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By 1909, a German firm, Metallgesellschaft
dominated the world trade in lead and zinc. This cartel therefore sold almost
all the ore produced at Broken Hill. The Germans had set up a subsidiary here
in 1897, which became part of a ‘Trio’ of German companies which tied up most
of the Broken Hill companies in long-term contracts. For instance, BHP had
signed up to sell through the cartel until 1921. In addition, BHP had more
German shareholders than British.
The real power of the German
firms came from their advances in metallurgy. Technological superiority over
the British firms meant that the cartel could offer the best prices. In keeping
with the turn to Finanzkapital from
free trade imperialism of the British, Metallgesellschaft
formed the Metallbank in 1906. Together they were the third largest firm in
Germany.
British capitalists fought back.
Their local allies became known as the Collins House Group. From nothing in
1905, the member companies owned the three richest mines on the field. They had
no smelter and so were tied to the German cartel almost as much as were BHP.
War broke out on the ground and
in boardrooms. In London, the family in control of Metallgesellshaft, the
Mertons of Frankfurt, anglicised their directorship. Only British subjects
could join – but most were naturalised Germans. Step two was to keep the trade
in their hands. The London subsidiary now handled all the metals. Every bullet
fired by either side would add to the profit of the German conglomerate.
The Mertons had taken charge of
the US supplies, along with those from Spain. But the upheaval of war gave the
Guggenheim-Morgan concern its chance to break into the world market without the
cartel.
A new front opened in September
with newspaper articles alleging that the metals trade was German stronghold.
The cover-up worked – for the time being. The British government could find no
evidence that Frankfurt bought or sold the metals in the hands of the Merton’s
London arm.
The propaganda war reached
Australia in October. ‘Is it British?’ headlined an article about BHP. The
Mining Standard wanted to know whether BHP was free to sell its lead to British
firms? Was it a British firm or German one with British connections?
The Military raided the Collins House
Group on 8 November 1914. A ‘Trading with the Enemy Act’ had been made retrospective.
The raid yielded no proof against the Group. Perhaps they should have raided
BHP.
Attorney-General Hughes made up
for the lack of hard evidence with rhetoric and insinuations. His state
socialist outlook meant that he knew that with millions at stake, the firms
could not be trusted. As he had written in the recent election campaign: ‘If
you can’t trust capitalists to supply clean milk to babies, what can you trust
them to do?’
Collins House wanted to escape
from the cartel but they could not go it alone as the Americans had. BHP feared
that any rupture would greatly harm the business. BHP’s London directors signed
a new Lead Convention on 18 February. One result was that a British firm
protested to Hughes that they could not buy ore from BHP. The cartel again did
a sidestep by releasing BHP from the Convention so long as they continued to
behave as if it existed.
Ducking for cover did BHP no
good. Its camouflage operations convinced him that they would never sever their
links to the Hun unless he made them. In May 1915, he pushed an Enemy Contracts
Annulment Bill. Not all the Imperial Patriots approved. Loyalty to the
King-Emperor was all very well but what about the sanctity of contracts?
Hughes’s attack was reinforced
when the Secretary of State for War, Lord Kitchener, publicised the chronic
shortage of ammunition. The cartel’s competitors were no slow to allege that
the Enemy metal traders were holding back essential supplies. The ANZACs were
But the tougher law had little
effect. Not a single contract was submitted for annulment. Hughes struck again.
He declared one of the smaller firms in the Trio to be an enemy agency. Its
manager was interned. BHP and Collins House at last answered the call.
None of the capitalists’
performance would have surprised Jack Simpson, shot on 19 May as he brought
another workmate through Shrapnel Gully. He had written to his mother: ‘I often
wonder when the working men of England will wake up and see things as other
people see them. What they want is a good revolution and that will clear some
of these Millionaires and lords and Dukes out of it.’
Drawn from Frank Carrigan, ‘The Imperial Struggle for
Control of the Broken Hill Base-Metal Industry, 1914-1915’, Essays in the Political Economy of
Australian Capitalism, volume 5, 1983, pp. 164-86.
Carrigan concludes: ‘Only the establishment of socialism
promises a future in Australia free from the shackles of imperialism and war.’
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