For Samuel Walder, the economic and political upheaval wreaked by the Depression was an ingredient in his rise and an opportunity. Becoming Sydney’s lord mayor in 1932, still a member of the Citizens’ Reform Association, he led efforts to cope through measures such as the Citizens’ Employment Committee, which helped some 3,000 people obtain work within two months. He oversaw the construction of Martin Place and Macquarie Street in order to put more people to work; with his wife, he took an active interest in finding employment opportunities for women.
He also exercised a wider influence by persuading the various non-Labor parties to band together under the United Australia Party banner. As vice-president of the National Association of New South Wales, Walder was party to the negotiations that led to its merger with the populist, right-wing All for Australia League in 1932. This in turn led to his becoming vice-president of the UAP. Then, in September, still serving as lord mayor of Sydney, Walder was nominated for a seat in the New South Wales Legislative Council by premier Bertram Stevens. From there, Walder had an immediate and close experience of all the frenzied efforts to alleviate the problems wrought by the Depression.
As McMahon drove between Walder’s home at Point Piper and his room at St Paul’s, as he accompanied Walder around Sydney, as he sat through meetings of the UAP, he made connections between the speeches he was hearing and the news he was reading — and the law that his teachers had begun to drum into him.
The Law School in his day had none of the roseate glow of a university. Located off-campus, in the veins of Sydney’s legal precinct, the school was staffed by working solicitors and barristers who taught around sessions in the morning and evening. The school was designed not for the butterflies of abstraction but for the teaching of a ‘systematic body of legal knowledge’. Students were expected to attend lectures in the morning, work as articled clerks during the day, and return for further classes in the late afternoon and early evening.15 In keeping with the orthodoxy of the legal profession, the facilities in which this took place were shabby: old and uncomfortable, cramped and small, with a cloakroom that was a ‘black hole of Calcutta’.16
What it lacked in material comforts the school made up for in the quality of its staff. McMahon came under the tutelage of the leaders of Sydney’s bar: Charteris, Treatt, Windeyer. But it was the famed professor of law, Sir John Peden, who was the most memorable.
McMahon encountered Peden in 1929.17 The dean of the Law School taught constitutional law, and was famous for enmeshing it with contemporary circumstances in order to ensure students understood its practical working.18 President of the Legislative Council of New South Wales, of the Law Council, and chair of the Royal Commission on the Constitution (1927–30), Peden combined the perspectives of an academic, silk, and legislator, and was a fierce defender of high standards. ‘You’ve got to work here. You’ve got to know your law,’ he would rasp. ‘You can’t expect us to turn loose a man who’ll be a menace to his profession’:
He [Peden] hammered into them [his students] the importance of exact knowledge. With all the grim fervour of his Covenanting ancestors he would turn, in the middle of explaining some case, to denounce the ignorance and indolence of the solicitor who had made a false step and ‘slaughtered his client!’19
Exacting and conservative, Peden was an advocate of the theories of A.V. Dicey, the English jurist who had promoted monarchical powers as a bulwark against the Home Rule movement in Ireland in the 1880s.20 He regarded Dicey as ‘almost sacred’, said one student.21 Setting Dicey’s Introduction to the Study of the Law of the Constitution as a class text, Peden would expound on the unwritten powers that could regulate governments.22 ‘The discretionary power of the Crown occasionally may be, and according to constitutional precedents sometimes ought to be, used to strip an existing House of Commons of its authority,’ Dicey had written. When might such an action be necessary? ‘A dissolution is allowable, or necessary, whenever the wishes of the legislature are, or may fairly be presumed to be, different from the wishes of the nation.’23
