The Great Depression: Lessons for Socialists

[This is an edited version of a talk delivered at the World at a Crossroads Conference in Sydney, Easter 2009. It was organised by the Democratic Socialist Perspective and Resistance and sponsored by Green Left Weekly.]

It is widely recognised that the current global economic crisis is not a normal recession of the kind which characterises the capitalist business cycle — that is, it is not one of the periodic downturns which inevitably follow a boom period. Rather, it is a fundamental slump.

It is also clear that the current crisis is the biggest crisis of the world capitalist system since the Great Depression of the 1930s. In fact, there are reasons for believing that it may well turn out to be much more serious.

Several articles in the Melbourne Age this year have acknowledged in passing that the 1930s depression was really overcome only by World War II with its mass call-up into the armed forces and the conversion of the economy to all-out military production. In the United States, for instance, 1933 was the worst year, with unemployment of almost 25%. While there was some revival of the economy in 1934 and after, in 1939 unemployment was still over 17%. Only the onset of the war changed this situation. It was essentially the same in Australia.

This raises several questions: How will the current crisis be overcome? Indeed, will it be overcome at all? (After all, in today’s conditions a new world war seems ruled out.) Or, if it is "overcome" in official terms, where will that leave the mass of working people in terms of jobs, wages and conditions, housing and social services — and in the face of rapidly onrushing global warming?

The impact of the Great Depression was especially severe in Australia — there was mass unemployment and widespread poverty, hunger and homelessness. The faith in the system of large numbers of working people was shaken and many moved leftwards in their search for answers.

While do not expect a carbon copy of the 1930s depression, some things will surely be similar — for instance, the utter greed and ruthlessness of the capitalist class, and the wretched role of the ALP and the trade union bureaucracy. Other aspects could well be markedly different.

At any event, we should study the last great crisis of world capitalism which began some 80 years ago and draw the necessary political conclusions from it. This will help to arm and fortify us in the struggle ahead.

This talk is not a history. I want to give comrades a feel for some of the political issues of the depression and the resistance it engendered. Hopefully you will want to study it further.

Prelude — the 1920s

The 1920s were the prelude to the Great Depression in Australia.

Depictions of this period as a boom time are seriously wide of the mark. Unemployment was rarely below 8% and on the eve of the late-1929 stock-market crash the figure was 10%. From the start of 1927 Australia was already in recession.

During the 1920s federal and state governments had borrowed heavily by selling bonds in Britain to fund extensive public works (such as the Sydney Harbour Bridge and the new national capital of Canberra). By end of the decade this source of funds had dried up. Australia's export earnings plunged as the price of wool, wheat and base metals on the world market dropped by almost half.

Before the depression proper had begun a series of big class battles had resulted in severe defeats for some of the most militant sections of the working class. In 1928 the waterside workers were badly defeated in a national strike; their leaders were jailed and a licence ("dog collar") system was imposed on them. The next year the Timber Workers Union was almost destroyed in another big struggle and the Arbitration Court increased their hours and worsened their conditions. In March 1929 the NSW coal bosses locked out the miners to force them to accept a 12½% wage cut. After 15 months (during which one miner was killed by police at Rothbury) the miners were forced back on the employers' terms.

Labor had been out of office since the conscription split during World War I in which Billy Hughes had defected from the ALP and formed a Nationalist Party government with the Tories. From early 1923 Australia had been ruled by a coalition of Stanley Bruce's Nationalists and the Country Party of Earle Page. The Bruce-Page government was widely hated by working people. A crisis developed when Bruce issued an ultimatum to the states to hand over their industrial relations powers to the federal government or he would abolish the federal arbitration commission. His government was forced to the polls in mid-October 1929. In a Howard-like denouement, the Bruce-Page government was annihilated, with Bruce defeated in his own seat by a trade union official.

(It should be pointed out that the elections had not involved the Senate which remained under the control of the anti-Labor forces. Scullin resisted calls from radical elements of his own party to quickly force a double dissolution while Labor's popularity was high and gain a majority in the upper house. As it was, even if the Scullin government had been minded to push ahead with some progressive measures it would have been blocked in the Senate; on the other hand, this fact was another convenient excuse for inaction.)

Labor had little time to indulge in the euphoria of victory. Two weeks after the elections the October 29 New York stock market crash ushered in the Great Depression. James Scullin's ALP government lasted a little over two crisis-wracked years.

'There's been lies told'

Here are a few figures to set the scene. In 1929 Australia's GDP was £800 million, in 1932 it had fallen to £550 million. Exports dropped from £150 million to £80 million, and imports from £150 million to £50 million. Unemployment rose to 19% in 1930, 27% in 1931 and 29% in 1932.

In 1937 Canberra parliamentary journalist Warren Denning published Caucus Crisis, his study of the Scullin government. The following passage gives a feel for the shattering impact of the depression on Australian society:

… the [Scullin] government had barely taken office before the threatening depression deepened swiftly into menacing reality. Wool values were plunging downward, dragging other primary industries with them. Within a matter of months the depression which had been affecting the outside world made its impact felt in this country.

