The origins of the Liberal Party

The official version of the Liberal Party’s origins is all about “personal freedom”, “choice” and “enlightened liberal policies”. However, history shows that for the Liberals, freedom for ordinary people is a disposable commodity.

The Liberal Party was formed in 1944 from the remnants of pre-Second World War conservative parties, most importantly the United Australia Party. This parliamentary group, despite its name, was never united and had no functioning party structure in most of Australia. One historian described the UAP as a “coalition of business interests and Labor renegades hastily cobbled together to meet the opportunities of the 1931 Depression”.

By 1943 the UAP was a rabble, in opposition without talent or a unified program. Australia’s ruling class needed a new vehicle for political power – a trusted set of hands that could look after the parliamentary machinery in the interests of capital.

Of course, by virtue of owning the factories, docks, newspapers and banks, Australia’s ruling class had vast economic power. This could be used to ensure that any government, regardless of its political stripe, would ultimately have to follow capitalist dictates.

So it was Labor prime minister Andrew Fisher who sent us off to the slaughter of the First World War, promising to defend the Empire to “the last man and the last shilling”. It was Labor that slashed wages and sold out thousands of locked-out miners and timber workers as the Depression of the 1930s set in.

Still, Australia’s elite could never trust Labor as “one of its own”. Labor’s electoral and organisational base in the working class meant that it was subject to pressures and splits that could render it, on occasion, an unreliable instrument for the smooth running of capitalism.

Robert Menzies, a prominent Victorian politician and former UAP prime minister, set out to forge the disparate and demoralised sections of existing pro-business parties into a coherent whole.

Menzies had proved himself a talented servant to Australia’s rulers as a lawyer before graduating to politics. As a barrister, he had received an annual retainer from BHP.

Menzies was introduced to politics in the 1920s by Wilfrid Kent Hughes, a Victorian businessman active in conservative circles. Together they formed the Young Nationalists, shaking up the state’s moribund conservative forces.

In 1933, Kent Hughes published a four part series in the Melbourne Herald entitled, “Why I Am a Fascist”. Like most of the Australian establishment of the 1930s, Menzies shared an admiration for the regimes of Hitler and Mussolini, which had crushed the left and the unions and ensured capitalist stability through a major crisis.

When Menzies reported on his tour through fascist Germany in 1938, he noted not the violent anti-Semitism, nor the thousands of worker militants lying smashed and bleeding in Hitler’s jails, but rather the “enthusiasm for the service to the State, [which,] although it, perhaps, went too far, could well be emulated in Australia”.

In 1938, Wollongong wharfies banned a shipment of pig iron from BHP to Japan, where it was to be used to produce munitions for the Japanese government’s invasion of China. As attorney-general, Menzies took legal action against the wharfies. “Pig Iron Bob” continued his service to BHP during the Second World War, appointing BHP boss Essington Lewis as director of munitions. Menzies made sure the profits of war rolled into BHP – no matter which side they were supplying.

There is no doubting Menzies’ loyalty to big business. But part of his genius was in recognising the political difficulties this posed. The filthy rich are only a small percentage of the electorate. And in a society with a powerful trade union movement and a Labor Party, there were political dangers in being too closely aligned with them in public.

So Menzies cut the open ties between the UAP and the old-money, Melbourne Club cabal that ran it. He did the same with the newly-formed Liberal Party; businessmen were largely relegated to roles like party treasurer, or the board of Liberal Party think tanks such as the Institute of Public Affairs (IPA).

The IPA, formed in 1943, played an important role in developing Liberal policies. Its founding board of management was a who’s who of the business establishment, with companies such as Coles, Hoyts and BHP involved, and Sir Keith Murdoch (father of Rupert) of the Herald and Weekly Times playing an important role.

On the formation of the Liberal Party, Menzies declared that it had been founded “as an instrument to combat communistic and socialistic influences which daily are making inroads into the lives of the people”. However, this champion of private enterprise supported tariffs, government ownership of key enterprises, and an extended welfare state.

Worrying about social stability in the wake of war and depression, Australia’s ruling class was prepared to allow the working class some crumbs from the table. However, workers trying to win a larger slice of the cake by their own efforts – or even worse, advocating the takeover of the whole bakery – were to be crushed.

So when the Chifley Labor government moved to nationalise the banks in 1947, the ruling class mounted a vigorous counter-attack and successfully crushed the threat. And when Chifley used the army to smash a coal miners’ strike in 1949, the ruling class cheered him on. With Labor’s working class supporters disillusioned, a ruling class on the offensive and with wild Cold War rhetoric from Menzies, the Liberals swept into power.

After his 1949 election win, Menzies moved to smash the Communist Party of Australia. Under the Communist Party Dissolution Bill, the CPA was to be outlawed, its property seized, and anyone carrying out its work jailed for five years.

The government could “declare” anyone to be a communist, on secret evidence from Australia’s security forces, and ban them from any position in a trade union, government employment, or strategic industries. Any organisation judged to share communist aims or be subject to communist influence could be banned. And a person who “indicated an association” with any communist organisation could be jailed.

The Bill was rejected by the High Court, and then by the electorate in a 1951 referendum. Labor, unions and the CPA campaigned vigorously against this dire attack on civil liberties and the labour movement.

Menzies strengthened the penal powers of the Industrial Court, which had been introduced by Chifley’s Labor government. Punitive fines were levied against unions for strikes. The Industrial Court could dismiss elected union leaders and appoint new leaders, allowing the right wing Industrial Groups to take over some key unions. Unions were fined if some of their members were giving donations to striking workers in another union.

A major achievement of Menzies’ career was the brutal invasion of Vietnam, and his role in strengthening the most pro-war faction in the Johnson administration in the US. Menzies pushed for the US government to deepen its involvement in a conflict that ultimately killed 500 Australian soldiers, 58,000 Americans, and well over a million Vietnamese people.

Menzies had the good fortune to govern during the greatest economic boom in the history of capitalism, and benefited from a debilitating split in Labor ranks in 1955. But he was never the invincible political force of Liberal Party myth. During a sharp credit squeeze he came within a few dozen votes of losing the 1961 election, and may well have lost in 1954 if not for the spectacular defection of Russian spy Vladimir Petrov from the Soviet embassy a month out from the election.

The other great myth that surrounds the years of Liberal rule that followed 1949, is that nothing really changed until Gough Whitlam’s Labor government took power in 1972. In fact, the Whitlam government was more a product of a radically changed political environment than the cause.

The Cold War politics that had sustained Menzies had been eroded by mass movements in Australia and around the world. The anti-strike penal powers were swept away by a historic strike wave in 1969. The resistance of the Vietnamese people, and mass movements here and in the US, meant that troops were all but withdrawn – Whitlam only had to pull out the last few advisors after his election.

So as Peter Reith advises us, in a rare outburst of honesty, let’s not forget the lessons of history. From their founding fathers onwards, the Liberals have always been the servants of the rich and powerful.

This can mean apologising for fascists, or making money from fighting them. It can mean proclaiming sacred individual rights and liberties, or trampling over these same rights as part of an anti-communist crusade. It can mean sustaining a welfare state to ward off social unrest or, in these more recent times of economic crisis and retreating unions, dismantling that same welfare state.

And let’s remember the best antidote to every one of these policies. That’s not to hang on for three years (or 23 years) in the vain hope that Labor might one day save us. Our side’s best strategy has always been, not waiting for Labor, but finding the best way to take on the Liberals and the system they loyally serve.