Peden was able to inculcate these views among three generations of lawyers in New South Wales. The future attorney-general and chief justice of the High Court, Garfield Barwick, thought ‘Jacko’ treated his students like kindergarten children, but found much to agree with in his lectures.24 The power to withdraw the commission, he would later say, is ‘always available as a last resort’.25 Herbert Vere ‘Doc’ Evatt, leader of the federal parliamentary Labor Party (1951–60) and Peden’s most brilliant student, agreed that the reserve powers existed, but found their unwritten status a cause for despair.26 His doctoral thesis, published as The King and His Dominion Governors, was an extended plea that these powers be set down and codified.27 For John Kerr, studying at Sydney University shortly after McMahon, the influence of Peden, Barwick, and Evatt was undeniable. The question of reserve powers was a ‘reality’ for him from his ‘early student days’.28
Debate over those powers became a reality for many people in May 1932.29 Since his election two years before, Labor premier Jack Lang had aroused the ire of Sydney’s elite with his policies to shorten the working week, and to provide endowments for children and relief for the Depression-hit mortgagors, tenants, and unemployed.30 ‘Man before money,’ he called it, but his opponents called him ‘six feet of uncouth, untrained political pugnacity’.31 Bad enough, they thought, were Lang’s insistent attempts to abolish the Legislative Council. Worse still were his slights on royalty, most evident in his decision to open the Sydney Harbour Bridge in the place of the governor. But these paled next to Lang’s vow to withhold payment of New South Wales’s share of the interest on debts that had been raised in Britain. By 1932, the unrelenting criticism from his opponents had caused Lang’s support to dissipate. Unemployment had hit 31 per cent. The press was openly hostile. The Scullin Labor government had cracked apart at Lang’s defiance, and been replaced by the Lyons-led UAP, which was determined to use Commonwealth law to check the rogue premier.
In March, with his state £7m in debt to the Commonwealth, Lang let New South Wales default on its interest repayments to British bondholders. The prime minister responded by passing the Financial Agreement Enforcement Act 1932, which allowed the Commonwealth government to appropriate New South Wales’ revenue from the banking system. Lang ordered all state funds to be withdrawn from the private banks, and mandated the use of cash for state transactions. The New South Wales Treasury vaults were filled with cash, and public servants with bulging leather satchels walked the city making payments under the watchful eye of police. Then Lang introduced a Bill that would impose a 10 per cent levy on banks and lenders. The financial institutions began to panic. Seven King’s Counsel wrote to the New South Wales governor, Sir Philip Game, calling on him to act. Game could not accept their advice, but he ‘generally’ agreed with it.32 He believed Lang was breaking the law. Unwilling to allow the Crown and his representative to be a party to it, Game asked Lang to withdraw the orders.
Lang refused. On 13 May, after a long night and a flurry of letters, Game dismissed Lang from office and commissioned the leader of the opposition, Bertram Stevens, a former head of the New South Wales Treasury, to form a government. Stevens advised an immediate election. Amid the Lyons government’s subsequent suspension of the Financial Agreement Enforcement Act and sudden provision of some £600,000 relief for the unemployed, the stock market soared. At the election, Lang’s Labor Party was trounced; its fifty-five seats were cut to twenty-four.
McMahon did not agree with Peden’s views on the reserve powers, and he did not agree with Game’s dismissal of Lang.33 An admirer of the former premier’s tenacity and ability, McMahon thought the context from which the reserve powers had sprung was too different, too removed, from Australia, where the political systems were coming of age.
Yet he thought highly of Peden. ‘He seemed to me to stress the duty of the lawyer to protect the individual against the State,’
McMahon said. ‘This has been one of my fundamental political beliefs.’34
It is unlikely that Peden would have thought much of him. Peden was severe, hardworking, and ‘puritanical in his outlook’, said Margaret Hay, the faculty clerk.35 The dominating scholar would have found much that was wanting in McMahon, a mediocre student who was in need of a tutor at each exam period. ‘I only got through by the skin of my teeth without failing,’ McMahon said later.36 Yet the relationship was possibly tinged with some care: Peden once told McMahon not to bother sitting an exam because he would fail it. McMahon took no small measure of pride in noting that he sat the exam anyway and passed. The story was possibly an exaggeration, a bit of self-flattery to counter the declaiming professor. Yet late in his studies, McMahon did begin to take on the work ethic that would make the story believable.
