Australian Dictionary of Biography

Edward Granville Theodore (1884-1950), by William Edwin Pidgeon, c1945

National Library of Australia, nla.pic-an4061194

Edward Granville Theodore (1884-1950), premier, Federal treasurer and company director, was born on 29 December 1884 at Port Adelaide, South Australia, second of six children of Basil Theodore, labourer, and his wife Annie, née Tanner, poor immigrants who had met on board ship. Basil, originally surnamed Teodorescu, was Rumanian; Annie, Liverpool-born, had an Irish mother and an English father. Working around the wharves and on the tugboats of Port Adelaide, Basil also cultivated a small, unrewarding orchard at Aldgate in the hills. Educated to the age of 12 at Lefevre Peninsula Catholic and Aldgate State schools, Edward found jobs as gardener, farm-hand and timber-getter, before heading in 1900 for Murchison on the Western Australian goldfields.

Moving east in 1903, he worked in South Australia then took employment—and an apprenticeship in labour politics—in the mines at Broken Hill, New South Wales. In 1906 he departed for the Chillagoe-Irvinebank hinterland of Cairns, Queensland, where, mixing mine labouring with prospecting for wolfram and tin, he perceived and set about repairing a lack of effective organization among the district's workers. With others he formed in 1907 the Amalgamated Workers Association of North Queensland, becoming at 22 its first secretary. Helped by William McCormack, who was to remain a close friend, he built the union into a broad-based and militant organization whose major achievements included the absorption of the sugar workers in 1910, victory in the sugar strike of 1911 and amalgamation in 1913 with the Australian Workers' Union, of which Theodore became State president. When he relinquished this post in 1916 his union career—marked by aggression, administrative cleverness, centralizing tendencies and clear-sighted pragmatism—came to a close.

Believing that workers' interests—conceived as improvement in job opportunities, wages and hours, and the exclusion of 'alien' labour—could not be served effectively by industrial action alone, Theodore had early affiliated the A.W.A. with the Labor Party, had subsequently thrown the resources of the A.W.U. behind that organization, and had embarked upon a political career. In October 1909 he won the Queensland Legislative Assembly seat of Woothakata (from 1912 Chillagoe) for Labor. On 20 December 1909 in St Stephen's Catholic Cathedral, Brisbane, he married Toowoomba-born Esther Mahoney, a contractor's daughter; while remaining privately ambivalent toward Catholicism, he would be well served in Queensland Labor politics by a resulting ambience of faith and domestic stability.

Theodore's rise was swift. In 1912, when Tom Ryan was elected leader of the parliamentary party, he became deputy leader, and, on Labor taking office in June 1915, deputy premier, treasurer and secretary for public works. In October 1919, when Ryan resigned to enter Federal politics, Theodore became premier. Nearing 35, he cut an impressive figure. Wide-shouldered, deep-chested, thick-necked and almost six feet (183 cm) tall, he might have been a rugby front-rower. His hair was dark, his eyes piercing and set well apart, his face broad, with thick lips and a strong, cleft chin. Speech lessons, intensive use of the parliamentary library and careful attention to his appearance had transformed the somewhat untidy, anti-intellectual and ill-informed parvenu of 1909 into a politician of presence. Adroit in debate and knowledgeable in financial as well as industrial matters, he was already revealing a preference for the company of books to that of his political colleagues.

Among the dramatic episodes of his 'Queensland period' were the anti-conscription campaigns of 1916-17, the associated referenda and a conspiracy charge arising from attempts to avoid the censorship of Theodore's pamphlets—in all of which he and Ryan vigorously opposed Prime Minister Billy Hughes. Just as turbulent were Theodore's hard-nosed confrontations with strikers and radical elements in the labour movement brought obstreperously to life by the divisions of war and events in Russia. Of more lasting interest was government intervention in the Queensland economy, embracing labour market regulation, business enterprises, and the level and structure of taxation. The philosophy of development—of 'opening up' Queensland's resources for closer settlement—was accommodated by railway, road and irrigation outlays, and by the creation or improvement of services (educative, marketing, financial) for the small farmer who was cosseted as natural ally of the working man. In the labour market, union ideals were honoured by the Trade Unions (1915) and Industrial Arbitration (1916) Acts, and by legislation covering compensation, unemployment and workplace safety. Restriction of competition among workers was matched by an enthusiasm to promote it elsewhere: with the intention of curbing private monopoly while enhancing revenue, various state enterprises were established—cattle stations and butcher shops, timber and sugar mills, banking and insurance services, even an hotel. In other cases, such as the purchase of the Chillagoe and Mungana mines in 1918 and 1922, the maintenance of regional production and employment was a consideration. While Theodore's approach to the budget was orthodox, he sought—in keeping with emerging if contested principles of public finance—to meet mounting expenditure from taxation based upon 'ability to pay'.

