The decline of free trade
in Australian politics,
1901-1909
Phil Griffiths
Thesis submitted as part requirement for the degree of
Bachelor of Arts (Hons)
Department of Modern History, Macquarie University
October 1998

Author’s edition
This edition has been laid out differently from the version submitted. The double spacing and ultra wide gutters have been taken out, hence the pagination will be different. In all other respects it is the same.

Contents
Note and Abbreviations	iii
Introduction	1
Chapter 1: Federation and the free trade alternative	7
Chapter 2: Reid’s anti-socialist gamble	15
Chapter 3: Nationalism, immigration and defence:
the Freetrade world view	26	
Chapter 4: Defeat and surrender	37
Chapter 5: The Labor party, free trade and fiscal policy	47
Conclusion	58
Appendix: Tables illustrating economic structure and growth	61
Bibliography	64

Note
The term free trade has been used to refer to the generic opinion that capitalists should be able to freely import goods, subject only to minimal tariffs, while Freetrade denotes Reid’s party in federal politics. Contemporaries used a variety of spellings. Similarly, protectionist refers to someone believing in high tariffs while Protectionist refers to the party led by Alfred Deakin. The Australian Labor Party took that name at its 1908 conference. Before that it was often called the labour or Labour party; which is why those terms sometimes appear in quotations.
Abbreviations
ALL	Australian Liberal League
AWNL	Australian Women’s National League
CPD	Commonwealth Parliamentary Debates
NCRL	National Citizens’ Reform League
PRL	People’s Reform League
SMH	Sydney Morning Herald

Introduction
A national policy, and every reactionary in the Commonwealth is massed behind it. There is not a vested interest in this country that does not acclaim him as their champion… I heard from this side of the House some mention of Judas…it is not fair — to Judas, for whom there is this to be said, that he did not gag the man whom he betrayed, nor did he fail to hang himself afterwards.
— Labor MHR, William Morris Hughes, attacking Alfred Deakin, 27 May 1909
On 26 May 1909, the enemies of a lifetime came together to form a single bourgeois political party opposed to Labor. When federal parliament reconvened that afternoon, Alfred Deakin announced himself the leader of the new party created by the fusion of his own followers in the Protectionist party, the followers of Joseph Cook in what had once been the Freetrade party, and the Tariff Reformers, a motley group of right wing protectionists associated with Sir John Forrest. Deakin’s party moved immediately to bring down the minority Labor government headed by Andrew Fisher, and Australian politics took the form that was to characterise it for the rest of the twentieth century. From that point on, parliamentary politics would revolve around the struggle between Labor and anti-Labor, as the wider class struggle found its echo in government.
It was a moment of catharsis. The Labor party felt utterly betrayed by Deakin, having supported him in government for more than six of the eight years since federation. Four of Deakin’s party refused to follow him in joining their conservative enemies against their former friends, and one, Sir William Lyne, shouted out to Deakin in parliament that he was a “Judas, Judas, Judas!”, provoking Hughes’ famous retort. During one all night session of the long and bitter debate which followed, the speaker collapsed in his chair and died shortly afterwards. It seems an appropriate gesture; some of Australia’s most significant political traditions — Deakinite liberalism, the Liberal-Labor alliance and free trade — also died that year.
The enduring product of Deakin’s “fusion” was a group of national policies that largely transcended party differences. The distinguished journalist Paul Kelly has called this agreement the “Australian Settlement”, and lists its component elements as White Australia, Industry Protection, Wage Arbitration, State Paternalism, and Imperial Benevolence. Protection, Kelly argues, was at the core of these shared politics.
Its appeal transcended that of an economic policy. Protection was both a creed and a dogma. It was a philosophy that would make Australia powerful, secure its prosperity and assuage its insecurity. For its disciples, Protection was a policy for both war and peace. Protection and White Australia became fused into a self-reinforcing emotional bond. Protection was the core of Australia's consciousness.
Deakin’s fusion proved to be tremendously durable; the “Australian Settlement” only being demolished in the 1980s and 1990s, while two party politics still endure. This has meant that historians have tended to see the triumph of protection as the more or less inevitable product of federation. But in Australia in 1901, it certainly didn’t seem as if protectionism would become hegemonic. In the years before federation, Australia’s richest and most populous state, New South Wales, had generally elected free trade governments. In the first federal parliament, the official opposition to the Barton government was the Freetrade Party, an indication in itself of the substantial nature of free trade opinion in the new federation. Free trade was also a substantial current within the Labor party. Indeed, after the federal election of March 1901, free traders (from Labor and the Freetrade party) were a majority in the Senate and held around 30 of the 75 seats in the House of Representatives.
