CHAPTER 3
On 27 August 1984 Mr John Stone, then soon to resign as Secretary of the Treasury, gave the Edward Shann Memorial Lecture at the University of Western Australia. In his lecture Stone described Henry Bournes Higgins as the "post-Federation regulator par excellence". Stone continued, "He was the man who, as Mr Justice Higgins, won renown, as Shann said, 'by renovating as a novel extension of democratic jurisprudence the mediaeval idea of the just price'." Other references to Mr Justice Higgins are found in Stone's text. For example:
In Shann's day, things had not approached that pitch of idiocy in these matters which has laid so sharp an axe at the roots of our national productive capacity today. Nevertheless, even by 1930 they had gone a fair way. Under the benevolent hand of Mr Justice Higgins and his disciples, for example:
The fear of discontent was held to justify awards of the same basic wage in different industries, on the ground that unequal wages were "anomalies over which men brood" [Shann].
The doctrine of capacity to pay, which to any person of ordinary common-sense (that is, the great bulk of the Australian people, both in 1930 and now) would appear to have a certain compelling quality about it, had been heavily frowned upon in the earlier history of the Arbitration Court. Let Shann take up the story:
Even this rule of thumb recognition [of the doctrine of capacity to pay], however, was a breach in the rampart of sacrosanctity. In 1909, Mr Justice Higgins ruled that the Federal Court could not prescribe a lower rate [of pay] in order to keep an unprofitable mine going. "If shareholders are willing to stake their own money on a speculation, they should not stake part of the employees' proper wage also" [Higgins].
However, in those days some working men at least not only possessed more commonsense than Mr Justice Higgins (and nothing has changed in that regard) but also were determined that their own commonsense should prevail over such nonsenses as he and his fellow regulators would have forced upon them. As Shann records:
The propriety of a wage, the legal award of which would also abolish their jobs, was not plain to the copper-miners at Wallaroo and Moonta in South Australia in 1921. They entered into an industrial agreement to work, while the market for copper was low, for less than the basic wage and the usual margins. This agreement the Federal Court somewhat reluctantly recognised.
Stone's lecture is significant in many ways but his sustained, acerbic comments on Higgins constitute the most significant attack on the founder of our arbitration system since Prime Minister Billy Hughes sought to undermine Higgins in 1917.
That his attack had found its target was soon evident. In the transcript of the Hancock Enquiry (Committee of Review into Australian Industrial Relations Law and Systems), a fortnight after the Shann oration, we read the following exchange between Mr Charlie Fitzgibbon, former Federal Secretary of the Waterside Workers' Federation and Vice President of the ACTU, and Mr Simon Crean, currently Federal Secretary of the Storeman and Packers Union:
Mr Fitzgibbon: There has been a well publicised paper delivered recently in which the suggestion that the major cause for youth unemployment is the rate of wages paid to youth. Do you have any views on that?
Mr Crean: We have some very strong views on it. In the first place, it is certainly not our view that the rate of wages paid to youth is the cause of youth unemployment. The problem with youth unemployment is the problem with unemployment generally, and that is that there just are not sufficient jobs because of the state of the economy. We have never accepted the argument the level of wage rates is the cause of unemployment whether one takes it on a sectoral approach or overall. The real problem in this country, in terms of employment opportunities, is that we have gone through a very severe recession which we are just starting to come out of, and, in our view, will take us some time to get out of.
These arguments come from the heartland of Australian trade unionism. Mr Simon Crean, although a young man, is a widely respected and distinguished trade union official who, it is often suggested, will succeed Mr Cliff Dolan as President of the ACTU. Another response to John Stone's attack on Higgins came from Higgins' biographer, the Monash historian John Rickard. Rickard's biography of Higgins was published in September 1984 and was subsequently awarded the 1984 David Syme Prize for Biography. In a radio interview following this award Rickard said that Stone's remarks were "a kind of back-handed tribute to what Higgins really achieved in setting a certain standard of living". Rickard has performed a public service with his biography of Higgins. He is a great admirer of Higgins, and his excellent biography is written with a sympathy which, whilst not entirely uncritical, is pervasive and warm.
