Giblin’s priority with respect to multiplier-style concepts has been conceded by authoritative accounts of the multiplier’s genesis for many years (Wright 1956; Moggridge 1993; Dimand 1988).^[2] Giblin’s version of the multiplier was in print, as Australia, 1930, in April 1930 - 15 months before the Cambridge multiplier was, and several months before the Cambridge multiplier was even conceived.

How did Giblin come to formulate the multiplier? The germ of Keynes’ multiplier theory is easily traced to economic stagnation in 1920s Britain, and to Keynes’ arguments in his pamphlet of May 1929, Can Lloyd George do it?, in favour of the extensive employment benefits of public works.^[3] No such line of intellectual descent will serve for Giblin: he had not read Can Lloyd George do it?, and suspected it was seeking to defend the discreditable.^[4]

A search for the roots of Giblin’s ideas tempts us to return to Hobart. In Giblin’s youth there lived in Hobart an underconsumptionist, A. J. Ogilvy (1834–1914), who shared the ‘left-liberal’ outlook of Giblin. He founded the Tasmanian Land Nationalisation Society, and in 1897, the Democratic League, a forerunner of the Tasmanian Labor Party. The author of numerous pamphlets on political economy, in 1892 Ogilvy published Is capital the result of abstinence? – answering in the negative – and in 1896 Saving and spending.

But Giblin did not need to notice or read Ogilvy to come into contact with underconsumptionism – almost every unorthodox economic thinker was an underconsumptionist (see Coleman 2002). In any case, Giblin, as we shall see, was not an underconsumptionist.

A stronger lead to the source of Giblin’s thought is found in the doctrines of Alfred De Lissa (1838–1913), a London-born Sydney barrister, who, during the 1890s, published a series of papers that not only explored a variety of effective demand notions, but advanced multiplier–style formula and geometric progressions that related the magnitude of an initial spending stimulus to the final total stimulus.^[5] In 1890 he proclaimed the ‘Law of Incomes’, a ‘great economic law which appears to underlie the industry of every country’, that turned on a ‘physiocratic’ multiplier concept in which workers in production support workers in services. In 1890 he explained his ideas in an Advancement of Science conference in Hobart in terms of geometric progressions.^[6] By 1898 he had generalised his ideas into a formula, whereby total incomes equal value of production divided by the proportion of income spent on services.^[7]

When De Lissa spoke in Hobart, Giblin was already in London, studying under Pearson. Thus reason forbids the fancy from imagining the young Giblin absorbing from the stalls De Lissa’s multiplier idea. Yet, as one commentator has obliquely put it: ‘It is an interesting coincidence that after De Lissa’s, one of the first expositions of the multiplier came from L. F. Giblin’ (Goodwin 1962). There is something that adds more piquance to the coincidence: during the 1890s De Lissa also wrote on a topic that was soon to become a preoccupation of Giblin’s, the special budgetary treatment of Tasmania in the new Commonwealth. De Lissa ‘showed that a fair distribution of national revenues in the new federation required adjusting for differences in the economic product in each colony, effectively to compensate for their varying fiscal capacity’ (Hancock and Smith 2001). This sentiment is very close to that principle which Giblin was to adopt and champion. Could Giblin’s absorption of the controversies over federal finance have brought him into contact with De Lissa’s works in general, and his work on the multiplier? One is lost in speculation.

One moves from speculation to fact with the advent in the late 1920s of the Development and Migration Commission, that had been created to appraise government proposals for the establishment of new industries in the light of their potential to support higher immigration. A railway that the Victorian Government had built to open up some wheatlands came to its attention. In 1952 Copland (writing anonymously) recalled:

In a similar recollection Torliev Hytten (Hytten, 1960) recorded:

Regrettably, Hytten’s ‘page or so’ appears to have been lost, but the three other memoranda survive. These are: ‘New farms and population’, L. F. Giblin, 9 August 1929; ‘The correlative increases in production and population’, L. F. Giblin c. 1929; and ‘Population supported by 1,000 pounds by new export production’, J. B. Brigden, 5 September 1929.

These papers are concerned with the total impact on national income of the new income deriving from a new industry.

‘New farms and population’ was written at the request of the Development and Migration Commission, which had asked Giblin to analyse what would be the gain to Australia’s population of the establishment of new wheat farms. Giblin approached this problem by arguing that there would be both a direct gain and an indirect gain. To analyse the direct gain, he estimated the value of production of each new farm at £700 (after making deductions for transport, interest, raw materials used, repairs etc.). He then noted that, as ‘Australian population works out at 1 per £100 of income’, the £700 of income accruing to the operator of each new farm would support an additional seven population members. Thus the direct population gain would be of seven people for each new farm.

