kewley, Social security in Australia, University of Sydney Press, Sydney, 1965, pp. 137-40 and chapter 10; Fran Jelley, “Child endowment”, Heather Radi and Peter Spearritt (eds), Jack Lang, Hale and Iremonger, Sydney, 1977, pp. 88-98; the Communists argued that the introduction of endowment had favoured the bosses but that its removal would hurt the workers, especially the jobless, Lang, Piddington and the Fight for Child Endowment, United Front Committee of Unemployed, Sydney, 1932, p. 32; Red Leader, 13 September 1934, p. 8b-c, reported on the suburban committees of the Protection of Child Life Campaign; for employers’ resistance as an extension of their opposition to compulsory arbitration and the basic wage, see Statement of the Victorian Chamber of Manufacturers to the Royal Commission on Child Endowment, Melbourne, 1928; for the majority and minority Reports of the Royal Commissioners on “Child Endowment or Family Allowances”, Parliamentary Papers, 1929, II, pp. 1281-1405, esp.pp. 345-455 for connections to the basic wage.

[18] 6 Commonwealth Law Reports (CLR) (1908) 41, and Union Label case, 6 CLR (1908) 469; for background to these Acts and judgements see Sawer, op. cit., pp. 40-42.

[19] John Lack, “Hugh Victor McKay”,  Australian Dictionary of Biography, volume 9, MUP, Carlton, 1986, pp. 291-94; Charles Fahey and John Lack, “ ‘A Kind of Elysium where nobody has anything to do’: H. B. Higgins, H. V. McKay and the Agricultural Implement Makers, 1901-26”, Labour History, 80, May 2001, pp. 99-119; Sandra Cockfield, “Arbitration, Mass Production and Workplace Relations: “Metal Industry’ Developments in the 1920s”, Journal of Industrial Relations (JIR), 36 (1), March 1993, pp. 19-38; Sandra Cockfield, “McKay’s Harvester Works and the Continuation of Managerial Control”, JIR, 40 (3), September 1998, pp. 383-400.

[20] The Australian Tariff, An Economic Enquiry, MUP, Carlton, 1929; Nancy Windett delivered a more severe critcism, Australia as Producer and Trader, 1920-1932, Oxford University Press, London, 1933;  for the context of these debates see Peter Groenewegen and Bruce McFarlane, A History of Australian Economic Thought, Routledge, London, 1990, chapter 6, and T. M. Fitzgerald, Between Life and Economics, ABC Books, Sydney, 1991 edition, chapter 4.

Kelly & Co. fail to see the connection between the income distribution effects of protection on one of the other pillars of their “Settlement” - White Australia - in terms of populating or perishing, as noted by L. F. Giblin, Australia, 1930, Melbourne University Press, Melbourne, 1930, p. 29, a connection taken up at length in F. W. Eggleston et al., (eds), The Peopling of Australia, Further Studies, MUP. Melbourne , 1933.

[21] David H. Plowman, “Employers and Compulsory Arbitration: The Higgins Era 1907-1920”, JIR, 28 (4), December 1986, pp. 588-609.

[22] Karl Marx and Frederick Engels, Birth of The Communist Manifesto, Dirk Struik (ed.), International Publishers, New York , 1971, p. 89. This fight goes on every second of the day around the disciplining of labour power to boost the expropriation of surplus value. Strikes, lock-outs and revolutions express this class struggle at a qualitatively different level from taking a smoko out of the labour time purchased by the capitalists.

[23] 18 CLR (1914) 224; Builders’ Labourers’ Journal (Melb.), 15 May 1916 , p. 1; 12 Tasmanian Law Reports (1916) 94.

One printing house journal wrote that compulsory arbitration had made the 1920s the second decade of “the abyss of chaos”, Cowans, XIII (50), April 1928, p. 12; Architects’ and Builders’ Journal of Queensland (ABJQ), January 1928, pp. 71-73; Newcastle Construction, 27 June 1929, p. 15. In rejecting compulsory arbitration, employers advocated conciliation along the lines of New Zealand , South Australian Storekeepers’ and Grocers’ Journal, July 1923, p. 645; ABJQ, November 1926, pp. 45-50; Cowans, XIII (51), July 1928, pp. 22-23.

[24] P. Mawson, A Vision of Steel, Cheshire, Melbourne, 1958, pp. 216-19; Delprat had headed a direct attack on arbitration in the 1909 lock-out at Broken Hill, Graeme Osborne, “Town and Company: The Broken Hill Industrial Dispute of 1908-09”, John Iremonger, John Merritt and Graeme Osborne (eds), Strikes, Studies in Twentieth Century Australian Social History, Angus and Robertson, Sydney, 1973, pp. 26-50; Queensland Industrial Gazette, 9 (7), July 1924, pp. 418-23.

[25] Quoted in Geoffrey Blainey, The Steel Master, Essington Lewis, Macmillan, South Melbourne, 1971, p. 83; by 1927, the Grimwades had avoided the problem of arbitration by using the monopoly profits from the tariff to automate production of its glass bottles, J. Poynton, Russell Grimwade, MUP, Carlton, 1967, p. 119.