The first leader of the Freetrade Party in federal parliament, George Reid, was widely acknowledged to be the most popular political leader in the country, attracting the largest audiences to his election meetings and rallies in 1901. When Labor’s vote sharply increased in the 1903 election, it was the Protectionist party of the new Prime Minister, Alfred Deakin, which suffered most, leading to a parliament in which the Freetrade Party had as many members in the House of Representatives as the governing Protectionist party, and more in the Senate.
Yet within six years of the 1903 election, the members of the former Freetrade party, now led by Joseph Cook, had joined all their protectionist opponents in one political party and accepted Alfred Deakin’s ultimatum that fusion could only take place on the basis of his policy. This total surrender of their politics reflected neither the relative electoral strength nor the cohesion of Cook’s party. It was never routed at the ballot box — at the time of fusion, it had 19 members in the House of Representatives, compared with Deakin’s 15 and 14 Tariff Reformers — and was widely regarded as the most coherent and disciplined of the non-Labor parties. In the Senate, the Cook party dwarfed its protectionist rivals.
In no other country in the world did the rise of the Labor party lead almost all anti-Labor politicians to merge into a single party.
Within the parliamentary Labor party there was also a decline in free trade sentiment. The later hegemony of protectionism has led many to underestimate the extent of the shift. Amongst Labor’s free traders in 1901 were some of the party’s most celebrated leaders: William Morris Hughes, Hugh Mahon and Senator George Pearce. One careful scholar has shown that in the first federal tariff debate, from 1901-2, Labor members voted with the Freetrade Party in more than 50% of divisions, playing a decisive role in undermining the attempt by Customs Minister Charles Kingston to introduce a protective tariff. In the second tariff debate, just six years later, Labor members were to vote with the protectionists in 90% of divisions.
In 1986, Stuart Macintyre lamented that, “The Free Trade side of national politics is in need of attention.” Most Australian historians grew up in a period when protection was hegemonic and treated its triumph as virtually inevitable. George Reid might have been a successful Premier, but in federal politics, he has been regarded as a lightweight opportunist, lacking principles or concrete proposals for government, pursuing a dead-end shibboleth, playing to the crowd with jokes about his massive weight, entirely lacking the gravitas necessary for high office. Deakin succeeded by using his liberal principles and his nationalism to ensure Labor support for his minority governments.
One of the very few books to challenge the stereotype is WG McMinn in his biography of Reid. McMinn has performed an invaluable service in telling us so much with little more than newspaper reports, parliamentary papers and the Deakin archives as sources. Unfortunately he made no attempt to chronicle the Freetrade party in New South Wales and federally, nor to look at the basis for its support, the social groups backing Reid, and the many other elements that would give us a truer picture of his subject.
John Rickard’s book, Class and Politics, covers the same period and many of the same issues as this thesis, and has proven to be a valuable source. But Rickard’s focus is the development of working class consciousness, for which he concentrates almost exclusively on parliamentary debate and the issues of wages and Arbitration. The differing strategies of different elements of the ruling class, and the class struggle in the workplace, are almost totally ignored.
Peter Loveday’s chapter, “The Federal Parties”, in the collection, The Emergence of the Australian Party System, remains one of the most substantial published treatments of Australian politics in the first decade of federation. Loveday points to the growing Labor/anti-Labor polarisation in politics, and the growth of major, national right wing organisations. But he reduces the differences between the political parties to the fiscal issue; thus once Labor began breaking its traditional links with the Liberals, fusion was inevitable: “The surprising thing…was that it took so long to arrive.”
This thesis aims to explain both the strength of free trade politics in Australia in the first years of federation, and the reasons for their demise. At stake was more than just fiscal policy: the Freetrade and Protectionist parties represented different strategies for the future of Australian capitalism as a whole — different approaches to nationalism, ethnicity, religion, the British Empire, and defence, all of which were deeply controversial during the first decade of federation. The practical focus here will be the Freetrade party in federal politics, because the fate of free trade ideas was so completely bound up with their parliamentary expression. After fusion, free trade was consigned to the fringes of politics and to academic economics, so fusion provides an appropriate end point for this study. One chapter will discuss fiscal politics within the Labor party; the reasons for the initial strength of free trade ideas and their demise.