During 1928 the almost complete stoppage of work on Canberra, then being built out of loan money, was followed by the drastic curtailment of all loan expenditure. This had exceeded £40 millions a year in the most prosperous years, helping to create a fictitious prosperity which the unhealthy high prices of raw materials in the early postwar years had confirmed. Batch after batch of men engaged on public works, or on activities subsidised or paid for by the Commonwealth, were economically demobilised, joining the vast stream of unwanted workers pouring out of the factories because people no longer had the money to spend, and therefore the capacity to buy. Added to by the workless rural hands, registered unemployment rose to over 300,000 and towards 400,000 employable people, more than 30% of the working population of Australia.

More people than the total number of taxpayers in Australia soon were on or below the breadline … and at the end of 1930 more than a million people were directly affected by the diverse but concentrating forces which had created the depression. In a population of a little over six million, this meant that a terrifying number of people, of all ages and degrees, were actually in want, for few had saved anything for the proverbial rainy day, and, indeed, a lifetime of saving on the meagre basic wage could not materially have helped. This was the outlook which faced the Scullin ministry very soon after it had assumed office.[1]

Jack Blake was one of the longtime key leaders of the Communist Party. In a very interesting 1971 article in Arena magazine, he drives home the human cost of the crisis:

At the beginning of the depression there was no relief for unemployed workers. Slowly relief began, handed out by various charitable organizations: the Salvation Army, church missions, Ladies Benevolent Societies. For a considerable time even this relief was given only to married workers with families. There was nothing for single men and women whatever. Even the married man received a maximum of five shillings a week, first in the form of a package of groceries, later in the form of an order for groceries. As for single men they slept in public parks from which they were constantly driven by the police, or they slept on the concrete floors of shelters without bedding of any kind: their sustenance was a bowl of soup at the charity centre soup kitchen; they were prosecuted if they tried to sleep in stationary railway carriages, Later, when some of the single unemployed men were placed in old World War I army camps the food they were provided with cost nine pence per day for each worker; others went "on the track", harried from one dole town to another.

The massive unemployment figures still do not complete the picture of the times. In most of the industries which were still working, rationing of work and part-time work were the order of the day. Where rationing was in force the workers on the payroll had to agree to share the available work, which meant employment for only half the week; in the case of part-time work the factory itself closed down for half the week or for one week in two. Because of this about half of those workers still in employment were in fact working only half time and accordingly receiving half wages.

It is not very easy for anyone who didn't live through it to mentally picture the conditions in which hundreds of thousands of workers existed. They were quickly deprived of their possessions: their furniture and their clothes. Evictions from homes were common, workers moved into other empty houses only to be again evicted. So the cycle went on. We held many of our meetings in such houses; much of the furniture in them was made from packing cases, there was often no floor covering on the worn floor boards, bedding consisted of a few ex-army blankets supplemented by old sacks sewn together, and old coats, cooking utensils were few and primitive, in many cases electricity and gas had been cut off. Children lacked warm clothing in winter and didn't get enough to eat.[2]

Finally, here is a recollection of a victim of the Great Depression:

When did I realise I'd been took? When I found myself eating garbage. At age 27, a qualified surgical toolmaker, I stood at the back of an Adelaide restaurant and waited for the rubbish tins to be put out. Half­chewed meat, vegetable peelings, hunks of bread, all slopped up with cold gravy and tea leaves and burned fat. It makes you spew to think about it. Yet there might have been 30 or 40 men waiting there in the dark, night after night. That's when I thought, Bob, you've been done. There's been lies told — politicians, churches, bosses, they all tell lies to protect something.[3]

Coalminers sold out

At the height of the depression, Labor governments were in office in Canberra and four states — NSW, Victoria, South Australia and Tasmania. Any progressive planks in their platforms were quickly abandoned. They faithfully carried out the austerity program demanded by the bosses, aimed at placing the burden of the terrible crisis squarely on the backs of working people. Let's look at some key issues.

The Scullin government began by selling out the coalminers. In 1929, Theodore, the treasurer in the Scullin government, had told the miners that if the ALP was elected, it would reopen the mines in the coalfields in northern NSW on their terms within a fortnight. Naturally, the miners strongly supported the return of a Labor government. After the election, Theodore made the belated "discovery" that in fact the government had no constitutional power to do any such thing.

NSW Labor leader J.T. (Jack) Lang, then in opposition, expressed a different attitude. As historian Miriam Dixson explains:

[At a December 1929 conference of ALP and union leaders] Lang demanded that the federal government confiscate Richmond Main and Pelaw Main which he described as "the richest mines in the world". He thundered, in a style to become a household byword in his term of office as premier during the depression:

"I know the right thing to do — it is the lawyers' job to tell me how to do it. I do not ask lawyers whether I am right or wrong. I tell them I want to do something; they must tell me how to do it. If I were prime minister fresh from the elections with a mandate to open the mines in a fortnight I would seize them and work them under the conditions of the lawful award. Seize your mines, and if necessary pass your law later on."[4]

Lang was undoubtedly a capitalist demagogue but here he powerfully expresses a fundamental truth of the class struggle: If you have the power and the backing of the people then use it boldly — laws and constitutions are entirely a secondary matter.