[26] After the Bruce-Page Government re-wrote the Arbitration Act in 1926, it appointed a former President of the Central Council of Employers and National Party Senator, Colonel E. A. Drake-Brockman, to the Court. 

By early 1929, the Lukin Award had cut wages and increased hours of the timber-workers, see Miriam Dixson, “The Timber Strike of 1929”, Historical Studies, 10 (40), May 1963, pp. 479-92. Despite the danger of the AWU’s taking coverage, even right-wing officials in the ABLF wanted their union to withdraw from Arbitration. One organiser argued that the bias of the Bench was so ferocious that further cases were “more likely to decrease and worsen their conditions.” (ABLF, Victorian Branch, Minutes, 4 February 1929, Noel Butlin Archives Centre, ANU, Z398/20), a reaction repeated when the Court suspended quarterly cost-of-living adjustments in October 1953, Victorian Branch Minutes, 12 July 1954, Z398/29.

[27] Jackqueline Templeton, “Rebel Guardians: The Melbourne Police Strike of 1923”, Iremonger et al. (eds), Strikes, 1973, pp. 103-127; Gavin Brown and Robert Haldane, Days of Violence, The 1923 police strike in Melbourne, Hybrid, Melbourne, 1998, chapter 7; Eric Campbell, The Rallying Point, MUP, Carlton , 1965, p. 16.

[28] Powers to L. Groom, 16 April 1925, NLA MS 236/2/851-4; for a se study in mendacity see Powers’ statement of resignation, 22 CAR (1925) xxxi at xxxii; James Douglas, “Sir Charles Powers”, M. White and A. Rahemtula (eds), Queensland Judges on the High Court, Queensland Supreme Court Library, Brisbane, 2003, pp. 171-97.

[29] Latham papers, late April 1929, NLA MS 1009, Series 28-4.
[30] Transcript of the 1913 ABLF Award hearings, National Archives, Australia , B1958 (B1958/1) 9/1912, p. 490.

[31] K. D. Buckley, The Amalgamated Engineers in Australia, 1852-1920, ANU Press, Canberra, 1970, p. 169; Tom Sheridan, Mindful Militants, Cambridge University Press, Melbourne, 1975, pp. 135-6.

[32] George Reid, My Reminiscences, London, Cassell, 1917, p. 200; Reid drew on the experience of New South Wales which had maintained its free-trade rectitude by fundings its activites through land sales, P. N. Lamb, “Crown Land Policy and Government Finance in New South Wales, 1856-1900”, AEHR, VII (1), Mach 1967, pp. 38-68.

[33] Commonwealth of Australia , Parliamentary Debates (CPD), volume 1, 21 May 1901 , pp. 110-11.

[34] Resistance to this impost led conservative prime minister S. M. Bruce to denounce Standard Oil and Royal Dutch Shell as “the great monopolistic institutions that control the oil market”, CPD, v. 114, 3 August 1926, p. 4801; R. S. Gilbert, The Australian Loan Council in Federal Fiscal Adjustments 1890-1965, Australian National University Press, Canberra, 1973, chapters 5 & 6.

[35] Argus,  25 April 1910, p. 5i; Andrew Fisher was less keen to endorse the nationalisation of other monopolies; free-trade supporters of Henry George’s Single Tax on land supposed that the monopoly over that resource underpinned industrial trusts, see Max Hirsch, Democracy versus Socialism, Storey Evans & Co., London, 1901, chapters IV and V, and “Appendix”, pp. 468-76.  

[36] Fisher’s first experience as prime minister had taught him the problems of State debts, finances and revenue which he made almost the only subject of his 1909 policy speech, Policy for Australia, delivered Gympie (Q), 30 March 1909. For example, the Commonwealth could not afford the pensions for which it legislated in 1908 until 1910, Kewley, Social Security, pp. 73-83.

[37] Ernest Scott, Australia During the War, The Official History of Australia in the War of 1914-1918, Volume XI, Angus and Robertson, Sydney , 1936, Chapter XIII.

[38] C. Forster, “Australian Manufacturing in the War of 1914-18”, Economic Review, 41, November 1953, pp. 211-30; even the scion of a great importing house, S. M. Bruce, favoured tariffs to help meet the costs of the war, but recognised a need to limit monopoly rent, S. M. Bruce to Prime Minister W. M. Hughes, 17 October 1919, National Library of Australia, MS 1538/136/1.

[39] Greene, CPD, vol. 91, 20 March 1920 , pp. 701, 707 and 717.

[40] Brigden, The Australian Tariff, pp. 181 and 184-9; for an account of its impact on Economic theorists around the world, William Coleman et al. (eds), Giblin’s platoon: the trials and triumph of the economist in Australian public life, ANU Press, Canberra, 2006, pp. 61-73.

[41] R. C. Mills Economic Record, 1927, pp. 53-54; thirty years later, A. J. Reitsma revived discussion, “Trade and Distribution of Income, Is there Still an Australian Case?”, Economic Record, 34 (68), August 1958, pp. 172-88; H. David Evans, “Income Distribution, Welfare and the Australian Tariff”, Australian Economic Papers, 10 (17), December 1971, pp. 89-113. 

