After this debacle, Menzies returned to the UAP leadership with carte blanche authority to rescue the non-Labor side of politics, excluding the Country Party, from complete annihilation. The problem, Menzies told his colleagues, was not that they were without popular support. There were, he said, ‘many thousands of people all desperately anxious to travel in the same political direction’. But those many thousands were ‘divided into various sects and bodies with no federal structure, with no central executive … and, above all, with no clearly accepted political doctrine or faith to serve as a banner under which all may fight’.51 In Menzies’ view, the cyclone that had struck the UAP was an opportunity to bring these parties together, to unite them under a single banner. Yet in spite of a general recognition of the problem, initial attempts to address it failed. A proposal for unity in New South Wales foundered when the Country and Liberal Democratic parties walked, leaving only the Commonwealth Party and the UAP to merge. It would take the authority of a federal leader, in Menzies, and a concerted, sustained effort by many within the state-based parties to bring about the unity required to take on Labor.
Efforts were helped by Labor’s decision to hold a referendum on the so-called ‘Fourteen powers’ in 1944. Evatt, serving as attorney-general and desirous of maintaining the wartime powers for use after the war’s end, pushed Curtin to have a question to that effect put to the people. The referendum, cloaked in an innocuously framed question, would consolidate Commonwealth control over employment, corporations, health care, and trade for five years following the end of hostilities. Menzies recognised the political danger. As he argued later, ‘if things were allowed to settle down into a continuance of this political pattern, Labor’s future would be bright and that of its opponents shadowy indeed’.52 He also recognised the opportunity to portray the referendum’s passage as a necessary step in the establishment of a centralised, socialist government in Canberra.
Between his campaign against the referendum, Menzies worked at promoting the formation of a single non-Labor party, one that could emerge from the ashes of the 1943 defeat as a cohesive political force. Dining with press barons Keith Murdoch, Frank Packer, and Rupert Henderson, Menzies put forth his arguments for the new party and the defeat of the referendum, gaining crucial support that could be exercised down the line. Meanwhile, lieutenants at the state level, such as William Spooner, in New South Wales, and Elizabeth ‘May’ Couchman, of the Australian Women’s National League, in Victoria, set about recruiting the splintered non-Labor parties to the Menzies-led cause.53
When Labor’s referendum was defeated in August, Menzies sensed the moment had come. ‘The fields were ready for sowing and we could hope for a great harvest.’54 He wrote to the leaders of the non-Labor organisations, inviting them to Canberra for a springtime conference: ‘The time seems opportune for an effort to secure unity of action and organisation.’55
Eighty delegates came to the Masonic Temple in Canberra, and among trestle tables and hard seats they set about debating and discussing the formation of the new party. On 16 October, they unanimously agreed on the need for a new party that would, stemming from state branches, support a federal organisation, council, and executive. At a subsequent conference in Albury in December, the delegates wrote a party constitution. It was enough to constitute a triumph. In the eyes of the press, Menzies’ efforts had wrought a whole new party, one that he would be acclaimed as birthing nearly single-handedly.56
The success enabled Menzies to make an announcement when Parliament resumed in February the following year. ‘Those who sit with me in this House,’ he said, ‘desire to be known in future as members of the Liberal Party.’57
SIX months later, the war was over. Germany had surrendered amid fire and ruin in May. Japan had held out longer, but the destruction of Hiroshima and Nagasaki brought its capitulation in August.