It was in the indirect effect that Giblin introduced multiplier analysis. He argued that about two-thirds of the income accruing to the operator of a new farm would be spent on domestically produced consumption goods, thus generating additional income for the profit-earners and wage-earners engaged in the production of such goods equal to two-thirds of the income accruing to the operator of the new farm. In turn these people would spend two-thirds of their additional income on domestically produced consumption goods, thus generating a further income increase of (two-thirds)² times the income accruing to the operator of a new farm. And so on indefinitely. Thus for each new farm established there would be an indirect income gain equal to the direct gain (£700) multiplied by ⅔ + (⅔)² + (⅔)³ + … This infinite series converges on two. The indirect income gain for each new farm established would therefore be £1400, so that the total gain would be £2100.^[9] The logic of geometric progression, absent from Australia, 1930, is explicit here.^[10]

Giblin sent ‘New farms’ to Brigden: ‘I should be glad of criticism, – destructive or constructive’. Brigden responded with a two-page comment entitled ‘Population supported by 1,000 pounds by new export production’, dated 5 September 1929. This is a bolder, starker analysis than Giblin’s. It drew the protectionist implications of Giblin’s multiplier analysis without hesitation. It pointed out that the reduction in (what would today be called) ‘the propensity to import’ would increase national income, and consequently suggested that it was through import substitution that any new industries would create employment.^[11] It also used the language ‘multiplying’ and ‘multiplied’, terminology that Giblin never used.

It is worth noting that Brigden has also been credited by some of his colleagues with turning Giblin’s mind away from the positive impact on national income of an expansion of exports, and towards the negative impact of a contraction of exports on national income. ‘It was Brigden who first realized the significance of the multiplier working in reverse gear when wool prices fell … When wool prices fell at the opening of wool sales late in August, 1929, he was the first to sound the warning of the impending depression that was to follow …’ (Copland quoted in Wilson 1951). Copland states that Brigden’s composition of Escape to prosperity (1930a) was the occasion of this realisation. The book’s opening chapter, ‘Australia in 1930’, very briefly presents an informal multiplier analysis of the impact of a contraction in exports (Brigden 1930a, p. 5).^[12]

Giblin first publicly aired his multiplier ideas in an inaugural lecture for the Chair to which he been recently appointed – the Ritchie Chair at the University of Melbourne.

Giblin had never sought the Ritchie Chair; it would be truer to say it sought him. The Chair had been founded by Mr R. B. Ritchie as a memorial to his son Captain Robert Blackwood Ritchie MC, who had been killed in 1916 while on war service in France. Ritchie had provided an endowment of £30 000 to the University for the purpose.

To fill the Chair, the University established early in 1927 an advisory committee led by Copland, who expectantly told Keynes that they were seeking ‘a first class man who would stimulate study generally in Australia’. Keynes soberingly replied: ‘My own expectation would be that you would find stronger candidates in Australia than from this country or America’ (quoted in Millmow 2005a). A few days later, and evidently quite undiscouraged, Copland shot high, and cabled Edwin Cannan, recently retired from his Chair at the London School of Economics:

Cannan declined, regretfully, ‘… on account of age and desire to proceed with literary projects’. He further chilled the air by suggesting that younger men would also be reluctant to go to Australia, since, by the time they had returned, ‘influential people’ would have forgotten them. Cannan’s reluctance would not have been diminished by the thoroughly dissatisfied reports of Australian academic life that he had been receiving from Benham, then exiled in Sydney. ‘Australia, as I expected,’ wrote Benham, ‘is intellectually dead’ (LSE).

In the face of the failure of Copland’s straight-to-the-point cablegram, a more deliberate procedure was settled upon. Two committees of three persons were established, one in England (which included Keynes) and one in the United States (including Taussig and Mitchell). Both committees were charged with finding a suitable person, and authorised to approach them. Several worthy candidates were identified, but none was of sufficient stature to satisfy Copland. They were ‘simply not good enough’, he declared. And the candidates of a stature sufficient to satisfy Copland – such as Viner, who Copland implausibly had hopes for – were not going to be satisfied by Melbourne.

With Keynes’ earliest warning seemingly born out, the search turned to possible candidates from Australia. Copland had been plainly angling for the job himself. ‘I am rather attracted to the position myself … I have hinted to the authorities I would be interested’. However, ‘I have the impression the University would like me to stay where I am’ (UMA DBC 29 June 1928).

Copland then took a ‘revolutionary step’; he would recommend Giblin. This needs no rationalisation. The strong man still needed Giblin, as several points in correspondence highlight.^[13] And he admired Giblin’s intellectual leadership. He told Taussig regarding his recommendation, that Giblin has ‘demonstrated his ability to find a way of measuring economic phenomena which has baffled the rest of us’.

The Council was unanimously persuaded by Copland’s recommendation, and on 17 October 1928 the Chancellor of the University enquired of Giblin whether he ‘… would consider favourably an offer of the Chair’. Giblin, however, would not consider it favourably. He broke the news to Eilean: ‘They have offered me the Ritchie chair and I have not read any of their damn textbooks’.^[14] But Copland rallied his ally: ‘Picture yourself as the doyen of Australian economists!’(quoted in Millmow 2005a).

Giblin was successfully cajoled, and cabled his acceptance of the Chair to Copland. Or so it seemed. For on the same day, 22 August 1928, he cabled again, at 12.40pm.

An incomplete draft of a letter from Giblin to the Chancellor spoke of his ‘amateurish equipment’ for the Chair.

But at 2 pm Giblin issued another cablegram.

These communications caused ‘a little stir’ at Melbourne.^[15] But Giblin was coming after all. Copland and he were colleagues once more.

Some of Giblin’s hesitation to accept is manifested in his prefatory remarks to his inaugural lecture, Australia, 1930.

The lecture was delivered on 28 April 1930 in the public lecture theatre of the University. The press was in attendance. The performance was, as the Argus truthfully noted, ‘long and interesting’. Its 8800 words would have taken a full hour to deliver. The multiplier concept was presented lucidly.