[42] Sometime Labor Minister for Customs, Frank Tudor, CPD, v. 92, 1 July 1920, p. 2516; radical Labor MHR Frank Anstey, CPD, v. 96, 6 July 1921, p. 9726; Phil Griffith tracked a free-trade current in the labour movement during the early Federal period but did not pick up the concern with monopolising and price-fixing as the third leg of New Protection, ‘Labor’s Tortured Path to Protectionism’, Robert Hood and Ray Markey (eds), Labour and Community, Australian Society for the Study of Labour History, Illawarra Branch, Wollongong, 1999, pp. 91-95; Griffith recognised the revenue dimension with its class bias but not the balance-of-payments question which became prominent after the Great War.

[43] “The depression years of the 1930s, the Second World War, and a period of 8 years in the 1950s, during which import quotas were imposed for balance-of-payments reasons, rendered tariff policy relatively unimportant.” H. David Evans, General Equilibrium Analysis of Protection, North-Holland, Amsterdam, 1972, p. 3; nonetheless, attempts are still made to calculate effective tariff rates across the twentieth century, Peter Lloyd, “100 years of tariff protection in Australia”, AEHR, 48 (2), July 2008, pp. 99-1

[44] Despite the elements that this article has added to the so-called Settlement and to New Protection, the factors operating at any conjuncture were even more complex. In the post-war chaos, tariff rates were effective only in relation to the other nation’s rate of exchange, CPD, v. 92, 19 August 1920 , pp. 3644ff.; tariff increases during the 1920s made up for only one-half of the falls in import prices, C. B. Schedvin , Australia and the Great Depression, Sydney University Press, Sydney, 1970, pp. 53-60.

A further complication in the balance-of-payments came when limits on the issue of banknotes disrupted the purchase of exports, which led to a rewriting of the Commonwealth Bank Act in 1924, L. F. Giblin, The Growth of a Central Bank, The Development of the Commonwealth Bank of Australia, 1924-1945, MUP, Carlton, 1951, pp. 6-14 and 24-30, S. J. Butlin, Australia and New Zealand Bank, Longmans, Croydon (vic.), 1961, pp. 367-76, and R. C. Mills and E. Ronald Walker, Money, Angus and Robertson, Sydney, 1952 edition, pp. 222-37.

[45] Douglas Copland, Australia in the World Crisis, 1929-1933, Cambridge at the University Press, 1934; Mills and Walker, Money, chapter X; the numbers are tabulated in Official Year Book, 24, 1931, pp. 113-16, 241 and 754-8; Giblin, Australia, 1930, pp. 9-11;  J. E. King, From Giblin to Kalecki: The export multiplier and the balance of payments constraint on Economic Growth, 1930-1933, La Trobe University, Schools of Economics and Commerce, Discussion Papers, Series A 97.05, March 1997; P. H. Karmel, “Giblin and the Multiplier”, Douglas Copland (ed.), Giblin: the scholar and the man, F. W. Cheshire, Melbourne, 1960, pp. 164-74.  

[46] A chronic dollar shortage contributed to the defeat of the Chifley administration in December 1949 through its maintenance of petrol rationing. The year ending June 1950 saw the first trade deficit (£10m) since the war, which did not alarm the Institute of Public Affairs because London reserves equaled a year’s imports, IPA Review, 4 (4), July-August 1950, p. 114; during the next twelve months, the challenge became to manage the export earnings from the Korean War wool boom against an even greater surge in imports until the trade deficit for the September Quarter of 1951 hit £111m., the highest recorded, Chartered Accountant in Australia, XXII (5), November 1951, p. 265.

[47] Senator Neil O’Sullivan, Clay Products Journal, November 1951, p. 4; Menzies explained to the Staffordshire potters that the import restrictions were “to preserve … our overseas balances.” ibid., June 1953, p. 3; post-1950 figures are in W. E. Norton and M. W. Brodie, Australian Economic Statistics 1949-50 to 1978-79: I Tables, Reserve Bank of Australia, Occasional Paper No. 8A, Sydney, 1980, pp. 3 and 162-3; for a century-long perspective see Year Book of Australia, AGPS, Canberra, 2001, pp. 1014-5.

[48] Norton and Brodie, Australian Economic Statistics, p. 103; see also L. J. Louis, Menzies’ Cold War, an interpretation, Vulgar Books, Melbourne, 2001.

[49] If the decision was based on the expansion of mineral exports, it was premature. How Menzies and the Fifties acquired their reputation for sound economic management is one of the miracles of propaganda, as Donald Horne saw through a lucky country “run by second-rate people who share its luck,” in The Lucky Country, Penguin, Ringwood, 1964, p. 209.

[50] Melanie Beresford and Prue Kerr, “A Turning Point for Australian Capitalism: 1942-52”, E. L. Wheelwright & Ken Buckley (eds), Essays in the Political Economy of Australian Capitalism, volume 4, ANZ, Sydney, 1980, pp. 148-71. The Reserve Bank had to draw a further £78.1m. from the IMF early in 1961; G. D. McColl, The Australian Balance of Payments, A Study of Post-war Developments, MUP, Carlton, 1965, who saw that maintaining the exchange rate set in 1931 of £A1.25 to £1 ster. was the holy grail of Coalition policy, one which compounded inefficiencies from protection, pp. 8 and 138-40; G. G. Moffatt, Import Control and Industrialisation, A Study of the Australian Experience, MUP, Carlton, 1970.