‘At this moment, let us give thanks to God,’ the new prime minister said, announcing the news. Ben Chifley had taken over from Frank Forde following John Curtin’s death on 5 July. Though he had a voice like ‘old rusty chains knocking together’,58 the former train driver could blend gravity with hope: ‘Let us remember those whose lives were given that we may enjoy this glorious moment and may look forward to a peace which they have won for us.’ Then came the words that so many wished to hear: ‘And now our men and women will come home.’59
Requests for transfer and demobilisation poured into the offices of the navy, army, and air force. McMahon’s was one of them.60 He had moved on from the military, in mind if not in body. He had been studying economics for the previous year and a half. His interest in commerce had survived the monotony of Allen Allen & Hemsley, and his aborted tilt for preselection had provoked an interest in political thought. The programme at the University of Sydney seemed to marry both of those interests. McMahon had enrolled as an External Service Student for 1944. He had taken the exams in December, and passed.61
It took a month to process McMahon’s demobilisation paperwork. By 11 October, he was out. He was tanned and healthy, body blessed with some vaccination marks, uniform studded with a War Medal, Australian Service Medal, and General Service Badge. He returned to an apartment he had taken in Kings Cross, and, by December, had passed his next set of exams.62
Another two years of study beckoned, but McMahon decided to delay them. Although he had been abroad before, McMahon later claimed that he was conscious of not having served abroad during the war and not having seen much of the world.63 Like many a young person before him, he decided to travel. There was another reason for the trip. Medical advances in post-war America offered McMahon the chance to make his hearing troubles a thing of the past. Deafness had prevented him from becoming a barrister and from serving outside Australia; who knew what it could do in the future? It was already isolating him, making communication difficult, affecting his voice. His pitch could slide extravagantly up and down, or hold in a slumberous monotone. In social settings, he could speak in a volume that was harsh and grating. Why not try to have his hearing fixed?
McMahon made his way to New York to see Dr Julius Lempert, a pioneer of effective but controversial advances in the treatment of hearing loss, most notably through a one-phase fenestration to treat otosclerosis.64 On his arrival, however, McMahon confronted the problem that Australia’s new diplomatic mission to the United Nations had also faced: prices. Unable to afford more than three nights’ stay in a Manhattan hotel, McMahon went to Alan Renouf, then third secretary at Australia’s mission to the UN, and begged for a spare bed. Renouf, who had attended the University of Sydney Law School a few years after McMahon, and who would in due course become secretary of the Department of Foreign Affairs, had been forced by the same problem to live in an apartment in Westchester County, an hour’s drive from Manhattan.
It might have been better had McMahon found the money for a hotel. On the night before McMahon underwent his operation, Renouf held a party for a friend. McMahon begged off attending, and went to bed early. He did not sleep long. A combination of unsuccessful romantic advances and unintentionally strong martinis led to Renouf’s friend becoming ‘resolved on satisfaction’. As a prize-winning boxer, ‘satisfaction’ for the inebriated fellow meant a pile of victims, Renouf among them.
Having been dispatched to the floor, Renouf dazedly noticed the door to McMahon’s room open. Suitcase in hand, McMahon tiptoed out, heading for the front door of the apartment. He was halfway to safety when his escape was detected. ‘I’ll have you too, McMahon,’ the drunk yelled. McMahon was out the door and down the steps ‘like a bullet’, Renouf saw from the floor. The drunk gave chase, but McMahon was fleet of foot.65
The operation the next day was not wholly successful. It restored some of McMahon’s hearing, but it took three more operations, dotted over the next twenty years, to fix his deafness fully. For now, consolation would have to be found in his surroundings.
The United States was full of
vitality. ‘They really felt they could do anything they wanted to do,’ Renouf said. He thought it made for an inescapable, infectious atmosphere: ‘It’s like a madhouse at any time. It’s an extremely invigorating place for a young person to live, certainly.’66 McMahon would undoubtedly have experienced something of this atmosphere, which was just as well — for it would have underlined the dramatic contrast between the United States and Europe.
After he had recuperated, McMahon went to Canada, Ireland, England, France, and West Germany. The destruction caused by the war was still apparent throughout Europe. So, too, was the threat posed by communism. Germany had been cleaved in two. The Soviet Union had subsumed half of Eastern Europe as a buffer against any future conflict. For all the energy and optimism McMahon would have encountered in the United States, the communist presence had a greater effect on him. The political truths instilled in his upbringing were reinforced by what he saw. What was supposed to be an adventure became a study tour.
