Eureka to the Diggers

by Thomas Keneally

  The boom 1880s were an era of great stability in Victoria. Duncan Gillies and Alfred Deakin had formed a coalition which united liberal factions and brought in a long phase of political stability as well. This government would not fall until November 1890, when the collapse of shares and property prices exposed the scale of what they had been borrowing from British investors for public work, including roads and sewerage and railways. These borrowings had certainly helped their friends and associates down in Collins Street, and also created a modern network of rail which made it immensely easier for wheat growers to get their produce to market and thus help the good times roll along in the bush as well as in the city. The writer of a private book of prayers, Alfred Deakin was himself a modest presence at the table of Mammon, director of a building society, an investor of his own and his father’s money in a range of societies and banks run by fine temperance men. He, however, possessed a genuine spirituality and sought no more than affluence. It was Victoria’s unlimited future which was his drug. Like thousands more, he lost his own investments and—more scarifying to his conscience—his father’s as well.

  James Munro had been leader of the Opposition for some time when the long rule of the railway-building Berry–Deakin ministry ended, making him premier and treasurer in November 1890. There were some problems with his banks and financial institutions, along with those of other folk, but no one believed the 1880s boom was not only about to end but to implode. There had been industrial unrest—the Maritime Union strike of 1890 had brought other unions into a savage class battle—but by the time Munro came to power in November 1890 the unions were beginning to run out of funds.

  Along with Victoria’s collapsing fortunes however—its old friends and financiers from overseas now stung by them and letting them hang—Munro’s own apparently unassailable fortune began to evaporate. Almost instantaneously shares worth pounds descended to the price of a few pence, bewildering and impoverishing many middle-class families and hurling the mighty down from their thrones. Amongst those whose thrones were wobbling was Munro. After a year of trouble, a Voluntary Liquidation Act was passed on 3 December 1891 with the supposed aim of stopping mischievous speculators from forcing companies into compulsory liquidation against the will of the majority of shareholders. But above all, it prevented small shareholders from making any inquiry into a company’s affairs, and enabled the companies to wind up their affairs privately, by ‘secret compositions’, often by paying their shareholders and depositors one penny in the pound. (There were, by the way, 240 pennies to a pound.) That is, the fortunes of many people, including the modestly affluent, were reduced to about 0.4 per cent of what they had been worth a few months before.

  Munro did not initiate this legislation but he agreed to it, and his Federal Building Society and Real Estate Mortgage and Deposit Bank availed themselves of it very quickly. Munro, pursued down Collins and Bourke streets by shareholders wondering where their money had gone, or abusing him for the declining value of shares, was pleased to hand over the reins of government to his deputy, William Shiels, and to plan to go to London to replace Sir Graham Berry as agent-general. There was a huge public protest at the appointment, and the Age and the magazine Table Talk lambasted him. He was called back from London by an embarrassed government. Sixty-one years of age, he was walking along Collins Street as a private citizen reduced in rank and wealth when a labourer named George Davis accosted him and shouted that investment in Munro’s Real Estate Bank had cost him all his money, reduced him to the status of labourer, and left him with ‘nothing but the Yarra’. That being so, he thought that he might as well kill Munro and go to the scaffold instead. He stopped short of murder but was charged with assault. He was fined £5, but the magistrate hearing the case said that it was remarkable, given the times the city had endured, that the citizens had behaved with such admirable composure. He almost implied that it was excusable for Davis to hit an old man.

  Sir Matthew Davies, born in Geelong in 1850, was Minister of Justice in James Munro’s cabinet from November 1890 to February 1892 and was largely responsible for the Voluntary Liquidation Act which allowed those ‘secret compositions’, that is, the winding up of banks and building societies without the principals ever having to face their creditors. Davies was lawyer to many of the so-called ‘land boomers’, the men whose companies attracted the citizens of Victoria and the other colonies and of Britain to invest in ever-inflating Victorian real estate. Spacious in his gifts to charity, Davies lived in a splendid Toorak mansion. Much of his early legal work was connected with the property dealings of one of the most notable of the land boomers, Charles Henry James, and Davies himself began speculating in land, forming his first land company in 1882, buying and selling real estate on the basis of investment from the public. By 1887 he owned a network of about forty companies.