[51] Chartered Accountant (October 1954, p. 202) had responded to the £100m. trade deficit in 1954-55 and reserves at bare minimum of £400m. by underlining Australia’s “vulnerability” through depending on wool while having no better policy than to hope for foreign investment and a minerals boom, which “leaves us in a gambler’s position: everything will be right when we hit a long-price winner.” The editorials in this professional publication matched sagacity with style and merit attention as the opinion of a pivotal branch in the management of capital. 

[52] R. G. Gregory, “Some Implications of the Growth of the Mineral Sector”, Australian Journal of Agricultural Economics, 21 (3), August 1976, pp. 71-91; Gregory applied principles devised by Roland Wilson, Capital Imports and the Terms of Trade, MUP, Carlton , 1931.

[53] The failure to recognise price-fixing is symptomatic of the ideological blindness of Neo-Classical Economists who persist in their dismissal of monopolising as an exception, contra Joan Robinson, The Economics of Imperfect Competition, Macmillan, London , 1938. Editing a volume of readings in Australian economic policy, D. M. Lamberton noted that: “The most common industrial structure in Australian manufacturing is an oligopolistic one yet there is no determinate theory of oligopoly price and output comparable to the theory of competitive industry.” Industrial Economics, Penguin, Ringwood, 1972, p. 7. For a comparable failing among Marxists see Michael A. Lebowitz, “The Theoretical Status of Monopoly Capital”, Stephen Reswick and Richard Wolff (eds), Rethinking Marxism, Automachine , New York , 1985, pp. 185-203. For Marxists, competition persists in the era of monopolising, in intensified forms, as I explain throughout The Essence of Capitalism, Sceptre, Sydney , 2001. Geoff Robinson surveyed how Left academics here examined monopolising, but gave little attention to the policies of the labour movement, “Monopoly, overaccumlation and disproportionality in Australian capitalism 1880s to 1930”, Phil Griffiths and Rosemary Webb (eds), Work, organisation and struggle, Australian Society for the Study of Labour History, Canberra Region Branch, Canberra, 2001, pp. 325-31.

[54] The third leg of New Protection has been written out of the “Settlement” story. The 1907 Parliamentary Paper explaining the proposed approach to tariffs had spelt out that “[a]n essential part of the completed scheme, however, is the protection of the consumer by the establishment of machinery to prevent the undue inflation of prices.” CPp, 1907, 2nd Session, II, p. 1889. This mechanism was to apply to producers as well as to domestic consumers, see CPD, 29 October 1908, v. 48, pp. 1708-18; Report of the Royal Commission into Price of Agricultural Machinery, CPp, 1909, II, pp. 65ff.; Peter Macarthy, “Employers, the Tariff, and Legal Wage Determination in Australia – 1890-1910”, JIR, 12 (2), July 1970, pp. 182-93.

By 1909, the High Court had invalidated the anti-monopoly provisions of the Australian Industries Preservation Act, nullifying the corporations power, Section 51 (xx), on the grounds that it applied only to inter-State commerce, 8 CLR (1908) 330. 

[55] Building and Engineering Journal, 9 January 1896 , p. 1; Richard Arnold May, “The Trade Association and its Place in the Business Fabric”, Harvard Business Review, 1 (3), October 1922, pp. 84-97; Gordon Boyce, “A Professional Association as Network and Communicating Node: The Pharmaceutical Society of Australasia , 1857-1918”, AEHR, 39 (3), November 1999, pp. 258-83.

The Bankers’ Association lay the heart of a ring of price-fixers who agreed on rates and not to accept, still less pursue each other’s clients, unless they were from the Commonwealth Bank, Report of the Royal Commission … into the Monetary and Banking Systems …, Commonwealth Government Printer, Canberra, 1937, Recommendation 386; A. L. G. Mackay, The Australian Banking and Credit System, P. S. King & Co., London, 1931, p.10; H. W. Arndt, The Australian Trading Banks, F. W. Cheshire, Melbourne,1957, pp. 8-9.

[56] In the chaos of the war and its aftermath, capitalists tried to protect themselves by excoriating a category of evil-doers known as “war profiteers”; the public remained convinced that profiteering and price-fixing were like two peas in a pod; for a catalogue of complaints see the Index to CPD, v. 98, 1920-21, pp. cccx-cccxi; Grocers argued that their setting prices eliminated profiteering because the public knew the correct prices, SASGJ, June 1919, pp. 324-5 and January 1921, p. 259. Chicago-School economist George J. Stigler later quipped that only monopoly could guarantee the perfect knowledge of bid prices required for consumer sovereignty in a “perfect market”, Journal of Political Economy, 65 (1), February 1957, pp. 14-15; see my “Shoot the Bolshevik! Hang the Profiteer! Reconstructing Australian Capitalism, 1918-21”, E. L. Wheelwright & Ken Buckley (eds), Essays in the Political Economy of Australian Capitalism, Volume two, ANZ, Sydney, 1978, pp. 185-206, where I missed the long-term context of price-fixing; see also Chris Nyland and Amanda McLeod, “The Scientific Management of the Consumer Interest”, Business History, 49 (5), September 2007, pp. 217-35.