In the event, despite their epic struggle the coalminers were forced to return to work on the bosses' terms.

Niemeyer and the Premiers Plan

Scullin invited Sir Otto Niemeyer, a leading British Treasury official and a director of the Bank of England, to come to Australia and advise the government. Niemeyer met with Scullin and the state leaders at a special premiers' conference in Melbourne in August 1930. Unsurprisingly, Niemeyer's message was that Australian living standards were too high and would have to be reduced. This produced the so-called Melbourne Agreement which called for balancing government budgets by slashing expenditure, giving priority to repaying the British bondholders, and savage wage cuts.

This program undoubtedly worsened the effect of the depression.

In line with Niemeyer's prescription, in January 1931 the Arbitration Court reduced the basic wage by 10%. Just as is the case today, the argument then was that reducing wages would create jobs. In fact, all that happened is that the bosses' profits increased. It didn't lead to an increase in job-creating business investment — capitalists will only invest if they can thereby make a profit and that will only happen if there is actually a market for what they produce (that is, needs backed by actual purchasing power). Wage cuts don't increase the market, they don't increase consumer demand for products, they don't increase purchasing power — in fact, they will obviously reduce all these things.

Another special premiers conference in May-June 1931 adopted the Premier's Plan for combating the depression. This called for: (1) A 20% reduction of all adjustable government expenditure (wages, salaries, pensions, social service payments). (2) A 22½% reduction in the interest to be paid on all government debts. (3) Raising taxes. (4) Reducing bank interest on deposits and loans. (5) Mortgage relief.

This savage plan deeply divided the Labor Party and led to severe disillusionment among its working-class supporters.

No action on banks

The official platform of the ALP called for nationalisation of the private banks. The banks refused to provide funds for anything other than the immediate needs of the government. If the government was to have the means to carry out any sort of effective program to deal with the crisis it would have to gain control of the financial sector. However, as Warren Denning explains, Scullin did no such thing:

The Labor ministry never made, and never really contemplated, any real attempt to put its banking policy into operation …

Banking reform, however, became an intense issue within the party itself, so assiduously did the ministry postpone any decisive action. Throughout his two years of office nothing was further from Mr. Scullin's mind than any attempt to nationalise the banking institutions of Australia, which is provided for in the platform of the Australian Labor Party, the platform on which he accepted leadership …

At the same time it always seemed to me that if Labor really believed in its financial policy, really believed that financial reform was essential to the placing of economic society on a firmer footing, the time to attempt its application was the first opportunity they had of doing so. To postpone it to some indefinite date in the future, and in the meantime to patch up the system which they had fervently declared to be unpatchable, and to consolidate the private banks against whom their political hatred was concentrated, seems a strange paradox.

The time to attack an enemy is when he is weakest; not to nourish him tenderly until his full strength is attained, and then make an onslaught. Depression had in 1930-31 forced the banks perilously close to collapse, and had Labor seriously believed in its banking policy, that was the time to strike. In recovering from the depression, the private banks, their fingers burnt and their eyes opened by the mistakes of the past, have become consolidated into an almost impregnable position; and if Labor ever does try to carry out its policy of nationalisation, it will have to face a pretty contest.[5]

At this time there was no Reserve Bank. The head of the state-owned Commonwealth Bank was the arch-Tory Sir Robert Gibson. He was a law unto himself and he demanded Scullin carry out the harsh medicine of the Premiers Plan. Not only did Scullin fail to carry out ALP policy on bank nationalisation, in August 1931 he actually reappointed Gibson to his post for a further seven years. And he did this behind the back of his own party — Scullin was actually on the boat to Britain for an Imperial Conference when his cabinet colleagues back home learned what he had done.

(As an aside, in the light of the unsuccessful 1947-49 effort by the Chifley ALP government to nationalise the private banks, Denning's final comments are remarkably acute.)

Lang: 'greater than Lenin'?

In New South Wales, the ALP won the November 1930 elections and Lang became premier. Although he had voted for the Premiers Plan, rather than follow Scullin whose popularity was rapidly falling, Lang now advanced his own plan. The key elements were a moratorium on interest payments to the British banks and a renegotiation of the terms of the loans (not at all without precedent in the period after World War I), and lower domestic interest rates.

Lang was riding a tiger of left-wing radicalisation in the New South Wales Labor Party. His plan, while not in itself anticapitalist, gave him a platform for his radical-sounding demagogy. The Lang plan won wide support within the NSW ALP. Some of his publicists proclaimed that "Lang is greater than Lenin".

In May 1931 Lang and the NSW ALP executive were expelled from the federal Labor Party. There were now two ALPs in NSW: the rump federal ALP and the much larger Lang party. Lang's supporters in Canberra comprised five MHRs and two senators.