It is the outstanding merit of this sympathetic book, and of its author, that those readers who are armed with a few basic facts of Australian economic history will quickly reach the conclusion that Higgins was a nut; a nut who, to the great detriment of his country, found himself able to give legal form and substance to his fantasies.
What were the essential features of the Australian society of 1870 to which Higgins and his family migrated from Ireland? How did Higgins make his way from obscurity to national fame? What are the consequences of his career? Answers to these questions tell us much about our current difficulties.
The most important fact about Australia in the latter part of the nineteenth century is that its people were, in per capita terms, the richest in the world. This wealth was based on the production of commodities for world markets, particularly British markets. The commodities were wool, wheat, gold, silver, and base metals, and the economic opportunities generated by these industries transformed Australia from a collection of colonies numbering some 400,000 people in 1850 to a nation of 4.5 million in 1900.
We, who were once so rich, have now become relatively poor. This impoverishment has so far been relative, as the countries of the west Pacific -- Japan, Singapore, Taiwan, South Korea -- one by one catch up to us in per capita income and then, seemingly inevitably, overtake us. But our relative decline will just as surely turn into an absolute decline. This economic decline (which we can summarise as our pursuit of the Argentinian dream) will force our children and grandchildren to choose between staying at home as international paupers or emigrating to other countries where opportunities are greater.
There are, I suppose, a number of institutions that have contributed significantly to our economic decline, but in any catalogue of them the Commonwealth Conciliation and Arbitration Court, and its child the C & A Commission, would have to occupy first place. A study of this quixotic institution must begin with its founding father, Henry Bournes Higgins, and the society in which he became first very rich and then influential and powerful but, in spite of this, always remained a crank. Eccentrics and nuts are always more interesting than ordinary, sane folk, and Rickard's absorbing account of Higgins, who, at least in terms of far reaching influence, must be accounted as one of Australia's most damaging and delusioned nut cases, reveals just how malleable Australian society was at the time of Federation.
In the fifty years after 1851, when gold was discovered, nearly three and a half million immigrants arrived in Australia. Most of them came in sailing ships, on a three month voyage which took them in sight of icebergs at 60°S, on a great circle route. Most would never be able to revisit their birthplace. They came to better themselves; to earn more than they could ever hope to earn back home; to try their luck in the hope of getting a fortune.
One such migrant was Anne Higgins. She arrived, with four children and a servant, at Port Melbourne in the heat of February 1870. Her eldest son, 18 years old, was Henry Bournes Higgins. He suffered from chronic respiratory ailments and his health had been one reason for the decision to emigrate. On arrival the young Henry noted in his diary:
At Melbourne we were struck with the extraordinary bustle and activity. Everything seemed on the move, very different from the staid gentility and begging poverty of Dublin. No beggars were discernible. The horses were driven with furious rapidity and urged mercilessly through thick and thin.
Henry's health improved greatly in Melbourne. His scholastic record from Ireland enabled him to get a job teaching with little difficulty. There were then no teachers' registration boards and no diploma of education requirements to obstruct or restrict those who wished to try out their skill at teaching. Aided by his employer, a Scot from Ayrshire who ran a small private school in Fitzroy (this was, of course, prior to the 1872 "free, secular, and compulsory" education act), Henry pursued his studies, matriculated and won exhibitions which enabled him to study at the University of Melbourne as a scholarship holder.