[57] Even while a dispute was raging, the MBA offered inducements to the ABLF not to work for those builders who did not observe “trade discounts”, Builders’ Labourers’ News, 4 August 1916 , p. 4, and 18 August 1916 , p. 5.

With the anti-monopolising thrust blunted, the regulatory structures installed by tariffs and arbitration assisted several trades to manage their price-fixing, Melbourne printers calculated their agreed profit margins on the wages set by the courts, Printing and Allied Trades Employers’ Association of Victoria, Minutes, 19 May 1920, Melbourne University Archives (MUA) 101/55/13, p. 85.

Despite the NSW MBA’s distress at the 1901 Arbitration Act in their State, its members learned how to use the Court to discipline their own. Late in 1902, the Master Builders took the Master Painters to Court for agreeing to a 44-hour week in conflict with the times set down under the Awards. Arbitration delivered other blessings because wage-fixation simplified price-fixing. The Carpenters Union won a High Court appeal against a spec firm which had refused to pay Award wages by pretending that its workers were sub-contractors. The major builders resented the operators who had consolidated into Building Companies allied to Real Estate Agents selling houses on “the time-payment principle”. These firms paid below the standard wage by relying on “labour-only contracts”. Members of the MBA and the architects lost work. The MBA condemned “the pernicious system of labour-only contracts adopted by the building companies, land agents etc, to the detriment of the bona fide builder.” Such evil ways had been declared “contrary to the Arbitration Court ’s award.” (MBA Report, 1907, no pagination) Similarly, South Australian Master Builders endorsed a Scaffolding Inspection Act in 1906 because it equalised their costs with those of shoddy speculators, Parliamentary Debates, South Australia, 18th Parliament, 2nd Session, 12 September 1906, p. 460; a threat from low wages had led to the formation of the Builders’ and Contractors Association of Tasmania in March 1891 when the Masters took advantage of the 1889 Trade Union Act to register its members to ward off price-cutting on contracts from employers using cheap labour available from the economic collapse, such “mutual protection and benefit” posing no threat to the ruggedness of their individualism, Dianne Snowden, Foundations of a Tasmanian history: a history of the Master Builders’ Association, 1891-2005, MBA Tasmania, Hobart, 2005, p.1; Master Builders in Western Australia convinced the Industrial Court to protect them from the price-cutting of jobbing operatives in exchange for granting preference to unionists who would uphold standardised rates of pay, Western Australian Industrial Gazette, March 1939, p. 530; in 1960, the Court affirmed this approach while acknowledging the difficulties of separating piece-rates from price-cutting, WAIG, December 1960, p. 669.

A Melbourne horticulturalist advocated a Wages Board to lift wages for his gardeners in order to discourage their kind from adding to their earnings by underselling commercial nurseries out of backyard seedbeds, Journal of Horticulture, 7 June 1907 , p. 218; for the Award Argus, 25 April 1910 , p. 7a.

[58] Price-fixing required a standardising of operations and products. For an institutional history of Standards Australia which omits this service to capital, see Winton Higgins, Engine of Change, Standards Australia since 1922, Brandl & Schlesinger, Blackheath, 2005; the workings of the standardisers can be tracked through Commercial Standards ( Sydney), 1931, unpaginated; SMH, 13 August 1929, p. 12, 11 September 1929, p. 19, 6 November 1929, p. 10, 17 April 1930, p. 18, and 20 November 1930, p. 11; W. I. Stewart, National standards and their impact on Australia, 1922-1980, Standards Association of Australia, Sydney, 1980; Jan Todd, For good measure: the making of Australia’s measurement system, Allen & Unwin, Crows Nest, 2004; cf. “Standards in Industry”, Special Issue, Annals of the American Academy of Political and Social Science, 137, May 1928. Rough drafts of mine on the topic appear on this website.

[59] The founders of the Bakers’ Association compared their actions with diplomacy in international affairs, as Higgins was later to do for arbitration. “Without association, how is the necessary increase in price required to meet increased cost of production to be brought about?” in order to withstand “assaults of the purchasing public”, AB&CJ, March 1904, p. 7.

Because Judith Brett is unaware of the existence of trade journals, thereby neglecting a principal primary source, she swallowed the Menzies line that the so-called “middle class” had lacked a voice in Robert Menzies’ Forgotten People, Pan Macmillan, Sydney, 1992. On the basis of this oversight, Brett went on to construct her fantasy about a high-minded middle class devoted to individualism in opposition to the collectivism of the working class, Australian Liberals and the Moral Middle Class, CUP, Melbourne, 2003. Had she examined what the self-employed and small-business people were saying about themselves she would have encountered both the immorality of their price-fixing and their envy at the collectivism of trades unionism. Again, we see that only nonsense can follow from parliamentary cretinism.

