The struggle to capture the history of the Depression began as soon as it had passed its crisis point. The first move was made by Copland with his delivery of the inaugural Alfred Marshall Lectures in the University of Cambridge during October and November 1933. The lectures had been established by the Faculty of Economics and Politics the year before, and have since usually been delivered by an outsider, but very rarely an Australian.[32] His topic was to be the economic policies that Australia had pursued. Copland gave eight lectures – comprehensive, lucid, and factual; confident without being arrogant. Australia, he declared, had undertaken ‘… a bold and unorthodox policy at a time when most other countries either refused to take stern measures, or sought to conceal from their people the fact of the depression’.[33] He claimed a triumph.
But it was his auditors in Cambridge, the very hosts of his triumph, that produced a new logic that allowed a doubt to creep over the whole ‘policy’ of the Plan. Very soon Ronald Walker, just returned from Cambridge, was articulating the new understanding of saving and investment in the pages of the Record, and Copland seemed quick to absorb them. By 1934 he was writing,
The Paradox of Saving
It has been assumed, all too frequently, that the mere act of saving would itself lead to investment, but experience of the past four years everywhere in the world has shown this not to be so. If investment stops, the national income must fall. During 1931 in Australia we reached a position when investment almost reached a standstill. (To-Day, 16 October 1934)
This sits ill with the Plan.
But the gap between this new thinking and the old was widest over the policy the economists pressed longest and longest – wage cuts. This was manifested with the arrival in Australia of Brian Reddaway, in 1936, with some proofs of the General theory in his luggage. He began making appearances before the Arbitration Commission, arguing the legitimacy of wage rises in the light of Keynesian theories of effective demand and the economic recovery that had, by then, taken place.
In 1936, not long after Reddaway’s arrival, Copland supplied an unexpected interpretation of the Plan.
The orthodox portions were only smoke screens for things that were really done under the Plan. The things included a depreciation of the currency, the heavy and substantial reduction in interest, the conversion loan of August 1931, and the definite inflation which took place in 1930 to middle of 1932. It was a tragedy that wages and salaries had to be reduced. (Reported in Westralian Worker, 21 August 1936).
With Brigden, there was no talk of ‘smoke screens’ or tragic necessities, but of paradox. ‘The Australian Plan’ he said in 1937 ‘was a paradoxical programme of cut and spend’, but it ‘suited the facts and the ebb tide turned’ (Brigden 1937 p. 5).
Whatever Brigden was doing in this statement, he was not making any concessions to permeation of the climate of opinion in the late 1930s by Keynesian ideas. He remained resolute in opposition to any notion of ‘excess savings’.
The menace of thrift is a new vice that has sprung up in the last few years. I think Mr Keynes and his school suffer from the same disability as Adam Smith did in his time, in that they have looked too closely within the range of their own national experience. Great Britain is a country exporting capital, and it is just possible that there may be too much saving for the good of the people of Great Britain. But I do not see the time coming very soon when we here shall be saving too much, enough to do without the importation of capital from abroad. (Brigden 1939b, p. 147).
Brigden’s lack of assimilation of Keynesian theory is evident in this argument. In an open economy the menace to full employment lies not in the possibility of an excess of saving over investment at full employment – that, certainly, has rarely happened in Australia – but in the excess of saving + imports over investment + exports, at full employment; another proposition altogether.
Brigden’s rebuff of Keynesian theories of national income was complemented by his steady resistance in the late 1930s of Keynesian theories of the price level.
I understand the new orthodoxy [i.e. Keynesianism] to declare that the continued expansion of credit does not lead to inflation until there is full employment. I understand the new credit theory has been acted upon very successfully in Nazi administration … It seems to require the same conditions which were available to Dr Schacht …
(a) a closed economy with neither free migration of men or money
(b) severe labour discipline with wages pegged at or about depression levels
(c) a comprehensively controlled social system such as the German; and
(d) a popular willingness to work under such conditions
I deny the theory is a good working basis for any sort of thinking in a democracy. It is just another mistake, and none the better for being a fashionable reaction from older mistakes. We in Australia can make our own mistakes. We do not need to import them. (Brigden 1939a, p. 237).
Giblin had no concern to fight Keynesianism, but as late as 1942, he was concerned to defend the plan.
Unemployment began to improve from the date of the Premiers Plan. That it did not improve more quickly is due chiefly to the fact that the Scullin government, which recognised the value of monetary expansion in promoting employment, was defeated and went out of office at the end of 1932.[34]
That Giblin thought it was worthwhile to defend the plan ten years later in drastically altered economic circumstances shows how much reputations had – perhaps unwittingly – been invested in the plan. It shows the tenacity of resentment. The economists had attracted some very specific parliamentary billingsgate. John Cain senior (later to be Labor Premier of Victoria) used the chamber in December 1933 to accuse Copland of a very personal hypocrisy in refusing the reduction in his own salary that he had proposed for others. ‘The professor of economics has been advocating reductions for everyone else, but does not want to share the responsibility … He was one of those who advocated at the first Premiers Conference that there should be a 20 percent reduction in adjustable government expenditure, including the salaries of public servants … I feel that I should … give the professor a taste of his own medicine’.[35]