The subjects that enthralled him, and at which he excelled at the young university, are significant: Latin, Greek, mathematics, and Roman history. Henry Higgins enjoyed a classical education, and it is a fair inference that he absorbed in his studies of the great Latin authors the distaste for the market place that was characteristic of Roman society. Roman citizens could not be shopkeepers. They could be farmers, they had to be soldiers (at least in the early days of the Republic), but trade and commerce were looked on with disdain. The Roman economy was kept going by slaves or Greeks or other non-citizens, who acted as middlemen, merchants, shopkeepers, speculators, and traders, often as agents for Roman principals. This classical distaste for market processes was to find judicial expression in the BHP case of 1909 where Higgins condemned bargaining and the higgledy-piggledy of the market place.
As well as the great Latin poets, Higgins devoured John Stuart Mill, Herbert Spencer, and, significantly, the intellectual founder of socialism, the archetypal social engineer, Auguste Comte. He was also thoroughly acquainted with Adam Smith and, through the influence of Professor W.E. Hearn, thought of himself as a Liberal free-trader.
Henry Higgins's father, John, had been a Methodist clergyman in southern Ireland. When he arrived in Melbourne in October 1870, he found himself in the humiliating position of being rejected by the Victorian Methodist Church and obliged, eventually, to take up home missionary work with another connection. John was something of a dreamer, and Ann Higgins's drive and ambition were now directed to forwarding her children's careers, Henry's in particular. Despite his brilliance in the classics, and offers of academic posts, she encouraged him to persevere with preparing for the Bar. She listened to him for many hours as he read aloud, practising like Demosthenes, to overcome the stutter which would have been a major impediment to a young barrister.
The nineteenth century saw a determined assault on the intellectual pre-eminence of the established churches. Darwinism, the battle over evolution, the development of an anthropological view of religion, which reached its high point in 1890 when Sir James Frazer's The Golden Bough was published, are evidences of the battlefield. Frazer was two years younger than Higgins, but the same currents that swept Frazer to fame carried Higgins into anxious doubt. He found those he revered at the University, the writers he admired, to be sceptics to a man. He committed his doubts and anxieties to paper, but in cipher lest his family should learn of his questioning and doubt. Loss of religious faith in an heir to strong religious commitment and tradition is a very frequent forerunner of political commitment and political activism, and so it was with Henry Higgins.
In 1876 Higgins was called to the Bar, his nominees being one of his law lecturers and, through his mother's initiative, Victoria's radical liberal leader George Higinbotham. Higgins concentrated in equity, began making money in 1879, married Mary Alice Morrison (eldest daughter of Dr George Morrison, the founder of Geelong College) in December 1885, and felt secure enough financially to take 1886 off to travel the world with his bride. When he resumed his practice in January 1887, he was 35 years old and leader of the equity Bar in the fastest growing city in the world. His mother must have felt greatly satisfied at the transformation that had occurred as a result of that decision to emigrate eighteen years before.
Australia's wealth in the nineteenth century was based on the sale of commodities on the world market. In the 1890s commodity prices collapsed, and the wool growers, in particular, found themselves in financial crisis. They sought to share their financial problems with their shearers and station hands, who responded by joining the AWU and engaging in prolonged and bitter industrial campaigns.
The collapse of commodity prices came soon after the collapse of the Melbourne land boom. The transition from golden boom to leaden bust had been quick. In 1893 most of the Melbourne banks closed their doors for a week. There was widespread unemployment, social unrest, and great bitterness. Many leading Victorian politicians of the eighties and nineties had been deeply implicated in the financial scandals of the land boom. Even Alfred Deakin, then a luminary of the Victorian Parliament and close protegé of David Syme, was not free of taint.
It would have been much better for the health of Victorian politics if those who had been implicated in the scandals had been driven from public life. But there seemed to be bipartisan support for a minimum of fuss. Higgins had not been involved in land speculation, which he regarded with distaste. His earnings at the Bar had made him wealthy, and his support for Irish Home Rule, as a nominal Protestant but good friend of the Irish Catholics, gave him political advantages in certain electorates.