Although there was (within the constraints imposed by war and post-war dislocation) a flurry of intervention under Ryan and Theodore, its novelty diminishes in comparison with the policies of other Labor—and even conservative—governments during the first quarter-century of Federation. The question of its effectiveness is complex, subject to intersecting political and economic considerations: politically, the strength of conservative resistance (in legislature, courts and the business community) which delayed or modified where it did not reject government initiatives; and economically, the degree to which policies as finally implemented were matched by their market outcomes. It is likely that historians will be impressed less by the intervention than by the vigour with which Theodore met opposition to it, by the brusqueness he displayed toward a laborite constituency unsettled by his stewardship, and by evidence that 'Red Ted' had himself begun to measure the gap between Labor idealism and the realities of a mixed and fluctuating economy.

Perhaps the most dramatic of several encounters between Theodore and the Queensland establishment began in 1920 with yet another rejection by the Legislative Council of a bill to increase pastoral rents. After appointing a complaisant lieutenant-governor (William Lennon), Theodore augmented Labor's numbers in the council in order to pass the legislation. He then set off for London to negotiate overseas borrowing which had been interrupted by war. A delegation of three under Sir Robert Philp representing pastoral and banking interests with English connexions preceded him, determined to compromise his dealings with the City. Theodore came away empty-handed and during 1921-22 was obliged to borrow more expensively in New York.

Meanwhile, a substantial reduction in Labor's majority after the 1920 State election led to such harassment in the assembly that Theodore resorted first to proxy-voting to circumvent Opposition 'misbehaviour' over pairs, and then to legislation to abolish the council which was passed in 1922. His 1921 Act governing the retirement age of judges would also change the composition of the Supreme Court. At the 1923 election Labor's parliamentary position improved, and early next year in London Theodore sought the conversion of loans due to mature in 1924-25. There followed a rapprochement which, despite Theodore's protest that he had yielded no more than a promise to freeze pastoral rents, drew strong criticism from radical laborites. Long unimpressed by his pragmatic, 'within system' approach to reform, they were now prepared to believe that a Labor government had succumbed to the English 'money power'.

That a man of the temper of Theodore should, during Federal A.L.P. conferences in the early 1920s, engage in bruising conflict with ideologues bent upon the destruction of capitalism is hardly surprising; indeed, he led the move to banish Communists from the party. The radicals, however, were able to exploit a misgiving among Labor supporters that Theodore's once ardent commitment to the party's economic objectives had weakened. The truth was that he had awakened to the potential for conflict between these objectives, especially in difficult times, and to the costs as well as the benefits of government intervention in economic life. There was also a matter of personal style: increasingly autocratic in his handling of government business and exuding a conviction that large affairs were best left in his keeping, Theodore resisted the unions with a no-nonsense frankness that aggravated their hurt. Incisively intelligent but lacking in urbanity, he evidently presumed that in politics logic should suffice, when too frequently it is not even necessary.

Pre-selected for the Federal seat of Herbert in July 1924, Theodore surrendered the premiership in February 1925 and in September resigned as member for Chillagoe to contest the Federal election. He had, in political terms, accomplished much in a relatively small State; and as an able, ambitious, young, yet immensely experienced politician who had come to see the advantages (for himself as for the party) of pursuing Labor policies from the centre, he could only have been tempted by an obvious weakness in the Federal leadership. But in November his bid for Herbert failed. While his subsequent decision to seek a seat in New South Wales was guided chiefly by the need for a more credible political base from which to challenge for leadership, it was strengthened by a realization that in Queensland his appeal had waned. Striving to extend his influence, he had agreed in late 1924 to adjudge a running dispute between the New South Wales executive and the A.W.U.—the notorious case of ballot-boxes with sliding-panels—and had found against John Bailey, the A.W.U. official involved. During 1926 he spent time in Sydney broking among the party's factions. Such tactics, risky at any time, were especially so in the State where the wily manipulator Jack Lang had become premier in 1925.