In Canberra, a group of right-wing Labor MPs led by former Tasmanian Premier Joseph Lyons had gone over to the opposition benches. And in December 1931, when the Lang group in federal parliament voted against the government, Scullin was defeated. In the subsequent election Labor lost badly to the new Lyons-led United Australia Party, a fusion of the Lyons turncoats and the Nationalists. (Labor would not return to office until Curtin's wartime government in 1940.)

In April 1932 the NSW government suspended interest payments to the overseas bondholders. In response, in May the state governor, Sir Philip Game, sacked Lang who was heavily defeated in the following election.

NSW Socialisation Units

One result of the depression was the development of a strong left movement in the NSW Labor Party. At the state ALP's 1930 Easter conference a motion was passed to establish a Socialisation Committee. Over the next four years this became a mass movement.

Associated with local ALP branches, Socialisation Units were set up, mainly in Sydney but also in other urban centres. By the time the movement was wound up at the 1933 Easter conference, there were 178 such local units. While the bulk of unit members were also members of the Labor Party, many were not and official policy on this point went through numerous changes. The Socialisation Committee published a monthly newspaper, Socialisation Call, and a regular feature each week in the official Labor Daily. Regular education classes were held by the units.

From July 1932 a strong push was made to create Socialisation Units within the trade unions.

Lang was not in the least sympathetic to socialism but he realised that, in the circumstances of the time, it would be disastrous to frontally oppose the left. Rather he and his "Inner Group" (of which former 1920s CPA leader Jock Garden was the most prominent member) cleverly and cynically decided to ride the socialist tiger and try to wear it down. Lang presented himself as a committed advocate of "socialisation". However, this was a very risky game.

Things reached the point that the 1931 Easter ALP conference adopted a Socialisation Committee motion for a "Three-Year Plan" of transition to a socialist state to be carried out by the Labor government. This moved things way beyond vague rhetoric. The resolution committed the party to something extremely radical and very definite. The Lang group had been taken by surprise. However, furious overnight lobbying by the Inner Group prepared the ground for having the motion rescinded the next day.

Why did the NSW socialisation movement fail? There are two main factors here. Firstly, the leaders of the Socialisation Committee were essentially utopian socialists. For them "socialisation" was to come about, not through the development of the class struggle, but by education and propaganda. Secondly, related to their utopianism, they had no clear idea of the nature and role of the ALP leadership as the "labour lieutenants of capitalism". It was only after some time that they finally realised that Lang was not on their side and that the Socialisation Units had to win control of the party.

You can read about this whole episode in Robert Cooksey's book, Lang and Socialism.[6]

Communist Party leads resistance

Jack Blake explains the vanguard role played by the CPA:

… [The Communist Party was] expressive of the militant collectivist and solidarist strain of the Australian workers' movement. We were in the forefront of every active militant struggle that took place, the first organisers of the Unemployed Workers Movement (UWM), the organisers of the struggle for unemployment relief, the leaders of the dole and sustenance work strikes and demonstrations.

In the conditions of economic depression the small Communist Party, reviled by "respectable" society and the newspapers, emerged as almost the sole force for militant action and struggle. Where there was despondence and hopelessness the communists brought the spirit of struggle, organization and the will to fight. Activism was not an original discovery of the 1960s, it was the outstanding characteristic of the communists of the 1930s. From morning to night for seven days a week the communists were out speaking and organizing at the dole depots, at factories, in houses, on the streets, writing leaflets and duplicating them on handmade silkscreen duplicators using homemade gelatine rollers, pasting up posters, chalking demands and slogans. The manner in which our widespread, constant activity and our skill in organization startled the establishment was shown by the Melbourne Argus: it estimated that we had more than 10,000 active members in Victoria alone at the end of 1932 — we did not have one-tenth of that number.[7]

Party of the unemployed

In The People Stand Up, longtime CPA leader Ralph Gibson recounts that when he joined the CPA in the early thirties it was largely a party of the unemployed: "Its members were not just talking about poverty. They were among the multitude who were deep in it."[8]

When the Great Depression first hit Australia and a great wave of unemployment engulfed the country, there was no unemployment insurance for eight months.

The CPA played a decisive role in building the unemployed movement and in fights to actually win the dole and then for improved dole and relief payments.

A national Unemployed Workers Movement (UWM) was set up in Sydney in July 1930; CPA members played the key role in setting it up there and in Melbourne. In the big cities there were repeated demonstrations of the unemployed. These actions won the dole and the first payments were made in June 1930. The CPA played the decisive role in leading these struggles.

Charlie Fox's study, Fighting Back: The Politics of the Unemployed in Victoria in the Great Depression, gives a feel for the frenetic pace of activity of the CPA cadres:

To be an active member of the UWM you had to give your heart and soul to the movement; you had to be involved in a constant round of meetings, rallies, lectures and entertainments. The Collingwood UWM broadsheet, Breadline, describes a week’s activities in 1932:

Monday 8pm. Dance. Silver coin collection.
Tuesday 8pm. General branch meeting. Everybody invited.
Wednesday 8pm. Street meeting. Watch footpaths for places.
Thursday 8pm. Dance. Silver coin collection.
Friday 8pm. Meeting. Youth section.
Saturday pm. Lecture. Good speakers, open discussion.