In 1892 Alfred Deakin urged him to stand for the Victorian Parliament. Higgins contested Geelong, where his wife's family was very prominent, and lost by a small margin. The next election was called in 1894, at the depth of financial depression. As is always the case at such times, the political debate was dominated by economic soothsayers and nostrum-sellers. Higgins was much influenced by Henry George and he campaigned on a platform of taxation on unimproved value of land, and abolition of plural voting. (Plural voting allowed for a property-based franchise as well as adult male franchise.) Nettie Palmer, Higgins's niece, tells the following story in her biography of her uncle:
To this plural voting H.B. Higgins was definitely opposed, and in his opening speech he told the electors so as plainly as possible. According to this new proposal, he said in a parenthesis, Judas Iscariot would have two votes because he bought a field with the price of his iniquity, whereas Christ would have only one vote, as He had no place to lay His head. A day or two afterwards his secretary came to him in the committee-room, gloomy and troubled, telling him that one X, who had given him his vote and powerful influence at the last election, had announced that since this Judas Iscariot speech he would vote against him. Higgins asked why: had he been thought irreverent or profane?
"No," replied his secretary, "but you were wrong. You said that Judas Iscariot bought the field, and it appears that it was the priests who bought it."
So the candidate looked again into the Scriptures and found that he was wrong according to St. Matthew, but right according to the Acts of the Apostles!
Higgins on this occasion topped the poll and became the Member for Geelong in the Victorian Parliament.
The 1894 Parliament, reacting to the grim economic conditions of the time (albeit Australia was still better off than the UK or the USA or anywhere else in the world) embarked on a massive programme of nanny legislation. It is difficult to avoid the suspicion that for many of those public men who had done very well out of the land boom, and who had extricated themselves out of the bust with minimum honesty, this nanny legislation provided a convenient method of assuaging their guilt. In 1895, the Chief Secretary, Mr Peacock, brought in a Shops and Factories Bill and stated that, whereas two years ago he would not have dreamed of a minimum wage for women and children, the conditions of sweating revealed by the investigations of Mr Harrison Ord had appalled him, and he had had the task of educating his colleagues.
Higgins played a prominent role in these developments. In the debates on sweating he argued that inspectors should have authority to enter private homes where women worked for piece rates.
The greatest evils of sweating existed not in the factories, though these were bad enough, but where only one or two persons work. Cases are known such as that of a woman sewing fifteen or sixteen hours daily in her "home" to make nine shillings for her invalid husband. To those who object that the State should not interfere with what goes on in private homes, I reply that to "interfere" with workers in such conditions is no more than interfering to protect a prisoner in his cell. Every worker should be under an inspector: it has been too much the custom to play off the out-workers against the in-workers of a factory, keeping down the conditions of both.
And to those parliamentarians, who attempted to stem the flow of regulatory sentiment and legislation with Ricardian and Smithian arguments of supply and demand, he counter-attacked in bitter terms:
He had been amused by what had been said by the hon. member for Eastern Suburbs about the liberty of the subject. ... The hon. member assumed a degree of free will on the part of those helpless people that they really did not possess.
In the course of 20 years Higgins had moved from the position of a poor student imbued with Gladstonian liberal ideals of individual liberty and free trade to that of a wealthy and influential barrister who supported protection and was prepared to extend the role of the State to that of intruder/inspector into the homes of citizens. Working wives were placed in the same category as convicted prisoners.
Higgins played a pivotal role in the adoption by the Constitutional conventions of 1897-98 of what is now paragraph (xxxv) of section 51 of the Constitution, the conciliation and arbitration power. He was narrowly elected as tenth and last Victorian delegate after having been endorsed by the Melbourne Age. As the conciliation and arbitration proposal was defeated twice before Higgins and C.C. Kingston succeeded in persuading the Convention, by a very narrow majority, to adopt S.51(xxxv), it is entertaining to speculate just how much harm was caused by the editorialist -- perhaps it was Syme himself -- who slipped Higgins's name onto the list of candidates recommended by the Age as worthy to be elected by Victorians to the Constitutional Conventions. Without that endorsement, Higgins could not have scraped home in the poll, and without the single-minded tenacious advocacy and wirepulling of Higgins there would have been no Conciliation and Arbitration power, no Commonwealth C&A Court and all that followed from it.
