The Money Men by Chris Bowen (i wanna iguana read aloud .TXT) 📗

although we were political opponents, he was a friend of mine and yours … Mr Chifley served his country magnificently for years.

An Evaluation

Chifley assumed the Treasury portfolio at the time of our greatest-ever national crisis, and he applied the necessary skills to the task. Chifley knew that the attendant crisis would require a concentration of economic power in the Commonwealth, which he mostly achieved through the centralisation of income tax powers as well as clarification of the role of the Commonwealth Bank and the government’s role in supervising it. He did not achieve all of his aims in this regard, though, having failed to convince the Australian people at two referenda to extend Commonwealth powers even further.

Chifley was also successful in devoting more resources to the war effort—the proportion of government expenditure going to the war effort increased dramatically during his tenure from that inherited from his conservative predecessors. In this task, Chifley was ably assisted by his predecessor Ted Theodore, whom he wisely appointed as head of the Allied Works Council.

But Chifley, as dedicated as he was to the war effort, was, if anything, even more focused on building for a prosperous peace. The pressure on him to avoid a repeat of the Depression of the 1930s (and the similar crisis of the 1890s) was immense, and largely self-imposed. This focus on postwar reconstruction led to some of Chifley’s greatest achievements, as well as some of his greatest mistakes.

Chifley’s move to take over personal income tax for the Commonwealth and his improvements to the operation of the Commonwealth Bank (as the central bank) have stood the test of time as sensible reforms that are, to differing degrees, still in place. And even if the objectives would change over the years, Chifley’s aim of government intervention to ensure full employment was similarly worthy. His judgement led him to make other good decisions with positive ramifications for the Australian economy, such as Australia joining the IMF.

But Chifley held on to wartime rationing for too long, the advantages in determining the amount of basic commodities each family consumed being too much for Chifley to walk away from. And, at his core, while Chifley intuitively understood the benefits of Keynesian economics for reflating the economy in times of contraction, he distrusted the ability or equity of using Keynesian tools to bring about a contraction in the economy.

Chifley also erred in overreacting to the potential unwinding of his banking reforms by the High Court. His reforms were well founded, but his attempt to nationalise the banks in response to legal challenges to his legislative regime was ill-considered. The British Labour Party at the height of its nationalisation fervour, which lasted into the 1980s, never attempted to nationalise the banking sector. It would have been unfortunate if the High Court had overturned Chifley’s legislation to require private banks to make deposits with the central bank, but it would not have been fatal. Certainly, Chifley panicked and this was a significant factor not only in the government’s defeat but also in the Labor Party’s inability to achieve office for several years afterwards.

Returning to the subject of Chifley’s contributions to his nation, perhaps his greatest was being a good and supportive partner to his prime minister during some of Australia’s darkest days. Curtin and Chifley had a model prime minister – treasurer relationship. They were close confidants and worked smoothly together. They were friends without a hint of rivalry. Any analysis of who was more important in the relationship is based on a false premise: their skills and personalities were mutually complementary—each needed the other.

Chifley was not ready to lead the nation in 1941, even if he had wanted to. He had been out of parliament for ten years, primarily dealing with internal NSW Labor fights. His profile in the party and across the country was too low for him to be considered as a potential leader. Curtin, on the other hand, had returned to parliament after an absence of just three years and had spent the preceding decade developing his thinking about economics as well as the vital national security issues of the time. But Curtin needed emotional support as he tackled the tasks of war. He turned more to Chifley for that support than to any other friend or colleague. It is appropriate that their statues in Canberra show them conferring as they walk together.

Chifley was a leader loved for his compelling modesty and authenticity. He was a good man and a talented leader. He was not infallible, as his predilection for holding onto the blunt instrument of rationing and his headlong rush into bank nationalisation showed. But Chifley’s achievements outweighed his foibles and Australia benefited from his qualities during his important tenure in the Treasury.

6

SIR ARTHUR WILLIAM (ARTIE) FADDEN

A Treasurer Intervening

Born: April 1895, Ingham, Queensland

Died: April 1973, Brisbane

Treasurer: 28 October 1940 – 6 October 1941 19 December 1949 – 9 December 1958

ARTHUR FADDEN’S LONG tenure as treasurer marked the first time that the Keynesian belief that budgets can be used to influence the level of activity in the economy was accepted across the political spectrum. The belief itself was not a new one. Ted Theodore had argued (albeit unsuccessfully) for new federal spending to ameliorate the effects of the Depression. And of Fadden’s predecessors in the role, Percy Spender and Ben Chifley could also be described as Keynesians to at least some degree. Fadden, however, was the first treasurer to actively use the Budget to reduce the amount of economic activity, with his 1951 Budget offering a particularly spectacular example.

In this, Fadden was imprecise, even clumsy, but his performance must be judged in the context of the times. Proactive budget management was in its early days. Even in the modern era, with sophisticated analytical tools and models at their disposal, treasurers still find it difficult to pick precisely the right time to stimulate and contract the economy through the Budget. The weapons at Fadden’s disposal were