An apprenticeship in a solicitor’s office was a necessary step in McMahon’s career. The demands of articles were mostly time-based: five years’ experience in a master solicitor’s office. The expectation that articles would begin during a student’s study was implicit.
Enter Norman Cowper. A tall, confident, and elegant solicitor, Cowper had an expertise in commercial law that was as sharp as his mischievous wit. He was an alumnus of Sydney Grammar School, and deeply involved in non-Labor politics. He had been a branch president of the Nationalist Party, and had unsuccessfully stood as its joint candidate, with the United Australia Party, against Billy Hughes in the 1931 federal election, when Hughes was a candidate of his own Australia Party. Transferring his allegiance to the UAP thereafter, Cowper helped to draft the party’s constitution, and served on its policy committee from 1932 onwards. Rarely seen out of a suit, a habitual pipe smoker, and, in his leisure, a gardener with a murderous eye for shrubs and bushes, Cowper was also a partner at the law firm Allen Allen & Hemsley.37
Cowper knew Samuel Walder and, by dint of McMahon’s association with Walder and Sydney Grammar, he knew McMahon. He took the young man on as his articled clerk in 1932.38
ALLEN Allen & Hemsley was old and reputable, and took pride in both.39 It had been around for more than a century when McMahon stepped through its doors. Stationed on the corner of Castlereagh Street and Hosking Place in the old Athenaeum Club building, signs of the firm’s history were everywhere. Its strongroom held books of letters that dated from 1840, and the familial link to George Allen — its founder and the first solicitor to have been educated in Australia — was evident in the penthouse offices afforded to his descendants Reginald, Herbert, and Arthur. None of the three was particularly interested in the law, though. Reginald played cricket for Australia and bred bloodstock; Herbert liked to travel; Arthur preferred to manage his real estate interests and record the minutiae of his life in a diary that he dictated to his secretaries. As those diaries attest, the Allen men were partners in the firm, but largely uninvolved in it. The real work went on in the lower floors.
Alfred Hemsley and Norman Cowper were the leaders of the firm. Hemsley, an Englishman married as much to the law as he was to his spouse, looked after big clients J.C. Williamson Ltd and Australian Gas Light while serving as a UAP-aligned member of the New South Wales Legislative Council. When not searching for a way into politics, Cowper managed the work emanating from the Bank of New South Wales, for whom Allen Allen & Hemsley had acted for almost ninety years.
Both men were Protestant, intellectual, and influential. Their work ethic was considerable. Their skill was notable. But, McMahon said later, it was their ‘sort of generous liberalism’ that he admired, a kind on display when Cowper represented Mabel Freer, an Indian-born British woman who had been refused admission to Australia after failing a dictation test in Italian; the real grounds for her refused entry was her intention to marry a still-married Australian army officer.40
Though McMahon also came under Hemsley’s eye, Cowper was a good master for him. Believing that ‘in the majority of offices an articled clerk can, if he has initiative and curiosity as well as ability and application, obtain a great deal of very useful experience’,41 Cowper nurtured his clerks and jostled them along, even gingering them up. The gentleman solicitor would later surprise one of his clerks by encouraging him to attend an anti-Vietnam War moratorium march: ‘He made you wonder what you were doing with your life.’42 McMahon had much the same experience with Cowper in the 1930s: ‘He tried to give you every opportunity he could to let you study and understand.’ Cowper was cognisant of the practical problems of studying law, and he was willing to trust his clerks’ initiative and application. ‘I can’t remember in all the time I was with him,’ McMahon said, ‘that he ever sought to try and steer you in any direction.’43
The guidance may not have been overt, but it was there. The nature of the clientele, Cowper’s involvement with the UAP, and Hemsley’s position in the Legislative Council, ensured that a conservative political orthodoxy pervaded the office. This was increased by the presence of non-Labor politicians. Thomas Bavin, who had served as premier before Lang, was a frequent visitor to Arthur Allen. S.M. Bruce, the former prime minister, was a correspondent of Allen’s and a dinner companion of Cowper’s. Thus, when Lang was dismissed, Arthur Allen could write with confident jubilation that ‘everybody [is] terribly thrilled at the political news to-day … Certainly one can look at the future with more hope than we could this morning.’44
Cowper’s expertise in commercial law meant that McMahon became intimately involved with the business side of the practice. And, as his university studies moved from constitutional law to the more mundane and practical, McMahon was increasingly assigned to the commercial work at Allens.45 The involvement allowed him to become familiar with commerce and industry in Sydney, and to make his own forays into it. One of these early moves became increasingly important in the years that followed.