After six years as the Federal member for North Melbourne (totally dependent on the Irish-Catholic Labor vote for his success in that electorate) and a brief spell as Attorney-General in the Watson Labor government of 1904, Higgins was appointed by Alfred Deakin to the High Court in October 1906, just in time to avoid defeat in North Melbourne by an endorsed Labor candidate.
Twelve months later he succeeded Justice O'Connor as President of the Commonwealth Court of Conciliation and Arbitration, an institution which the Federal Parliament had established in 1904, using the power of S.51(xxxv) which Higgins had so strenuously pushed through the Constitutional Conventions.
It is noteworthy that three ministries (including the Watson Ministry) died during the drafting and passage of the legislation establishing the Court, and during Higgins's long presidency it remained a subject of political debate.
In his fourteen years as President of the Conciliation and Arbitration Court, Higgins worked long hours, heard many cases, and got himself involved in some notable arguments. In 1914 a Deputy President was appointed to share the growing workload but, because of the intrinsically arbitrary nature of decision making and the fundamental incompatibility of Higgins's mediaeval vision of economic "justice" with a market economy, particularly an economy based on producing commodities for world markets, disagreements between President Higgins and Deputy President Powers soon became acute.
Higgins's prestige and authority with the trade unions was based primarily on political factors. As an advocate, although a Protestant, of Irish Home Rule, he had solid support from the Irish-Australian community. The trade union movement was not an Irish preserve, but the Irish found trade unionism very congenial and took to the tribal rhetoric and politics of unionism with enthusiasm. After World War I and the conscription referenda Irish influence in the trade union movement and the ALP increased greatly.
Higgins's decisions and the language he used were Aristotelian and mediaevalist in doctrine and sentiment. This made his work appealing to the Roman Catholic hierarchy, and he was often in correspondence with the archbishops of Melbourne and Sydney.
Two of Higgins's cases merit detailed discussion: the Harvester case of 1907 and the BHP case of 1909. The Harvester case has become standard copy in school textbooks. It had its origins in a deal done to get tariffs through the new Commonwealth Parliament. Tariff protection was to be granted only to those industries which paid "fair and reasonable" wages.
So H.V. McKay, inventor of the Sunshine Harvester and in 1907 Australia's largest manufacturer of agricultural implements, duly asked the new President of the Arbitration Court to grant him the required certificate. One can only sympathise with McKay as he slowly realised the trouble he was in. Higgins seized the opportunity to decide what was fair and reasonable. As he later wrote in the Harvard Law Review:
Many household budgets were stated in evidence, principally by house-keeping women of the labouring class; and, after selecting such of the budgets as were suitable for working out an average, I found that in Melbourne, the average necessary expenditure in 1907 on rent, food and fuel, in a labourer's household of about five persons, was one pound twelve shillings and five pence, but that as these figures did not cover light, clothes, boots, furniture, utensils, rates, life insurance, savings, accident or benefit societies, loss of employment, union pay, books and newspapers, tram or train fares, sewing machine, mangle, school requisites, amusements and holidays, liquor, tobacco, sickness or death, religion or charity, I could not certify that any wages less than 42 shillings per week for an unskilled labourer would be fair and reasonable.
This paragraph summarises the fantastic nature of Higgins's mind. To him the ups and downs of economic fortune and of market prices, the vagaries of the seasons, the decline of orebodies or the discovery of new orebodies, the demanding process of wealth creation was unknown and unappreciated. Here was a lawyer gone quite crazy.