Theodore's accession to the Federal seat of Dalley in January 1927, after the sitting Labor member obligingly withdrew, was clouded by his relationship with John Wren and by allegations of bribery which were made the subject of a Commonwealth royal commission. Although Theodore emerged formally unscathed, it was a 'characteristic beginning for [a] federal career in which his great ability, strength of will and capacity for resolute leadership, which the Labor Party so badly needed, were effectively neutralized by the association of his name with transactions of a questionable nature'. His parliamentary speeches, robustly eloquent rather than rhetorical, and directed mainly to economic matters, drew large and respectful audiences. He badgered the treasurer (Sir) Earle Page over financial policy, accused the government of a weakening commitment to tariff protection, and vehemently supported the unions—timber workers, coal miners and stevedores—in their militant defence of wages and hours. In this latter respect his performance smacked of opportunism, but in that of protection it rang with industrial patriotism.

By February 1928 Theodore had reached the Opposition front-bench, but in March, when James Scullin succeeded Matthew Charlton as leader, even the deputy leadership eluded him. At the November Federal election Labor's position improved, and in February 1929 he became deputy leader with an unenviable brief to mediate in the great industrial disputes of that time. When Prime Minister Stanley (Viscount) Bruce went to the people in October over the industrial issue, Labor won handsomely and Theodore became deputy prime minister and treasurer. As campaign director for New South Wales in both elections, he had displayed his usual industry and cleverness, though obliged to deal with a State executive from which Lang—decanted from government in 1927—was trying to isolate him.

Carefully attired, aloof, grave and measured in manner, the new treasurer stood out in a parliament where his air of brooding strength and confident grasp of the world at large intimidated colleague and foe alike. Incapable of small talk or bonhomie, and preferring to spend what little leisure he had in reading or fly-fishing, Theodore was a solitary man. In the comfortable library of his Kirribilli home were gathered works ranging from economics and history to philosophy and literature. Proud and relentlessly self-improving, already prospering from investments and multiplying his contacts in the business world, he had moved far in style and circumstance from the working man he once was; and the feelings he aroused in others—of admiration, of enmity, of simple envy—were, as ever, strong.

The 1929 Federal election coincided broadly with the onset of economic depression and political manoeuvring against Theodore from either side: in Queensland the conservative Moore government set up a royal commission into allegations of corruption over Mungana, and questions were asked in parliament about Theodore's Mt Isa shareholding; in New South Wales the Langites worked to ensure that Theodore would not supplant Lang in control of the State machine, and to extend their influence over local members of the Federal caucus.

Australia's Depression problem was formidable. How was a small, primary-producing, debtor country, which was determined to meet its international obligations, to deal with a massive external deficit inflicted by collapsing terms of trade and the abrupt cessation of capital inflow? Such were the character and severity of the crisis, and Australia's political circumstances in 1930-31, that little was possible by way of compensatory monetary and fiscal policy. Even had Theodore (rightly regarded as enlightened for his day) been able to implement reflationary measures, it remains an open question how much they might have achieved—the more especially in a world which was not behaving similarly.

Scullin inherited a hostile Senate, a deeply orthodox chairman of the Commonwealth Bank, Sir Robert Gibson, and an electorate resistant to novelty in economic policy. The suspension of assisted immigration and the sharp raising of tariffs in 1929-30 were characteristic Labor responses to mounting unemployment. These reactions, together with the countercyclical timing of public works financed in the normal way, were elements of Theodore's own thinking. So, too, was the manipulation of credit; but not, as some laborites were urging, by tinkering with the note issue or requiring the Commonwealth Bank to finance large capital projects when the loan market was quiescent. He offered, instead, his central reserve bank bill of April 1930, embracing the philosophy of price stabilization by monetary management which reformers like J. M. Keynes had been advocating in the 1920s when Theodore had read upon the subject. At this early stage, then, Theodore was of the liberal, rather than radical, monetary persuasion. Despite a wide sympathy for central banking ideas, the bill—at first delayed in committee and later rejected by the Senate—failed for political reasons. In April, too, the Mungana commission exposed McCormack's secret half-share in the mines before their sale to the Queensland government, and Lang finally secured control of the State executive, putting Theodore's pre-selection for Dalley at hazard.