In October 1932, the journalist George Warnecke conceived a plan to scratch at the protective instincts of Hugh Denison, chairman of the Sydney-based Associated Newspapers. Warnecke’s plan was simple: form a syndicate to take on the loss-making Australian Workers’ Union newspaper, The World, and then, by announcing plans to set up The World as a direct rival to Denison’s evening paper, The Sun, provoke a panicked takeover bid from Denison, a tidy proportion of which would be profit.46
Unable to raise the capital for the idea, Warnecke approached his old boss, Clyde Packer. Packer was intrigued, but could not take part. He told Warnecke to talk with his son, Frank, who was smarting from his recent ejection from Associated Newspapers. The young Packer seized on Warnecke’s plan with glee. He brought James Scullin’s former treasurer, E.G. ‘Ted’ Theodore, into the loop, and together they purchased a nine-day option on The World and its premises for £100. Via a front-page report on The Newspaper News on 1 November 1932, Packer announced that he and Theodore would remodel The World along the lines of the London evening dailies and undercut the price of The Sun by a ha’penny. ‘We are busily organising so that the new production will make its first appearance on November 9,’ he said.47
To ensure the scratch could not be ignored, Packer had his solicitors register a new company to publish the paper: Sydney Newspapers Ltd. According to the announcements it made, the company had a formidable authorised capital of £150,000. But only £30,000 was actually paid at the time. Packer and Theodore, respectively managing director and chairman, invested £5,000 apiece; Warnecke scraped together £1,000; the remainder came from ‘friends and business associates’.
Where did McMahon fit into this? As he described it forty years later, McMahon’s involvement with Sydney Newspapers Ltd was simple:
On 8th November 1932 or somewhere about that time I did sign the memorandum and articles of association of his [Packer’s] company. I was then an articled clerk in Allen Allen and Hemsley. I had never met Frank Packer; I had never met his associates. I did not know who he was. The men to whom I was clerking, Sir Norman Cowper and Mr Arthur Hemsley [sic], asked me to sign the document.
Of course I signed it. Any person with a knowledge of law and a knowledge of the way companies are formed would have done exactly as I did.48
McMahon may certainly have signed the papers, but to leave it there is to understate his role. McMahon was an original subscriber to the infant company, one of those who stumped up part of the remaining capital. Cowper and Hemsley were not among those others; indeed, the articles of association were not even drawn up by Allen Allen & Hemsley.49 How Cowper and Hemsley would have been involved, if they were at all, is unclear. It is likely, however, that McMahon was alerted to the opportunity by a relative, Maisie McMahon, a stenographer for the lawyers who drew up the papers.50
However it happened, it was among the best investments that McMahon ever made — for the scratching worked. Denison and the board at Associated Newspapers panicked. They paid Packer and Theodore £86,500 in exchange for their promise not to publish an afternoon daily or Sunday newspaper in Sydney for three years. The only modesty that Denison managed to insist upon was keeping the figure private: ‘It was inadvisable to make this public,’ Denison said.51 The discretion did not last. It was common knowledge within a few months.
The money, and the company that had been formed in the ploy to obtain it, was the seed of the Packer family’s wealth and power. From that money sprang the Australian Women’s Weekly; from that came Australian Consolidated Press; from that grew the clout that Packer would wield unabashedly in the service of McMahon’s political ambitions. However new it was in 1932, the connection between McMahon and Packer would strengthen in the years that followed: Packer would bring his business almost permanently to Allen Allen & Hemsley in 1936, and McMahon would count the press tycoon as a close friend.
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