The leaders of the UWM were, and had to be, dedicated, tough and resilient characters. They organised and proseletysed relentlessly. They constantly argued among themselves and frequently fought battles with the police and their enemies in the reformist labour movement.[9]

In mid-1931 the UWM claimed 31,000 members, in 1934 the figure was 68,000 and the organisation continued to grow until 1936. In response to the success of the UWM, the ALP and trades hall councils formed their own unemployed organisations but the CPA-led UWM outstripped them in numbers and militancy. Not surprisingly, the UWM was a major source of recruits for the CPA.

The UWM fought for improved conditions for the unemployed. These struggles were successful in winning higher dole payments and in gaining a rent allowance for the unemployed to stop people being evicted from their homes.

In 1932 the government tried to introduce "work for the dole". Previously there had been short-term relief work for which wages were paid. But work for the dole made the unemployed work for their pittance. In Melbourne, the beautification of the grounds of the Shrine of Remembrance (that icon of bourgeois patriotism and militarism) and the Yarra Boulevard were the two main projects. The unemployed organisations were unable to prevent the introduction of this scheme, but in mid-1933 an heroic eight-week strike of the jobless in Melbourne succeeded in winning a substantial increase in the amounts paid.

Resisting evictions

Eviction or the threat of eviction was a constant reality for the unemployed. The UWM often spearheaded struggles against evictions. Some of these actions were veritable battles against the police attempting to evict people from their homes and throw them onto the street.

Charlie Fox gives some vivid examples:

As the Depression deepened, however, the organisations turned their attention to evictions. Perhaps the first of the violent eviction fights, which dominated the public image of the wars over housing, took place in Brunswick in July 1930. The circumstances were rather fortuitous, because the eviction began as hundreds of local unemployed men were marching nearby. Their attention was attracted by a neighbour:

“To the unemployed men the mention of the word bailiff was like waving a red rag at a bull [reported the Brunswick-Coburg Gazette]. Without further parley the entire squad was on its way to Gold Street at the double.

"In her kitchen Mrs Carruthers had just heard the agent instruct the bailiff to mark certain furniture. At that moment there was a commotion and through the doors and windows streamed the modern knight errants. A push sent the bailiff reeling back into a chair where an enterprising gentleman tipped a dish of water over him. The agent and the bailiff were then subjected to some rough handling as they were bundled unceremoniously down the passage and thrown out of the house where they were seized upon by the crowd numbering several hundred who were waiting in the roadway.

"The agent and his clerk managed to escape in a motor car whilst the bailiff who was again roughly handled made a break for the South Brunswick railway station nearby. His progress was expedited by the avengers and he was almost thrown over a post and rail fence before he got out of the danger zone."

A year later, confrontation like this had become firmly identified with the Unemployed Workers' Movement, which gloried in its reputation for confrontation.[10]

Here is another example:

The climax of direct action against evictions came early in 1932. On March 1, South Melbourne unemployed workers caused damage worth £50 to the interior of a house in Cobden Street from which a family had been evicted. They then marched 400 to 500 strong to the estate agent's office and tore up his business books. Continuing on to his house, they were confronted by police and dispersed. However, three days later the house was set on fire and further damaged. It seemed that arson was to be the unemployed's final weapon in the fight against evictions …

Then, later in March [1932], there were extraordinary scenes in Brunswick as the unemployed came seemingly from everywhere to fight an eviction in [Charles Street]. The local paper [the Brunswick-Coburg Gazette] described the scene:

"Thousands of men congregated about a home in [Charles Street]. From early morning men marched to the place from numerous suburbs, the first detachments arriving as early as 5.30am. Hundreds marched four abreast from Preston and some of the men came from a place so far distant as Williamstown. All day long the thoroughfare was blocked up over a considerable length by a seething mass of humanity."[11]

Often evictions became pitched battles as activists barricaded and defended houses against assaults by the police.

Expansion of trade union work

Alongside the Unemployed Workers Movement, the other key organisation through which the CPA attempted to lead the working class in the first part of the 1930s was the Militant Minority Movement (MMM). It was first established in 1928 with CPA leader Jack Kavanagh as its first secretary.

Ralph Gibson points out that: "The economic crisis, while it stimulated struggle among the unemployed, on the whole dampened it among employed workers." Strike activity declined as did trade union membership (due to loss of faith in unions along with an inability to pay union dues). "… there was no real strike movement till the ice broke with the Wonthaggi mining strike of 1934."[12] (depicted so well in the movie Strikebound).