Worse was to come. On 4 July the commission found Theodore and McCormack guilty of 'fraud and dishonesty' and abuse of ministerial position. The case against Theodore hinged upon McCormack's regular payment to him of sums equal to one-half of McCormack's receipts from the Mungana mines. On 5 July Theodore resigned from cabinet; on the 8th he vehemently defended himself in parliament. He also learned that the Queensland government intended to take civil action to retrieve the large difference between the price of the mines and their estimated worth. It was to be another year, however, before this action began.

For about four months, as the Depression deepened, Theodore absented himself from parliament and caucus, denying the Mungana charges, monitoring the policy debate and manoeuvring to recapture his position within the party. On 18 August Sir Otto Niemeyer, representing the Bank of England, delivered the chastening orthodox advice—vigorous cost cutting and swift budget balancing—which was to be embraced by Australian governments in the notorious 'Melbourne Agreement' of August. Scullin departed for London on the 25th, leaving James Fenton as acting prime minister and Joseph Lyons as acting treasurer to conduct policy in his absence. Making effective use of the Niemeyer bogey, Lang won the New South Wales election of 25 October. Apparently stung, Theodore returned to caucus as sponsor of the 'Gibbons resolution'. Its most striking feature was a proposal that the Commonwealth Bank should in effect cover the shortfall between government tax-loan revenues and planned expenditures (including domestic loan conversions and a public works programme of up to £20 million). The exchange rate was to be flexible and the price level was to be monitored. Now aligned with the laborites he had once rebuffed, he was thought to be preparing a challenge to Scullin. But, after Scullin's return in mid-January 1931, Theodore changed tack and supported Scullin's suggestion that Commonwealth Bank lending be directed more to the private than the government sector. A target for the price level—that of the later 1920s—was also set. At the caucus meeting of 26 January, despite opposition from Lyons and others on the right, Scullin restored Theodore to his former cabinet positions.

During the premiers' conference of February 1931 various under-treasurers aired severely deflationary ideas which lent urgency to Theodore's espousal of reflation. He approached the banks with proposals informed by a memorandum which Melbourne economists Edward Dyason, Lyndhurst Falkiner Giblin and (Sir) Douglas Copland had submitted to Lyons in September. In the course of the conference he and Scullin, accepting that a cut in real wages was unavoidable, pressed the advantages of achieving it within a policy which focused upon prices more than costs. Thus credit creation and exchange depreciation would ease the pressure upon money wages and deprive local bondholders of the bonus which a subsiding price level had brought them. A special tax would ensure that they shared in the reduction of living standards imposed by world events. If the banks co-operated in this scheme, governments would rein in their expenditures. Throughout these discussions Theodore drew upon Giblin in various ways and, when Charles Wickens fell ill, made Giblin acting statistician and effectively the government's official adviser.

As bargaining with the banks proceeded, Lang, with an eye on Federal office, declared that not only should local bondholders suffer (by a statutory reduction of interest rather than taxation), but that payments to British bondholders should be suspended altogether. By easing government budgets and the balance of payments, this course would have given more room for manoeuvre in economic policy, but it was condemned by the conference. Theodore's own scheme, presented now as a 'middle way' between repudiation and deflation, was rejected by the bankers who insisted upon fiscal discipline as the prerequisite to any assistance they might offer. He was accordingly impelled to his renowned 'fiduciary' expedient by which £18 million of unemployment relief works and farm assistance was to be financed by an expansion of the unbacked note-issue. As the fiduciary notes and associated bills went to their fate in the Senate, he persisted in a belief—buttressed by Keynesian and other authority—that reason was sufficient to the occasion. This same faith found expression in his abortive attempt to release gold for shipment on government account, not by modifying the note-issue reserve requirement, but by abolishing it altogether.

In February-March Lang's plan became the catalyst for an open split between the New South Wales and Federal executives. Federal caucus expelled the Langites who, with the defection of Lyons and his followers from the A.L.P., had the government at their mercy. Theodore, expelled with others from the State A.L.P., was also rebuffed by his Dalley electoral council which endorsed the Lang solution. In early April Lang's defaults began, but were made good by the Federal government. In this month, too, Gibson delivered his 'ultimatum' on government finance which led to the establishment of the Copland committee to devise a scheme of deficit reduction. Its proposals, delivered to the premiers late in May, underpinned the deflationary Premiers' Plan of June.