But the political structure supporting the tariff arrangements was so delicate that no substantial political interest was prepared to make the effort to turn this new development into a laughing stock. McKay subsequently went to the High Court and got Higgins's judgement disallowed. But the damage was done. The idea that wages could be determined by judicial decree was firmly embedded in the Australian consciousness and has remained there ever since.
The BHP case is of greater consequence. Here Higgins went much further down the road of Platonic guardianship than he had dared to do in 1907. He was venturing into an industry fully exposed to the ups and downs of the international market place, an industry for which tariff protection was merely an additional cost burden. The story of the strike at Broken Hill in 1908-1909 is succinctly and vividly told by Geoffrey Blainey in his The Rise of Broken Hill, but in the context of the development of Higgins's theories of wages and markets the important thing is that Higgins laid down a doctrine of bankruptcy rather than adjustment as a response to falling market prices.
If a man cannot maintain his enterprise without cutting down the wages which are proper to be paid to his employees ... it would be better that he should abandon the enterprise.
and
If shareholders are willing to stake their own money on a speculation, they should not stake part of the employees' proper wage also. (emphasis added)
These two cases summarise Higgins's theories. Wages, judicially determined after consideration of current consumption patterns, were to be inviolable. Unemployment was preferable to any adjustment to changing market conditions. No doctrines could be more damaging to Australia's position as a commodity producer for world markets.
The most illuminating postscript to the Higgins story is the tale of the Foster pound, told by Blanche D'Alpuget in her fascinating biography of Sir Richard Kirby.
In February 1949 the metal trades unions applied to the Court for variation of the basic wage in their awards. The hearing was a mammoth one, interrupted by strikes for which two unions were deregistered, the striking out of claims by six other unions because of misbehaviour, the coal strike, difficulties of interpretation of new legislation and political pork-barrelling in the general elections of December 1949 in which Chifley lost office.
On 12 October 1950 the bench gave its decision after 122 sitting days, 6950 pages of transcript, 440 exhibits, and 125 witnesses. The Chief Judge, Sir Raymond Kelly, was determined to use his authority to fight inflation. He was not prepared to give the unions any increase at all. Judge Foster had decided to recommend an increase of one pound -- the largest increase proposed since Higgins's Harvester judgement. But Foster, believing that Judge Dunphy would inevitably come to terms with his fellow Catholic, Chief Judge Kelly, arrived at this figure confident that it would be nothing more than a glorious gesture: Dunphy was proposing ten shillings, Kelly was adamant that he would support no increase; by the ordinary rules of politics Dunphy and Kelly would eventually agree to a compromise of five shillings.
About a week before judgement was to be given Dunphy went to Kelly and proposed to him again that they compromise at five shillings. Kelly would not agree. Forty-eight hours before judgement day Dunphy returned to Kelly and told him that he believed to award nothing would be wrong, and that therefore he had decided to side with Foster. Kelly was thunderstruck but he still refused either to compromise or to hold a conference with Foster. Dunphy re-wrote the last few pages of his judgement; Kelly tacked onto his a final sullen paragraph stating that he was in a minority; but it was not until half an hour before going into court that Dunphy informed Foster of his decision.
Foster, said Dunphy, was "not delighted so much as astounded".
In 1921, at the age of 70, Higgins declined to offer himself for re-appointment to the Arbitration Commission, believing perhaps that Prime Minister Hughes would delight in appointing someone else over him. His last years were spent in literary pursuits, in seeking to build up the prestige and strength of his Arbitration Court, in following the troubled course of Irish affairs and in fulfilling his duties as a High Court Judge. He presented his Harvard Law Review articles to the University of Melbourne, as publications to be recognised for the granting of a doctorate. After his death in January 1929 his place on the High Court was taken by Owen Dixon.
One wonders if he was ever troubled by intimations of the damage the Arbitration Commission, the institution to which he had been father, midwife, and builder, had caused and would increasingly cause to the land to which he had come as a bronchial eighteen year old.
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