In advising employers to join him in setting up the Victorian Employers’ Union in 1885, that paragon of free trade, Bruce Smith, called upon business to “adopt and avail themselves of exactly the same principles which have been found to succeed so well with the working men themselves.” Smith recognised that the “interests and objects” of the classes of employers and employed were “antagonistic to one another – the one seeking to obtain the largest amount of labour for the smallest amount of wages; the other, endeavouring to obtain the largest amount of wages for the smallest amount of work.” The result was that the “price of labour – must (all other things being equal) depend upon the strength of the parties: using the word ‘strength’ in a general sense, to signify all the elements which contribute to enable either side to enforce its terms. Now, one of the most important of these elements is unanimity of action – in fact, next to money itself, the most important of all.” Smith argued that the employees were winning because they had organisations to promote their general interests while the employers had no equivalent to the Trades Hall. An Employers’ Union would fill that gap. “Trades Unionism in Victoria; or Who Shall be Master? A Note of Warning to Employers”, Victorian Review, 11 (65), March 1885, pp. 581 and 572, italics in original. Smith’s account neglected the role of the state in resisting the employees, including the despatch of the police and the military against strikers.

The Master Grocers recognised “that remarkable organisation which is termed trades unionism; which, to give it its due, stands for all that is admirable in a stern fellowship of interests bound together to get all possible aggrandisement from life, even at the expense of the other side of the industrial game.” Southern Grocer, 25 May 1911 , p. 4. In an address to Sydney Bakers, their President warned against an individualism which refused to obey a decision, whether in a trade union, the army, or sporting team, hence, their watchword must be: “Loyalty to God, King and Country, and the Master Bakers’ Association”, SASGJ, September 1917, p. 12 and backcover; the President of the Graphic Arts Service Association, E. S. Bolle, reminded his members in 1936 that “The industry was greater than the individual.” GASA Minutes, 18 May 1936, MUA, 94/119/1, p. 252; see also Australasian Grocers’ Journal, 1 January 1889, p. 4; Australasian Hardware and Machinery, May 1901, p. 183, and November 1901, p. 355.

[60] Alfred D. Chandler, The Visible Hand, The Managerial Revolution in American Business, Belknap Press, Harvard, 1977. Far from examining the reorganisation of capital, Gill Palmer wafted on about arbitration as an instance of “corporatism” as ideology, Stuart Macintyre and Richard Mitchell (eds), Foundations of Arbitration, OUP, Melbourne , 1989, pp. 313-33.

[61] Victorian Boot and Shoe Retailers laughed when one of the officials observed that “while there was always plenty of talk of brotherly love, they all tried to cut one another’s throats in business”, Australasian Footwear, May 1917, p. 112.

[62] Western Trader, March 1924, pp. 16-17.
[63] Chemist and Druggist of Australasia , November 1909, p. 330.

[64] Southern Grocer, 20 April 1912 , p. 623; see also 20 May 1911 , p. 5.

In a NSW country town, a new bakery advertised cheaper bread; when its owner refused a request from the trade Association to desist, the other bakers cut their prices and drove him out of business within eight days, Australasian Bakers’ and Confectioners’ Journal (ABCJ), January 1904, p. 7; following an outbreak of price-cutting, the Journal warned members of the consequences “unless the evil is grappled with strenuously”, July 1906, p. 5. Another link between tariff rates and price-fixing came in 1907 when, the confectioners denied that they had formed a “combine”, merely an arrangement to settle prices after the imposition of tariffs, ABCJ, September 1907, p. 42; Melbourne (Hoadley and MacRobertson) and Sydney confectioners agreed not to sell into each other’s markets below the prices set by their local association, Sydney Morning Herald, 2 September 1907, p. 7c.

[65] Each trade and industry had particular issues, which shifted over time. Master Tailors protested that, because they paid craftsmen at a higher rate than was earned by the machinists who worked for department stores, the latter engaged in a form of price-cutting, Tailor, October 1913, p. 22-23, November 1913, pp. 24-25, December 1913, p. 10, and February 1914, p. 18. Boot and shoe manufacturers set about controlling prices by limiting the styles and colours, Australasian Footwear, July 1916, pp. 176-7, May 1917, pp. 112-3, November 1918, p. 428. Retailers of electrical goods hoped to defeat the “cut-throat competition of department stores and drapery emporiums” by boycotting manufacturers and distributors who supplied those rival outlets, Australasian Electrical and Radio Times, 20 May 1936 , p. 4. For the less than competive condition of the tyre market between wars, Jon Stanton, “Inefficiency in the Early Australian Tyre Industry”, AEHR, 24 (2), September 1984, pp. 91-114.

