Lessons from the past: The Great Depression and the Communist Party of Australia

A section of the Wharfie's Mural, the large-scale work of art from the walls of the CPA-led Waterside Workers Federation (WWF) canteen in Sussex Street, Sydney, in the 1950s and '60s.

By Dave Holmes

[This is an excerpt from the new pamphlet, Meltdown! A socialist view of the capitalist crisis, by Resistance Books. Meltdown! features essays by John Bellamy Foster, Phil Hearse, Adam Hanieh, Lee Sustar and others. Purchase a copy from Resistance Books.]

The current economic crisis is a fundamental crisis of the world capitalist system. British socialist Phil Hearse calls it the “third slump” in the history of the capitalism (the other two being the Great Depression of the 1930s and the 1974-75 sharp downturn). And the levels of mass distress may yet come to rival the 1930s.

We certainly already have the anti-human irrationality of that period. Some time ago I came across a TV program about Las Vegas and the crisis. Casino business was down, it said. But Las Vegas also has normal suburbs, full of struggling, financially stressed homeowners. Across the city the sheriff’s department was conducting 3500-4000 home evictions each month! And the US has dozens of cities the size of Las Vegas.

But it is not the desperate homeowners who are being bailed out, but the very bankers and speculators whose insatiable greed caused the crisis. In a November 26 article on counterpunch.org Kevin Zeese wrote:

$7.6 trillion.

That is what [financial information agency] Bloomberg reports has been committed on behalf of the American taxpayer to bail out America’s finance system. This includes spending by the Treasury, Federal Reserve and FDIC.

• The amount is equal to half the value of everything produced in the United States last year.
• It is $24,000 for every man, woman and child in America, that is, nearly $100,000 for a family of four.
• It’s nine times what the US has spent so far on wars in Iraq and Afghanistan.
• It is enough money to pay off more than half the country’s mortgages, but bankruptcies have continued despite the bailout.

We do not even know where all of those funds have gone. The taxpayer is putting up a king’s ransom and not being told who is receiving it. We guarantee the debts of banks and are not being told what collateral is provided or who is receiving the funds. Before receiving the bailout funds, Treasury Secretary Paulson promised transparency. But Federal Reserve Chairman Bernanke says that such transparency would be “counterproductive”.

All of this money and yet foreclosures, bankruptcy and unemployment are all up; the stock market, consumer spending and housing prices are down. Pouring tax dollars into banks is not working …

You’d think for $7.7 trillion we’d get health care for all, tax relief or free college education! But Americans got none of that.

And, of course, no matter how hard the crisis hits ordinary people in the West it will be massively worse in the Third World.

What does all this mean for us? We are entering into a new period. Unemployment is likely to rise significantly and there will be further deep cuts to welfare and social spending — all against the backdrop of the looming threat of climate catastrophe. Along with the growing social dislocation we can expect increasing political turmoil. The last time this happened in Australia was in the Great Depression of the 1930s. And while we shouldn’t expect a carbon copy of that period, we can learn a lot from the experience of the Communist Party of Australia (CPA) in those turbulent years.

Much of the factual material in this talk is drawn from the 1983 book The People Stand Up by longtime CPA activist and leader Ralph Gibson.1While this work is firmly in a Stalinist framework, it nevertheless provides a very interesting picture of the 1930s crisis in Australia and the work of the CPA. Gibson gives a vivid sense of the depth of the suffering of the masses, the rottenness of the ALP leaderships, and the passionate struggle of the communists fighting for something better.

The Great Depression

The Great Depression of the 1930s began with the October 1929 crash of the US sharemarket. This rapidly developed into a crisis of world capitalism — the most severe in its entire history. From the end of 1929 to the end of 1932, industrial output fell 46% in the USA, 47% in Germany, 31% in France and 16.5% in Britain (already in a severe slump). Agricultural production dropped by a third over 1929-33. International trade contracted to one-third of its previous level. Unemployment reached at least 35 million (12 million in the US). In the US, only the mobilisation of World War II really put an end to the decade-long slump.

Workers, means of production, people’s needs — everything was still there but due to capitalist ownership of the economy the whole mechanism had seized up. To keep up prices, milk was poured down coal mines, oranges and coffee were dumped in the ocean, livestock were slaughtered, cotton fields were ploughed under. Mass misery reigned amid plenty. In the Soviet Union, however, Stalinism notwithstanding, the economy was forging ahead under the first Five-Year Plan. The contrast could not have been clearer to millions of people suffering in the capitalist world.

In Australia the impact of the crisis was extremely severe. The economy was heavily dependent on exports of primary products and world prices of these fell by over half. In the 1920s large-scale federal and state government public works had been financed by loans from Britain. With the crash, these stopped but the banks (the “British bondholders”) still demanded payment of the interest. In the years 1930 to 1934, an average of nearly a quarter of the workforce was unemployed, existing on a miserable pittance. Misery, hunger, homelessness and dire distress gripped the country.

ALP helpless in face of crisis

Some basic facts of political history are necessary here.