The emphasis in this thesis is on the “big picture”; an overview of the history of the Freetrade party and its strategies, and an explanation for its major defeats. This inevitably means that each element is more suggestive than authoritative. There is a concentration on New South Wales and Victoria because these dominated national politics and the Australian economy, and were the bases for the main protagonists. In particular, the account of class relations here is highly schematic; the working class movement of the first decade has been ignored almost as completely as Reid’s Freetraders.
The theoretical assumptions upon which this thesis has been written are those of classical Marxism, as developed by the great revolutionary thinkers associated with the early Communist International — Lenin, Trotsky, Luxemburg, Bukharin and Gramsci — and in the post war period by the International Socialist tendency. Thus, the author rejects any identification with either free trade or protection, and shares the position expressed by Mick Considine, MHR for Barrier (NSW), when he told parliament: “It is over the surplus value that is wrung from the working class in the place where they are exploited that the importers and the manufacturers quarrel.” If at times the viability of free trade politics and their appeal to working class people have been highlighted, it is to emphasise the point that their defeat was not inevitable, not to imply any sympathy with them.
The triumph of protection in Australia was no isolated event: the intervention of the state in economic life was to become perhaps a central feature of twentieth century capitalism. Intense military rivalries forced the state to intervene and ensure a strong industrial base, while tariff protection, strong banking laws, government ownership of utilities and major enterprises, and centralised economic planning tended to limit the destructive effect of the world market and market crises and allowed more rapid capital accumulation. It is easy to conclude from this that protectionism allowed a more rapid capital accumulation in Australia and that was the reason for its success. Thus a belief in the primacy of economic development and relationships of production in explaining change in human society can easily become teleology.
This thesis argues that it was the depth and militancy of the class struggle in New South Wales, from 1906 to 1909, that drove the export capitalists of that state to abandon their sectional economic preferences to ensure a common bourgeois party against Labor and the working class. They were driven to this by their failure to build a popular basis for anti-socialism, and by Deakin’s intransigence towards them, a product of differences that had deepened in the years after Japan emerged as a great power in 1905.
Chapter 1 outlines the background to free trade and protectionist politics pre-federation, and documents the strength of free trade through the 1901 election, the 1901-2 tariff debate and the 1903 elections. Chapter 2 looks at the forces which briefly brought Reid and Deakin together, describing Reid’s two anti-socialist campaigns, and discussing the reasons the first campaign failed. Chapter 3 draws out the differences between the bourgeois rivals on defence, imperial preference, immigration policy and racism, and considers the impact Japan’s victory over Russia in 1905 had in deepening those differences. Chapter 4 examines the reasons for Reid’s defeat in the 1906 federal election, the tariff debate of 1907-8 and the reasons for the Freetraders surrender in 1909. Finally, Chapter 6 discusses fiscal policy in the Labor party, looking at the reasons for the strength of free trade opinion in the early years of federation, and the reasons it failed to maintain strong support. At the same time, it challenges the established idea that Labor became protectionist in 1908, arguing that for a considerable period, there was hostility to protectionism that was based on class rather than free trade considerations.
This study has overwhelmingly relied on secondary sources, including a number of unpublished theses. Amongst these are two theses on Reid’s anti-socialist campaigns: RB Scotton’s much admired The Anti-Socialist Campaigns 1906-1906, and MJ Belcher’s George Reid and the 1905 Anti-Socialist Campaign, Yvonne Larsson’s, The Triumph of Protection, which looked at the two federal tariff debates of 1901-2 and 1907-8 in detail, and the unpublished biographies of George Foster Pearce by John Merritt, and Joseph Cook by John Murdoch. One relevant, but still embargoed, thesis was RE Sullivan’s recently completed PhD, Trade, protection and taxation: the formation of Australian tariff policy, 1901-14.
It is one of the primary functions of government and the media to surround established government policies with a thick web of historical myth. So it is with protectionism. Its architect, Deakin, is remembered as a visionary, yet few politicians have started out with such substantial electoral support and seen it evaporate so rapidly. Protectionism shaped both the national economy and the working class. Australia without protection became unthinkable; it had been “inevitable”. Yet this thesis will conclude that the Australian ruling class stampeded its politicians, the venal and the “visionary”, into lining up together behind protection out of concern for what the working class might do if they remained divided. The bourgeois losers saw their tradition scrubbed from the political landscape, and a thick coat of historical dust was allowed to settle on the real story of fusion and protection. This thesis hopes to contribute to blowing that dust away.