However, the CPA was able to advance its industrial work, especially in traditionally militant sectors like the miners. This was despite its overall Third Period sectarian line. In his 1969 history of the CPA, Alastair Davidson summarises its gains in the first years of the Great Depression:

In early 1933 the MMM usually captured only low positions in militant unions, gains which were basic successes, but did not become news. In late 1933 and 1934 it started to capture militant unions at the state level. It also spread its activity throughout the entire Australian union movement. In 1933, through good organisation as well as essentially "pork chop" policies, the MMM captured the presidency of the Victorian Federated Engine Drivers and Firemen’s Association as well as several positions on the Victorian Tramways Union executive. It also consolidated its hold on positions in the WWF and was only narrowly defeated in the Amalgamated Engineering Union elections.

In [January] 1934 it captured its first union at the federal level, [when Bill Orr became secretary of] the Miners' Federation, and throughout 1934 and 1935 it captured positions at the state level. By 1935 it decisively influenced a number of unions in various states: the ARU, the Leather and Tanners', the Federated Ironworkers' Association, the Tramways and Engineering unions, and the Miners' unions.

It also led a militant minority which included about 20% of Australian unionists. It was winning influence in the Victorian, New South Wales, and New South Wales South Coast labor councils once again. Nearly all its successes at this stage were limited to traditionally militant unions, but it was also building its influence in the lower units of unions which were not traditionally militant.[13]

The CPA's key trade union cadres came mostly from the party's unemployed work. For instance, Ernie Thornton, who became a leading figure in the Federated Ironworkers Association, had been a leader of the UWM.

The Militant Minority Movement was a very interesting phenomenon. However, one thing we should be clear about is that this was not just a "rank-and-file" movement. It certainly aimed to organise the ranks of the unions but it also aimed at winning leadership of these organisations and as it had success in this regard, the concept of the militant minority became somewhat anachronistic. Whole unions were won by militants and followed a militant line.

Free speech

The CPA engaged in numerous free-speech fights through the 1930s, often through the Unemployed Workers Movement. One hard-fought campaign took place in Brunswick in Melbourne in 1933. A state law banning "subversive" gatherings was used by the police — under the command of the reactionary police commissioner, General Thomas Blamey — to break up meetings of radicals and the unemployed. The struggle was at its fiercest in Brunswick. Dozens of members of the UWM were arrested in repeated protests during Friday late-night shopping.

A celebrated incident took place on May 16 at the corner of Sydney Road and Phoenix Street in Brunswick. CPA member and artist Noel Counihan had himself locked inside an old steel mesh lift cage bolted onto the back of a horse-drawn cart which was securely chained to a verandah post. From the safety of his improvised fortress he spoke to a large and growing crowd — one estimate put it at 10,000 — for 15 or so minutes on the situation of the unemployed, the right to free speech, war and the rise of Hitler. The police were beside themselves. Earlier that evening in Brunswick a free-speech activist had been shot in the leg by the cops. With the police smashing at his cage with an improvised battering ram, Counihan eventually came out and was duly arrested.

After three months, the campaign was finally successful. The Nationalist state government backed off and brought in a new, less restrictive law and street meetings were generally allowed to proceed without police harrassment.

Then there was the famous case of Egon Kisch in late 1934-early 1935. Menzies, the attorney-general in the UAP federal government, banned the Czech communist writer from entering Australia to address a congress of the CPA-led Victorian Council Against War and Fascism. When Kisch courageously jumped from his ship in Melbourne — breaking a leg but briefly touching Australian soil — the whole government effort to exclude him backfired. He eventually made a triumphal tour of Australia, speaking to large crowds and gaining enormous publicity for his message.

Rise of right-wing militias

In response to the rise of working-class militancy, various anti-labour militias began to be organised around the country by businessmen, ex-army officers and other right-wing adventurers.

The most prominent of these was the semi-fascist New Guard in NSW, led by ex-army officer Eric Campbell. Its slogan was "King and Country" and its aim was to break up CPA, Socialisation Unit and Lang Labor meetings. At its height, its numbers reached some 50-100,000. The CPA was forced to set up a defence guard to protect its meetings. But in February 1932 the New Guard met its match in the "Battle of Bankstown" when 200 of its thugs in dozens of cars attacked a workers' meeting and were driven off in complete disarray. After Lang's dismissal the New Guard went into sharp decline.

'Third Period' sectarianism

The CPA was formed in 1920, inspired by the victorious Russian Revolution. It took some time before a united communist party was consolidated. Through the twenties the party struggled to find the correct strategic and tactical orientation toward the ALP. Then, in 1929-31, under the pressure of the Comintern, the old leadership around Jack Kavanagh was forced out and a new Stalinist team installed, led by Lance Sharkey and J.B. Miles. Under this leadership the party adopted the policies associated with Stalin's ultraleft "Third Period" schema and a typical top-down Stalinist form of party organisation and control was implemented.

Through its frenetic activity in the struggles of the day, especially among the unemployed, the Communist Party grew rapidly. At the beginning of 1929 it had about 250 members; in 1934 the figure was almost 3000. As mentioned above, it began to win positions in the trade unions, laying a strong basis for a growing influence in this sector later in the decade.