  The great crisis for Davies came in 1892 when his Mercantile Bank declared an 8 per cent dividend for its shareholders in February but then suddenly suspended payment of it in March. He was forced to resign from Parliament in April. Secretly he boarded a ship named the City of Chicago, bound for London, where, by the wonder of the Overland Telegraph, he had organised a meeting with his British creditors and shareholders. At it he hoped to raise money to keep the bank afloat. But his ship was wrecked on the Irish coast on 2 July 1892, and Davies was forced to scale a cliff on a rope ladder to escape the wreck. He reached London too late for the meeting of his depositors and found they had applied for liquidation of his bank. They attacked him bitterly at a reconvened London meeting, and refused to save him.

  When he got back to Melbourne he found most of his other companies in difficulty. In January 1893 he was committed to trial for fraud for issuing a false balance sheet. The young, aggressive solicitor-general, Isaac Isaacs, Federationist son of a Yackandandah draper, meant to get him. The attorney-general, Sir Bryan O’Loghlen, withdrew the charges, but Isaacs pursued Davies with new writs. Davies fled Australia before he could be arrested, but a Victorian detective followed on a later ship and arrested him in Colombo.

  At his fraud trial in Melbourne, he was acquitted but forced to file his schedule in bankruptcy in 1894. All his companies collapsed and were wound up, and a then fabulous sum of £4 million invested by others was lost. To shareholders and other creditors he was permitted under his own pernicious legislation to pay one quarter of a penny in the pound, that is, less than 0.01 per cent of what they had invested. Losses of this nature, and accusations of fraud, were by then so common in Melbourne that his personal shame was diluted, and he would stand for Parliament again—though unsuccessfully—and still manage to be elected Deputy Grandmaster of Freemasons. He was also permitted to go on practising law.

  The spectacle of reduced circumstances, of families moving to smaller homes, of once prominent persons leading somewhat less visible lives, was so common that both those guilty of fraud, and those who had acted as negligent directors of companies in which they had shares, were able to console themselves that they were not the sole examples of the great cleansing. But they could not always avoid paying the price for what had happened; Matthew Davies and James Munro suffered depression and self-doubt, and so, most acutely, did Alfred Deakin, a director of the City of Melbourne Building Society, who devised special prayers of repentance to help him through his dark night, the weight of his burden of responsibility and the bite of his own loss and shame.

  Deakin’s old schoolmate Theodore Fink, member of the Yorick Club, friend of writers such as Marcus Clarke and Jules François Archibald of the Bulletin, and artists like Charles Conder, Arthur Streeton, Frederick McCubbin and Tom Roberts, suffered from the collapse of the land boom too. By 1891 Deakin owed £70 000, a massive amount in those days but small compared to the debts of others. He resolved his own financial differences by arranging a secret composition.

  His younger brother Benjamin had a more notable crash. Benjamin was a speculator and developer who owned the
Collins Street land the stock exchange of Melbourne was built on. With the crash his Mercantile Finance Company, just one of his companies, would lose £1 million. He made a secret composition with his creditors and his estate realised a halfpenny in the pound. At least two attempts were made by investors and institutions to have Fink’s composition set aside, since large assets of land had been moved into the name of his wife Catherine. As late as 1909 his wife was still subdividing and selling this land. In 1899 she was able to buy back the freehold of Fink’s buildings in Collins Street, which Benjamin had lost in the bust.