Price-fixing in bricks and tiles led to the opening of government-owned brickworks. The NSW MBA asked for the abolition of the 25% tariff on tiles to break the octopus, ABJQ, 7 July 1923 , p. 29; Brisbane ’s Archbishop Duhig denounced the brick ring, ABJQ, September 1935, pp. 17-19 & 35-36. At a national conference of builders, one contractor declared: “Combines had run riot in New South Wales . Brickworks had been closed down but they continued paying dividends for many years. Control of manufacturers outside combines was made through supplies of raw materials.” Another delegate declared that “manufacturers had paid brick companies to cease manufacturing tiles.” Argus, 19 November 1938 , p. 2h. For the cement cartel, see Colin Forster, The Growth of the Cement Industry in the 1920s”, Economic Record, 34, August 1958, pp. 199-211; The Pre-mix Concrete Octopus, ABCWF, Greensborough, 1969; the Australian Consumer and Competition Commission fined Boral, Pioneer and CSR $6.6m each in 1995 for fixing the $1bn Brisbane ready-mix market between 1988 and 1993, Christine Parker, Paul Ainsworth and Natalie Stepanenko, The Impact of ACCC Enforcement Activity in Cartel Cases, ANU Centre for Competition and Consumer Policy, Canberra, May 2004, pp. 29-35; for collusive tendering organised through the NSW MBA see its Annual Report, 1911, no pagination; Report of the Royal Commission of inquiry into certain matters relating to the Department of Public Works, NSW, Parliamentary Papers, 1911, volume 1, pp. 681-926; for Leighton’s collusive tendering see Report of NSW Royal Commission on Building Productivity, NSW, Parliamentary Papers, Second Session, 1992-93, vol. XXII, Paper 273, pp. 99 and 130; and NSW Casino Control Authority, Report of Public Inquiry, 1994, p. 32, where Leighton’s CEO, Wal King, justified his companies’ use of false invoices to conceal price-fixing as “the culture … and custom that had been longstanding in the industry that had been handed on for years.”

[66] South Australian Shopkeepers’ and Grocers’ Journal, July 1923, p. 676 and 690; September 1930, p. 17; October 1930, p. 99. 

[67] Retailers’ Budget ( Perth ), October 1934, pp. 20-22, November 1934, pp. 9-11.

For an explanation of “pooling” as a scheme by which “keen competitors” saved “unnecessary expense” and avoided “the evils of unrestricted competition”, see E. S Wolfenden, “Re-orgnisation of Capital Reconstruction & Amalgamations”, Blennerhasset’s Commercial Education Society, Sydney, 1933, pp. 62-64.

[68] Grocers and Shopkeepers’ Journal of W.A., December 1941, p. 4, March 1942, p. 4.

[69] Bob Hawke, The Hawke Memoirs, William Heinemann Australia , Port Melbourne , 1994, pp. 56-58. For an account of this element of anti-competitiveness see Warren Pengilley, “Price-Fixing Agreements: a study of the economic, legal and administrative objectives of control of horizontal pricing agreements”, Two volumes, M. Comm., University of Newcastle , 1973.

[70] See my The Essence of Capitalism, chapters 2 and 6; and H. L. Wilkinson, The Trust Movement in Australia, Critchley Parker, Melbourne, 1914; and Andrew Hopkins, Crime, law and business, the sociological sources of Australian monopoly law, Australian Institute of Criminology, Canberra , 1978.

In April 1918, the US Congress passed the Webb Act, exempting trusts formed purely for export from anti-trust laws, a threat noted by Australian manufacturers, Bulletin, 10 April 1919 , p. 5, and written up by Ambrose Pratt, Australian Tariff Handbook, Industrial Australian and Mining Standard, Melbourne, 1919, pp. 15-16.

[71] In introducing the 1906 Australian Industries Protection Act, the Minister for Trade and Customs, Sir William Lyne, feared that the “giant trusts” that had been formed in “protectionist America … will be created in protectionist Australia if action is not taken to prevent it. This Bill aims at preventing monopolies.” CPD, 31, 14 June 1906, p. 243. Of immediate interest to many workers was the creation of price ring in 1903 by six of Melbourne breweries which combined in July 1907 as Carlton and United to supply half of Victoria’s beer, Wilkinson, Trust Movement, pp. 90-91; in addition, brewers integrated vertically through tied houses; the Swan managers in Perth used twenty-four code words to inform their Melbourne directors of discounts and other anti-competitive devices, safe from the eyes of the Inter-State Commission, Suzanne Welborn, Swan, The History of a Brewery, University of Western Australia Press, Nedlands, 1987, p. 115.  

Conrad Joyner, The Commonwealth and Monopolies, Sydney Studies in Politics: 4, Cheshire, Melbourne, 1963; see also the chapters on “Public Control of Prices” and “‘New Protection’ and Price Control”, in W. Jethro Brown, The Prevention and Control of Monopolies, John Murray, London, 1914; for Brown’s outlook see Michael Roe, Nine Australian Progressives, Vitalism in bourgeois social thought, 1890-1960, University of Queensland Press, St Lucia, 1984, pp. 23-56.

[72] 8 Commonwealth Law Reports (1909) 330, until overturned 124 CLR (1971) 468; free traders had pictured protection as the seedbed of the trusts, see Hirsch, Democracy versus Socialism, pp. 154-60, and B. R. Wise, Industrial Freedom, A Study in Politics, Cassell, London, 1892, pp. 186-7.

The free-trade conservatives joined the property-owning protectionists in opposing government interference to break up the trusts, a point of agreement which greased the Fusion of their parliamentary agents in 1909. The alliance between free traders and protectionists demonstrated that the struggle between classes was more decisive than the conflicts within the capitalist class. Fusion was not complete until the 1992 merger of the Chambers of Manufacturers and Commerce, made possible by the free marketeering under Hawke-Keating.