Australia went to the polls in October 1929. The hated anti-worker Nationalist government of PM Stanley Bruce was defeated (Bruce lost his seat to a trade union official) and the ALP under James Scullin took office (but with the Nationalists still controlling the Senate). However, the euphoria was short-lived. A few days later the Great Depression began …

In the two short years it was in office, the Scullin government showed itself to be completely incapable of protecting the interests of working people. It abandoned its modest election promises and was completely subservient to the bosses.

Worried about getting their pound of flesh, the British banks sent out an emissary, Sir Otto Niemeyer, to lay down the law to the Scullin government. Neimeyer demanded drastic cuts in wages and pensions — Australian living standards were too high, he said. At a Premiers’ Conference held in May-June 1931, the notorious Premiers’ Plan was adopted. It called for slashing all adjustable government expenditure by 20% — including all wages, salaries and pensions.

In NSW the ALP under J.T. (Jack) Lang won office in October 1930. Lang had presided over a modestly reformist state government in the mid-twenties. He put forward his own plan for the crisis. It called for a moratorium on interest payments to the British banks and a renegotiation of terms (actually not without precedent in the times). However, this was rejected at the February 1931 Premiers’ Conference. Despite all the demagogy surrounding Lang, the truth is that he later voted for the infamous Premiers’ Plan.

Lang was expelled from the Federal ALP in May 1931. There were then two ALPs in NSW: Lang Labor (by far the larger) and the rump Federal Labor. Five MHRs and two senators in Canberra were Lang supporters. In April 1932 Lang announced that the NSW government would suspend its interest payments to overseas bondholders. In response to this, in May the governor, Sir Philip Game, sacked Lang and he was defeated in the subsequent elections.

When a group of ALP defectors led by former Tasmanian premier Joseph Lyons withdrew support, the Scullin government was forced to the polls in December 1931. It was defeated by the new Lyons-led United Australia Party, a fusion of the Nationalists and ALP turncoats. Labor would remain out of office in Canberra until the Curtin government in 1941.

CPA and the ‘Third Period’

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 much more top-down form of party organisation and control was implemented.

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.

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.

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 they are today. But the most fruitful way to expose them in the eyes of their 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 the masses 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 his book Ralph Gibson is critical of the CPA’s tactics toward Langism. Yes, Lang was a capitalist demagogue but he had attracted a mass following precisely because he appeared to offer an alternative to the Premiers’ Plan. The CPA called for a repudiation of the overseas debts. OK. But the actual struggle was developing around Lang’s proposal to suspend interest payments and renegotiate the terms of the loans.

When Game sacked him (probably an unconstitutional act) an enormous meeting was held in Sydney’s Moore Park in June 1932 under the slogan “Lang is right”. The place of revolutionaries was to be part of that movement, demanding that Lang be reinstated — and then actually carry out his plan. But the CPA’s Third Period schema closed off this possibility and this whole promising development passed them by.

Similarly, the CPA played a negative role in regard to the Socialisation Units which arose in the NSW Lang Labor Party in 1930-33. The outlook of the leaders of the units was utopian and they were unclear in their understanding of the nature of the Labor leadership around Lang but here was a movement embracing scores of thousands of workers looking to “socialisation” as the answer to the misery of the depression. The CPA denounced the leaders and supporters of the units (as “left social-facists”). And when a few communists did operate inside the units, they sought to commit the movement to an abstract revolutionary program.

Work among unemployed

Ralph Gibson explains 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.”2

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

A national Unemployed Workers Movement (UWM) was set up in Sydney in July 1930. CPA members played the key role in setting it up in Sydney and 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.

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 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. The UWM also 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 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.

Growing influence in trade unions

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”3(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.4

The Militant Minority Movement is a very interesting phenomenon. One thing we should be clear about is that this was not just a “rank-and-file” movement. Yes, it aimed to organise the ranks of the unions but it also aimed at winning leadership of unions 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.

New Guard threat

In response to the rise of working-class militancy a semi-fascist New Guard formed 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.

Conclusion

According to Alastair Davidson, at the end of 1928 the Communist Party had 249 members. By April 1931 membership was in excess of 1100. In 1934, the figure was almost 3000 and in 1935 probably greater still.5

What can we conclude from this very brief sketch? In the early 1930s, in the context of a global crisis of capitalism and a consequent profound crisis of Australian society, a small revolutionary party built itself into a formidable force in Australian political life. It remained small compared to the ALP but its influence was much greater than its mere numbers would suggest. All this was achieved despite a fundamentally wrong political line (its Third Period ultraleftism).

Many things are different today. But we can be sure that one thing at least will not be different this time around. Its Stalinist framework notwithstanding, the CPA grew because of the commitment, drive, energy and will to struggle of its membership. This time too success will go to those who are prepared to fight and make sacrifices for their cause.

In the period ahead of us the socialist movement will have increasing opportunities. We can learn a lot from the experience of the CPA during the Great Depression, while hopefully avoiding its mistakes.

[Dave Holmes is a member of the Democratic Socialist Perspective, an Marxist organisation affiliated to the Socialist Alliance of Australia.]

Notes

1.Gibson, The People Stand Up (Red Rooster Press: Ascot Vale, 1983).

2.ibid., p. 29.

3.ibid., p. 42.

4.Davidson, The Communist Party of Australia: A Short History (Hoover Institution Press: Stanford, 1969), pp. 59-60.

5.ibid., pp. 53, 69.