The Plan was not as great a defeat for Theodore as commonly supposed. Its retrenchment programme was less severe than earlier proposals, and in an unprecedented Lang-like breach of contract, a statutory reduction of interest on internally held bonds was applied which—unlike contemporary wage cuts—would not be reversed as conditions improved. Moreover, during the protracted stand off over budgetary policy, the Commonwealth Bank had been obliged to expand credit significantly. Believing that the rest of the world would soon reflate, Theodore was even able to comfort himself that the Plan itself had uses within a strategy of delay, or so he maintained to John Curtin in 1932. But his hopes of softening its impact with projects to relieve unemployment foundered upon banking intransigence.

On 22 July 1931 civil proceedings began over Mungana. A 'not guilty' verdict was handed down on 24 August, yet Theodore's failure to testify before either the commission or the court left his enemies with ammunition. In the electoral débâcle of December precipitated by the Jack Beasley group, Theodore was Labor's most conspicuous casualty: opposed by a Langite, he saw his 78 per cent of Dalley's formal vote (1929) plummet to 20. Bitterly contemptuous of what he construed as the treachery of Lang and the banks, and the unintelligence of Labor's traditional constituency—'the fool workers'—he resisted importunings to return. The man whom conservative (Sir) Bertram Stevens described as 'the coolest, best and most experienced financial brain in the southern hemisphere' had abandoned politics for ever.

Theodore's subsequent career embraced publishing, gold-mining and wartime public service. In 1932 he was asked by the A.W.U. to report on the operations and prospects of its struggling newspaper, the World. Finding his recommendations for its rescue uncongenial, the union offered Theodore an option on the paper. With a youthful (Sir) Frank Packer and others, he formed a company which in November 1932 exercised the option. Subsequently the Australian Women's Weekly (1933), a revitalized Daily Telegraph (1936) and the Sunday Telegraph (1939) appeared; by World War II Consolidated Press Ltd, with Theodore as chairman of directors, was well launched upon its impressive career.

Meanwhile, the prospect of high returns, as well as the test of nerve and skill associated with gold, had lured him to Fiji. There, in partnership with Wren, Packer and P. F. Cody, Theodore backed his own judgement against an unfavourable survey which had rattled his colleagues, and triumphed. By July 1935 the syndicate had opened the Emperor, Loloma and Dolphin mines, of which the first two were later floated on the Melbourne stock exchange. Living near Suva as managing director of all three, Theodore involved himself in local matters and made fewer trips to Sydney. From 1937 he ranged farther afield, seeking gold in Borneo and then on Guadalcanal, Solomon Islands, which he left just before the Japanese invasion.

Mindful of his abilities, men from both sides of politics sought to draw him into the war effort. (Sir) Percy Spender's attempt in May 1940 was foiled by Country Party objections which led (Sir) Robert Menzies to remonstrate: 'Give up this deplorable habit of throwing stones at great men'. John Curtin later secured Theodore's appointment as director general (February 1942–October 1944) of the Allied Works Council. As organizer of resources for war-related projects, he showed his usual force and skill, but his return to public service brought controversy. In September 1942, protesting political interference, he threatened resignation over clashes with his old antagonists Beasley and Eddie Ward; his secondment of Packer from the army to be his director of personnel attracted criticism; and his willingness to invoke punitive labour regulations did not endear him to the unions.

After World War II Theodore occupied himself with mining and newspaper business, and talked of settling in Fiji. In 1946 he was a delegate to the Imperial Press Conference in London. Aware of his serious heart condition, he carried on with increasing difficulty; after joining the board of Great Boulder Mines Ltd, he suffered a major heart attack in 1948. He resigned the chairmanship of Consolidated Press in January 1949 and made his last trip to Fiji. On 9 February 1950 at Edgecliff, Sydney, he died of hypertensive cardiovascular disease; after a state funeral he was buried in South Head cemetery. His wife, two sons and two daughters survived him. His estate in Victoria, New South Wales and Queensland alone was sworn for probate at £629,915. In a panegyric Archbishop (Sir) James Duhig traced the way in which Theodore's intellect, character and industry had overcome his lack of formal education, but spoke of how the envy of others had brought him down in public life.