  CLEVER DEVICES

  There was a cleverness of a less pernicious variety operating in the bush. Some of the best places for success for smaller agriculturalists from the 1870s were the wheat growing areas of South Australia and western Victoria, where in both cases the railway connected the farmers to the ports and farm machinery made production so much easier. The South Australian government offered a £4000 prize with a closing date of 1879 for a stripping and winnowing machine. By December 1879 twenty-four machines had been entered and trials took place on a farm at Gawler. The government did not award the major prize but smaller sums were shared between a number of South Australian and Victorian inventors.

  In 1884 Hugh Victor McKay, a young man of twenty-three, tried out a machine which, with its drive belts, cogging and bagging, promised to do everything. Throughout his childhood his wheat-farmer father used the horse-drawn South Australian stripper and the manual winnower—what the Americans were beginning to call ‘combination harvesters’. It was in 1885 that McKay’s prototype, which would do all that mechanically, was tried in the field and patented. Hugh persuaded the plough makers McCalman Garde and Company of North Melbourne to manufacture his machine. James Morrow had exhibited a stripper harvester more than a year earlier and had won a prize at a government trial in December 1884, but the manufacturers spread the myth that McKay was the true begetter.

  The McKay Harvesting Machinery Company, established in 1890, purchased McKay’s patents back along with the manufacturing rights. The depression came close to sending him broke. When he married in 1891, he was down to £25. But with a syndicate’s help, he was able to begin business as the Harvester Company and to market his harvester under the name Sunshine. By 1901 he was selling 500 a year, but then he began to sell in South Africa and through an Argentinean agent, who marketed the machines under the name La Australiana, in South America. By 1905 he was selling 2000 a year.

  McKay would be known for something other than mechanically enhancing the harvest process. A paternalistic employer who underwrote his workers’ choirs, drama groups and cricket teams and who did not—to his own mind—work them for inhuman hours, he detested unionism and threatened to replace workers with machines if they dallied with it. He avoided the decisions of wages boards by moving his business, and Tom Mann, the Labor leader, called him a free trader in humans.

  He became concerned that the stripper harvester, which he believed had been pirated by Americans, was being dumped cheaply in Australia by the International Harvester Company of Chicago. McKay wanted higher tariffs and applied for exemption from excise duties, and came to the attention of Justice Henry Higgins, who selected this as the test case to decide whether McKay was paying the fair and reasonable wages justified by the levels of protection put in place by the new federal government. In his celebrated Harvester judgment of November 1907, the Sunshine Harvester works, ruled Higgins, was ‘a marvel of enterprise, energy and pluck’, but the normal needs of an average employee ‘regarded as a human being in a civilised community’ dictated that an unskilled labourer should be paid a minimum of 7 shillings for a day of eight hours. As some wage rates at Sunshine Harvester were below this, McKay could not be exempted from excise. Thus a resonating legal judgment arose from the romance of golden grain promptly harvested.

  In 1911 the Agricultural Implement Makers’ Union called a strike to enforce the closed shop but also to bring the industry under a federal award. Led by McKay the employers responded with a lockout of all unionists, whether they were striking or not. McKay refused Prime Minister Andrew Fisher’s offer to mediate. The strike lasted thirteen weeks and left the union defeated and fundless, and it also helped poison industrial relations. McKay’s paternalism had been replaced by new stratagems and new dissensions. He decided to take his grievances to the federal parliament and stood for the seat of Ballarat in 1913, but a Labor candidate won in a fierce campaign.

  A CHANGED WORLD

  Striking shearers had gathered in Wilcannia in 1890, turning the world of jointly shared pastoral endeavour into a conflict. Their activism was not as lost on Edward ‘Plorn’ Dickens as that of the Harvester workers was on Hugh McKay, but he was on the government’s side. ‘Any demonstration made by the government,’ said Plorn, concerning the intervention of police troopers, ‘has not been made against trade unionism. The government have simply done their duty in protecting society against these ruffians and blackguards who always rise to the surface during a time of popular excitement.’ However, he said, with somewhat more wisdom, Parliament should not pass hasty repressive legislation. ‘In the excited state of public feeling the people are hardly fit to record their votes without temper or prejudice.’