However, the truth is that the CPA's sectarian politics prevented it from building a possibly much larger party and leading a much more serious challenge to the whole system.

The Sixth Congress of the Comintern in 1928 had saddled the communist parties with the disastrous schema of the "Third Period". According to the Comintern analysis, adopted at its Sixth Congress in 1928, after the crisis of World War I and the immediate turbulent aftermath, and then the stabilisation of the 1920s, world capitalism was now in its third period. This was one of decisive crisis, in which revolutionary situations were on the immediate agenda just about everywhere and the task of the moment was to organise for the socialist revolution. The problem with the "Third Period" line is that it confused real possibilities of development with the actual situation.

As we know, stormy struggles did occur in many countries and revolutionary possibilities did open up but these still had to be developed with a correct program of transitional demands to win leadership of the masses. The "Third Period" line pushed the CPs into all sorts of ultraleft mistakes, into substituting slogans and abuse for a correct policy.

And the tactical prescription which flowed from it was disastrous. The Comintern argued that not only were the pro-capitalist social-democratic leaders holding back the masses and preparing the ground for reaction and fascism — which was absolutely true — but their rank-and-file followers were also "social-fascists". Left social-democrats — "left social-fascists" in the Stalinist categorisation — were even worse because they could more readily mislead the masses. When the Great Depression came and capitalism did enter a period of tremendous dislocation and political turbulence, the Comintern’s ultra-sectarian "Third Period" line prevented the communist parties from being able to correctly relate to the situation and win leadership of the masses.

For example, in Germany in the later 1920s and early thirties, this sectarian line prevented the potentially formidable labour movement from uniting its forces to check Hitler's rise to power. Instead, the working class remained divided between social-democracy and communism. As Trotsky tirelessly stressed, whatever their differences it was necessary for the workers' movement to unite for self-defence against the growing fascist menace. If it did not do this it would suffer a catastrophic defeat. Trotsky also pointed out that a successful campaign against the Hitlerite threat would open the way to a socialist revolution in Germany. The social-democratic leaders certainly didn't want to fight but the sectarian CP line made it easy for them to avoid the struggle. How different would world history have been had the Marxist-Leninist policy advocated by Trotsky been followed!

In Australia, the Third Period schema meant a crazy sectarianism toward the ALP and its mass base. At a time when the faith in the system of large numbers of workers was being shaken as never before, when they were groping for a way out of their misery, the CPA line made it so much harder for them to cross over to the revolutionary camp.

Of course, the ALP leadership was loyal to the capitalist system, just as it is today. But the most fruitful way to expose the Labor misleaders in the eyes of its followers was not just through general propaganda but by constantly trying to achieve unity in action in fighting for the interests of the masses. Only in the struggle will large numbers of people lose their illusions. Criticism is certainly not excluded but it must be relevant to the issues at hand and formulated in relation to the struggle as it unfolds.

In Australia the Third Period line meant that the ALP leadership was simply denounced. The abusive "social-fascist" tag was also applied to the Labor membership, repelling them at the precise moment when many of them were having serious doubts about capitalism and the parliamentary approach. As Jack Blake recounts:

We believed we had to fight both the openly capitalist parties and the Labor Party, the main blows to be struck against the Labor Party which was considered to be the first barrier to the development of revolutionary struggle. It was thought that as the Labor governments had revealed themselves as supporters of capitalism, all that was needed to win the workers away from the influence of the Labor Party and bring them under the leadership of the Communist Party was the use on a wide enough scale of strongly worded agitation and propaganda. This was the ground on which members of Labor governments, Labor Party and trade union leaders were described as "social fascists". When left trends emerged in the Labor Party and trade unions in various states these were branded as "left social fascists" who were more dangerous to the working class than open right-wingers like Scullin and [Victorian ALP Premier Ned] Hogan.[14]

Here is an example of the CP's abusive style of polemic taken from a 1930 article in the Workers Weekly:

The advancements made recently in the organisation of the unemployed movement have so alarmed the filthy crew of social fascists that they are engaging in a frenzied campaign of sabotage and treacherous intrigue in an endeavour to break up the UWM and place the unemployed once more at the mercy of Hogan's gang of professional starvers of the unemployed. In this foul conspiracy the usual bunch are playing a leading role — Duffy, Monk and Cameron. The prostitute socialists are gathering all the opportunists, degenerate stool pigeons and scum that infest the ALP and placing in their hands the agencies for the distribution of state food stuffs …[15]

This absurd and destructive line was applied in NSW both to the movement headed by Lang and to the Socialisation Units. Common sense would seem to dictate that the CP should have attempted to form the closest links in the struggle with the units and their mass base. When Lang was dismissed by Governor Game in 1932, a huge crowd assembled in Sydney's Moore Park in a very radical mood, with a section calling for arms. The CP had cut itself off from influencing this development and, with Lang heading off to his country farm until everything blew over, it went nowhere. It could have been very different.