In later years, McMahon spoke of the trip almost wholly in this vein. His tour was spent studying the ‘political trends’ of Europe, he said. ‘On this trip I was particularly interested in the future of democracy and the threat of communism.’
In his efforts to emphasise the importance of what he saw, McMahon would sometimes deny entirely the original, innocent curiosity that had prompted the trip, and completely elide the attempt to address his hearing issues. That he did so speaks to how important the trip was to his conception of himself and his politics. It was an integral part of the story that he would later tell about himself, whereby he was a self-declared authority on Marxism and communism by virtue of having studied and seen the latter in operation at first hand.67
BY the time McMahon returned to Australia in March 1947, he had missed two important events. The first was the re-election of the Labor government under Chifley in September 1946. Though the ALP lost six seats, it obtained 49.7 per cent of the vote to the Liberal Party and Country Party’s combined 43.7 per cent — a rebuff, it seemed, to the hopes of the new Liberal Party.68 The second was the death of his uncle four months before.
Samuel Walder’s death was not unexpected. By all accounts, Walder had been ill for some time. Aged sixty-seven, he had cancer of the bowel and liver that an operation in 1945 had failed to stem.69 McMahon would have known of his uncle’s ill-health before he departed Australia. The possibility that Walder would pass away could not have been remote.
Nonetheless, McMahon had returned just in time for the resumption of the university year; within no time at all, he had resumed the life of a student.
Economics offered McMahon a university experience much more typical than Law. The teaching was academic in style, and progressive in purpose. Liberal European scholarship was well-represented on the syllabus, and the faculty, under the much reserved and dry-humoured dean, Syd Butlin, nurtured ‘an emphasis on academic understanding rather than vocational training’, also unlike Law.70
The faculty was in the middle of a change when McMahon re-enrolled in 1947.71 Four years before, Syd Butlin had pressed his colleagues to revise the undergraduate economics degree. He wanted to address the over-use of courses from other faculties, the reliance on part-time staff whose availability was never guaranteed, and he wanted a greater emphasis on economic history.72 Butlin secured his changes, but there were dangling threads and exceptions that were still working themselves out years later.
McMahon took advantage of the exemptions on offer to returned servicemen. When he met with Butlin in April, he was given a programme that exempted him from four of the fifteen courses that constituted his degree, and allowed him to claim credit for courses in English and Philosophy he had taken almost twenty years before, during his Law degree. With Butlin’s blessing, McMahon enrolled in two courses.73
The first of these focused on the economy, and was broken into three key streams.74 ‘My task,’ recalled Heinz Arndt, the lecturer, ‘was to teach … basic income theory in the first term, money and banking and fiscal policy in second term and international monetary economics in third term.’ Oxford-educated and a recent émigré to Australia, Arndt set liberal amounts of Keynes for the income theory; drew on topical work to cover the third term’s study; and, after a bout of fruitless searching, resolved to write a ‘suitable textbook’ for the study of banks and financial institutions. Believing that economic theory should guide policy, Arndt said that his chief concern was ‘to pass on to students some of my own excitement about Economics as an exercise of the mind and as a guide to better policies in the post-war world’.75
Arndt’s enthusiasm would rub off on McMahon, who would forever take pride in his familiarity with economics and its centrality to government. But Arndt’s political beliefs, which he never bothered to conceal, would raise McMahon’s hackles. He and Gordon Barton, an ambitious and mischievous man studying for three degrees at once, who later caused much political trouble for McMahon, were ‘articulate critics’ of their then left-leaning lecturer.76 The conservatively oriented McMahon found much to argue about with Arndt, most notably on the nationalisation of the banking system.