  A new force had entered the field, derived from Labor Leagues set up throughout Australia. For the election of June 1891 the New South Wales Labor Party for the first time nominated candidates and selected J.H. Cann against the sitting member for Sturt, which included Broken Hill. Labor won the seat. But in Wilcannia Plorn was returned unopposed. The Sydney Morning Herald noted that at his pre-election political meeting ‘he received a splendid hearing and was frequently applauded’. It was generally thought that no one had a chance of successfully standing against him.

  Parliament met and Sir Henry Parkes continued to hold office until October, when Sir George Dibbs came back into power. Now Edward told the Minister for Public Works that secession had been ‘seriously entertained’ by the press and the people of Broken Hill. It is not remarkable for a man of his era that he would never, however, as party to the compact with Macquarie Street which he now foreshadowed breaking, mention the Barkindji people, tall desert people, of the region of Wilcannia. He would have seen the Aboriginal as stockmen and as town drifters, and in so far as he considered them at all they were as to most men of his class either cheaper labour or a hindrance to the progress of the region.

  In 1893 Edward rose to speak against a suggestion made by Premier Dibbs to raise £94 000 for railway building by imposing tolls on the Darling River. Edward pointed out that £80 000 had been spent on trying to keep the Darling open in a losing struggle against the climate. ‘The Premier reminds me somewhat of a gentleman named Micawber . . . In this case the Premier wants to make up his figures and he waits for something to turn up.’ But in his general ineffectuality at least Plorn reached for a visionary argument.

  If there is one thing that could possibly retard Federation it would be the tolls which the Premier proposes . . . there is no doubt that the whole principle of the proposal is retaliation against the adjoining colonies of South Australia and Victoria, because owing to their position and certain facilities of nature, they are able to carry our produce and bring produce to us, at a far cheaper rate than we can ourselves.

  The proposal to levy river tolls was abandoned, though whether it was due to Plorn one does not know. But there was never to be a railway to his town.

  Back in his lodgings in Gresham Street, his marriage to Connie Desailly was not going well. The couple was childless, and Plorn’s political career was doomed. His defeat in 1894 was the result of the further development of class war in the minefields.

  The Amalgamated Miners’ Association created by William Guthrie Spence in 1878 was strong in Broken Hill. A handsome, driven and charismatic young union leader, Richard Sleath, had risen to the presidency of the organisation before the age
of twenty-three. The son of a Fifeshire ploughman, he was a Briton, but another kind of Briton to Edward Dickens. Sleath had succeeded in making the Broken Hill Proprietary Company accept a ‘union shop’. He sat on a board of inquiry into lead poisoning of miners working the BHP silver-lead deposits.

  By 1892 he was speaking in favour of nationalisation of the mines, and came into collision with BHP management, who—because of the collapse in world mineral prices—were devoted now to reducing wages and introducing individual contracts with workers. In June 1892 they told Sleath that they would not be paying the miners a flat wage but would vary it according to the ore they mined. The ‘Big Strike’ of July 1892 lasted eighteen weeks and brought Sleath frequently to the rostrum throughout Broken Hill, and the miners felt a communal power in his presence—a sense of power which grew dimmer, however, the hungrier their children got. He spoke ferociously about mining conditions at the BHP shareholders meeting in Melbourne. When the company brought in non-union labour from Sydney and Melbourne, there were battles between the police and the union men, and Sleath counselled good order, though he was quoted by the Herald as saying that perhaps ‘all the men should be armed and drilled’.

  In September 1892 he was arrested with four others for supposedly inciting violence. The five men were committed to trial by a Broken Hill magistrate with the trial to take place in Deniliquin in the Riverina. They had to travel there via Adelaide and Melbourne, and were warmly welcomed by unionists in those cities. The trial in Deniliquin lasted five days and a guilty verdict was handed down. Sleath was sentenced to two years’ imprisonment.