Opposition to price-fixing and monopolising contributed to what amounted to a fusion inside the Federal Labor party between its free-trade and protectionist wings. It is worth considering whether the 1916 split over conscription for overseas service reproduced that fracture line.

[73] Photo-engravers assembled in Sydney in 1908 to fix “a minimum price”, Max Farley, Graphic Arts Services Association of Australia, Sydney, 1993, pp. 7 & 25; the Australian printing industry then adopted the U.S. system of a price-fixing known as Typothetae. The Master Printers colluded with the paper merchants, ink-makers and engravers not to supply any firm quoting below an agreed schedule of fees, see Report of the Inter-State Commission, Commonwealth of Australia, Parliamentary Papers, 1914, volume 2, pp. 249-57, Victorian Parliamentary Debates, Legislative Council, Session 1913-14, volume 135, pp. 3345-53, 3877-87; Wilkinson, The Trust Movement in Australia, pp. 110-13; for the creation of the ring, see Printing and Allied Trades Employers’ Association of Victoria, Minutes, MUA, 101/55/3 – that file contains a letter from H. E. Starke, dated 24 February 1915, advising the Master Printers not to sue for defamation because such action would further expose their price-fixing. Their associations could never eradicate the cheating and disloyalty dictated by the competitive strand of capitalism. A Sydney printer, William Brookes, MLC, protested in 1928 against “the insane competition and price-cutting that pervades throughout the industry”, Wimble’s Reminder, July 1928, p. 57, and October 1928, p. 13; the madness became a pandemic during the 1930s depression. GASA Minutes, 6 August 1929, p. 85; 19 January 1931, p. 115; 5 December 1932, p. 164; 16 January 1933, pp. 167-68, MUA, 94/119/1; NN, 1 May 1935, p. 9; for a 1938 effort at price maintenance, see MUA 94/110/1.

[74] CPD, volume XCI, 25 March 1920 , pp. 827-42 and 945-64.

[75] Mixed Business, May-June 1963, p. 2; and see also my “Pop Goes the Bottler: the Australian Soft-drink Industry, 1945-65”, Journal of Australian Political Economy, 46, December 2000, pp. 126-45.

[76] George Venturini, Mal Practice, the administration of the Murphy Trade Practices Act, Non Mollare, Sydney , 1980. The core of this account is the zinc cartel, a reminder that some of the most significant price-fixing relates to raw materials, not consumer items, although those mineral cartels do push up prices in the shops. For the Aluminum cartel see I. A. Litwak and C. J. Maule, Anti-Trust Bulletin, XX (3), Fall 1975, pp. 641-63; and for the uranium cartel see June Taylor and Michael Yokell, Yellowcake, Pergamon, London , 1980.

[77] 229 CLR (2006) 1.

[78] Nothing in this article should be construed as favouring protection over free trade. As Marx clarified in his disputes with Friedrich List, the point is to take sides in the struggle between classes, so that any support for tariffs remains tactical, see Roman Szporluk, Communism and Nationalism, Karl Marx versus Friedrich List, OUP, New York , 1988.

Within the domain of parliamentary reform around 1970, the progressive alternative to both tariffs and free trade was indicative planning, as proposed by J. F. Cairns, Tariffs or Planning? The case for reassessment, Lansdowne, Melbourne, 1971; see also the critique of hydra-heading planning under free-market ideologues, Bruce McFarlane, Economic Policy in Australia, the case for reform, Cheshire, Melbourne, 1968, chapter 5. As Trade Minister in the second Whitlam government, Cairns appointed, in July 1974, a Committee, headed by CSR’s Gordon Jackson, to advise on secondary industries, see Policies for the Development of Manufacturing Industries, AGPS, Canberra, 1975, which identified a set of burdens for manufacturing unconnected with tariff – for example, the refusal to consolidate production in localities, the monopoly profits to overseas investors which then failed to invest in research and development. As the mouthpieces for handing regulation over to corporations, Kelly and Keating put the blame for inefficiencies on protection, a device which the multinational firms no longer needed, as shown by their switch to the world car in the late 1970s, see my Gone Tomorrow, Angus & Robertson, Sydney, 1982, chapter 2.             

In the first half of the twentieth century, tariffs were a poor compensation for the unwillingness of banks to invest with manufacturers, a matter explored by the Report of the Royal Commission … into the Monetary and Banking Systems …, 1937, Recommendations 685-7; as a member of the Commission, future Federal Treasurer and Prime Minister J. B. Chifley carried the lessons over to bank nationalisation after the striking down of his 1945 Banking Act, for his dissenting views, pp. 262-8 and L. F. Crisp, Ben Chifley, Longmans, Croydon (Vic.), 1961, Chapter XII; Wilson, Capital for Industry, Blennerhassett, Sydney, 1937: Peter Cochrane, Industrialization and Dependence, Australia’s Road to Economic Development, University of Queensland Press, St Lucia, 1980, chapter 4; the 1931 Macmillan Committee exposed a comparable problem facing British manufacturers, David Kynaston, The City of London, Volume III, Illusions of Gold, 1914-1945, Chatto and Windus, London, 1999, pp. 193-202.