This ‘holy ikon of Socialism’, as one Labor parliamentarian described it,77 was among the ALP’s most deeply held policy objectives, regarded by the party’s rank and file as an article of faith. For Chifley, nationalisation had been spurred by the callousness of the banking system and the intransigence of the High Court, which, in striking down section 48 of the Banking Act in August 1948, had all but dared him to enact the policy. ‘If there be a monopoly in banking lawfully established by the Commonwealth,’ Justice Owen Dixon had written, ‘the State must put up with it.’78
So, a week later, after declaring to his cabinet that he was committed to the policy ‘to the last ditch’, Chifley had his press secretary read a forty-word statement that prompted one startled journalist to bite through the stem of his pipe:
Cabinet today authorised the Attorney-General and myself to prepare legislation for submission to the federal Labor parliamentary party for the nationalisation of banking, other than State banks, with proper protection for the shareholders, depositors, borrowers and staffs of private banks.79
Opposition materialised immediately. Menzies said that it was a ‘tremendous step towards the servile State’, and called the government ‘aspiring dictators’. He quoted Milton’s Second Defence of the People of England. He told the House of Representatives that the debate was ‘a second battle for Australia’.80 The banks, too, geared up for a fight. They called in the lawyers they kept on retainer, including Norman Cowper, by now returned to Allen Allen & Hemsley. In the argument over who would lead the inevitable court challenge to the legislation, Cowper’s voice was decisive. He picked Garfield Barwick, at that point best known for his part in a suit brought against the winner of the 1943 Archibald Prize, William Dobell.81
In Sydney, Heinz Arndt joined with colleagues to form the Fabian Society of New South Wales. With its imprimatur, he published a pamphlet supporting nationalisation. The Chifley government found it so much to its liking that it purchased 40,000 copies to distribute. Arndt wrote letters to The Sydney Morning Herald railing against the paper’s opposition to nationalisation, and at public forums he added his voice to the debate.82
McMahon was unequivocally opposed to the idea. When Arndt gave a lunchtime talk to students for the Economics Society, McMahon ensured that he had a front-row seat from which he could heckle his lecturer and answer his arguments supporting nationalisation.83
Much more agreeable to McMahon was Professor Francis Armand Bland, his lecturer for Public Administration I. Bland had told The Sydney Morning Herald that if nationalisation were carried out ‘we can say good-bye to popular government and, with it, our cherished rights and liberties’.84 Shortly to retire from the university and seek Liberal Party preselection for the federal seat of Warringah, following Percy Spender’s appointment as ambassador to the United State
s in 1951, Bland was preoccupied by questions of government and management. A frequent advisor to New South Wales premier Bertram Stevens, Bland described himself as ‘an uncompromising opponent of the extension of centralised authority’.85 His course was designed to ‘appraise the role of the official in the scheme of modern government’ through the whole field of personnel management: from recruitment, to remuneration, management, arbitration, and political rights.86 McMahon admired the man. Bland’s teachings, McMahon said later, ‘revived my interest in liberal philosophies … I was particularly impressed by his views on free men and free institutions.’87 These were the views that he took into politics and exercised as a minister.
McMahon passed his course with Bland, and the following year completed the next course in Public Administration.88 He scooped several prizes: the Frank Albert Prize for Proficiency at the Annual Examinations and the John D’Arcy Memorial Prize for Public Administration were both his. He also did well with Arndt. In Economics III, Arndt acknowledged, McMahon ‘wrote a good essay (with the policy conclusions of which I strongly disagreed) on company tax. Imperfectly familiar with the regulations, I gave him a Distinction in the end-year examinations.’89
Arndt’s confusion was understandable. The dangling threads of Butlin’s changes to the Economics degree were as confusing for staff as they were attractive for students looking for loopholes. McMahon was one of them. The dean had told McMahon in 1947 that he could do the Distinction work in Economics III and IV — but this was ‘on the distinct understanding that you are not a candidate for Honours’.90
When McMahon was told this again, in 1948, he grew angry. ‘He threatened to sue the University Senate, claiming that the regulations were ambiguous on the point’, Arndt claimed.91 Despite having documentary proof that he had known about this condition, the university gave in and let McMahon have his way. He finished his degree in 1948, breezing through his remaining courses.
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