Another path of development

As we have pointed out, the Great Depression was eventually "overcome" on a capitalist basis only by World War II. But there was another path of development and at the time it made a mighty impression on masses of people suffering under the anarchy and madness of the capitalist crisis. This counter-example was the Soviet Union. As the capitalist world was in a tremendous crisis due to an "overproduction" of goods, the USSR was surging forward in the mighty collective effort of the first Five-Year Plan.

At the beginning of his classic 1936 work, The Revolution Betrayed, Trotsky sums up what was achieved:

The vast scope of industrialisation in the Soviet Union, as against a background of stagnation and decline in almost the whole capitalist world, appears unanswerably in the following gross indices. Industrial production in Germany, thanks solely to feverish war preparations, is now returning to the level of 1929. Production in Great Britain, holding to the apron strings of protectionism, has raised itself 3 or 4% during these six years. Industrial production in the United States has declined approximately 25%; in France, more than 30%. First place among capitalist countries is occupied by Japan, who is furiously arming herself and robbing her neighbours. Her production has risen almost 40%! But even this exceptional index fades before the dynamic of development in the Soviet Union. Her industrial production has increased during this same period approximately 3½ times, or 250%. The heavy industries have increased their production during the last decade (1925 to 1935) more than 10 times …

Gigantic achievement in industry, enormously promising beginnings in agriculture, an extraordinary growth of the old industrial cities and a building of new ones, a rapid increase of the numbers of workers, a rise in cultural level and cultural demands — such are the indubitable results of the October Revolution, in which the prophets of the old world tried to see the grave of human civilisation … Even if the Soviet Union, as a result of internal difficulties, external blows and the mistakes of leadership, were to collapse … there would remain as an earnest of the future this indestructible fact, that thanks solely to a proletarian revolution a backward country has achieved in less than 10 years successes unexampled in history.[16]

We can add a postscript to this assessment. In 1967 — the 50th anniversary of the October Revolution — Isaac Deutscher, the renowned biographer of Trotsky, published The Unfinished Revolution, his well-known study of the Soviet Union. He pointed out that if allowance is made for all the years the USSR took to simply get back to prewar levels of production (following the devastation of World War I, the Civil War, and then World War II), then in the equivalent of a mere 25 peaceful years — from a very low base — it had created the second most powerful industrial economy in the world.

Despite all the howling of the bourgeois ideologues, nothing will ever be able to erase from history this "indestructible fact". Put aside Stalinist bureaucratism and repression, the deliberate neglect of consumer needs in favour of heavy industry, the damage to the environment, and the eventual final collapse of the Soviet Union — these things were in no way essential corollaries of this prodigious economic effort — the example of the Soviet Union nevertheless shows the truly enormous power of collective human labour, once it is freed from the shackles of capitalism and allocated according to a conscious plan.

Conscious, planned effort needed

The world capitalist system will not simply collapse. It will continue until it is overthrown by the struggle of the people. But if it does continue, humanity will pay a tremendous price. The burden of the current slump will be placed on the backs of the people. The crisis of global warming will not be meaningfully addressed — with completely catastrophic consequences for humanity.

But the example of the Soviet Union as Trotsky outlined it remains. Today we need nothing less than the same sort of massive, conscious, planned effort to mobilise the whole population and all the resources of our society to tackle the looming catastrophe of global warming. However, such a gigantic emergency mobilisation won't be done and cannot be done on the basis of capitalism and the profit motive but only on the basis of a nationalised, planned economy.

The restructuring of our economy to make it sustainable on all levels and to cope with the consequences of global warming will provide more than enough work for everyone. But this requires that we tear control of the economy out of the hands of the profit-mad capitalists, place it in the hands of the people and use it to benefit society.


  1. Denning, Caucus Crisis (Cumberland Argus: Parramatta, 1937), pp. 57-58.
  2. Blake, "The Early Thirties", Arena, No. 25, 1971, p. 45.
  3. National Times, a feature on the Great Depression published in 1971, quoted in Socialist Worker, June 1983, p. 3.
  4. Dixson, "Rothbury", in Cooksey ed., The Great Depression in Australia (Australian Society for the Study of Labour History, 1970), p. 23.
  5. Denning, pp. 63-65.
  6. Cooksey, Lang and Socialism (ANU Press: Canberra, 1971).
  7. Blake, p. 47.
  8. Gibson, The People Stand Up (Red Rooster Press: Ascot Vale, 1983), p. 29.
  9. Fox, Fighting Back: The Politics of the Unemployed in Victoria in the Great Depression (MUP: Melbourne, 2000), p. 51.
  10. Fox, pp. 146-147.
  11. Ibid., pp. 152-153.
  12. Gibson, p. 42.
  13. Davidson, The Communist Party of Australia: A Short History (Hoover Institution Press: Stanford, 1969), pp. 59-60.
  14. Blake, p. 49.
  15. Fox, p. 52.
  16. Trotsky, The Revolution Betrayed (Pathfinder Press: New York, 1972), pp. 6-7.