The role of Dr H. C. Coombs as an agent for change in Australia

- Peter Myers, October 15, 2004; update October 19, 2004. My comments within quoted text are shown {thus}. Write to me at contact.html.

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Coombs was Governor of Australia's Reserve Bank from 1960 to 1968, when I was growing up; his signature was on all of our bank notes.

He helped create our leading University (ANU), and was later its Chancellor.

He led the campaign for a treaty between Aboriginal and non-Aboriginal Australia. Aborigines nicknamed him "short father".

Item 2, a tribute from academics at ANU, is adulatory. But Coombs also advocated Free Trade - as he says in his book Trial Balance - which has undone the Full Employment policy he had espoused.

Subsequent to this article (1974), he produced a report for the Whitlam Government whose implementation has ruined Rural Australia, and created the Welfare State which has destroyed family life and disrupted the transmission of Aboriginal Culture.

In item 3, Gough Whitlam, Prime Minister from 1972-5, reveals that it was Nugget Coombs who was behind the 25% drop in tariffs Whitlam implemented.

(1) Coombs as Marxist and as Taoist (2) The Coombs Contribution (3) Gough Whitlam's eulogy at the funeral of Nugget Coombs (4) The Aboriginal Legacies of Dr "Nugget" Coombs - by Peter Myers (5) An exchange between Dr Coombs and myself (6) Dr Coombs' article on the destruction of the Australian economy, Banana Republic? No, Banana Colony (7) Coombs on Central Banking and the BIS

(1) Coombs as Marxist and as Taoist

Coombs' goals seem Marxist. He hints at it: "... I have all my life turned to men like Adam Smith, John Stuart Mill, Karl Marx, and Alfred Marshall, for enlightenment." (H. C. Coombs, Trial Balance: Issues of My Working Life , Sun Papermac, South Melbourne, 1983; first published in 1981 by Sun Books, p.5).

But his method was Taoist. He was fond of quoting the Tao Te Ching; many chapters of his book Trial Balance begin with a quote from Lao Tsu. Here are some:

{p. 1} 'If the sage would quide the people he must serve with humility." - Lao Tzu

{p. 107} 'Better stop short than fill the brim.' - Lao Tzu

{p. 141} 'Working yet not taking credit Leading yet not dominating This is the Primal Virtue.' - Lao Tzu

{p. 183} 'Look, it cannot be seen - it is beyond form." - Lao Tzu

{p. 185} 'Knowing others is wisdom Knowing the self is enlightenment.' - Lao Tzu

{p. 261} "Who can wait quietly until the mud settles? Who can remain still until the moment of action?' - Lao Tzu

{p. 263} 'Is there a difference between yes and no?' - Lao Tzu

(2) The Coombs Contribution

The Australian National University News

August 1974, Vol. 9, No. 2

{p. 1} Coombs: midwife to the University adviser to the Nation

by Rosemary Mayne-Wilson

ANU News July 1974

During his forty-year public career Herbert Cole Coombs is credited with having altered Australians' thinking in five directions - central banking, full employment as an accepted norm, on research as a necessary component for universities, the appreciation of the Australian arts and raising the consciousness of Australians towards Aborigines.

And curiously enough the basis of his own social thinking has hardly changed in that period at all. He remains the embodiment, albeit tightly compressed, of small c, small h, small s, Christian, humanist, socialist values.

'It is true', he sald, 'that my social values were indelibly formed in the thirties. I had been brought up in Western Australia which was largely unindustrialised at that time. There was not much stratification in society and although the onset of the depression brought hard times there was no desperate poverty. The weather was pleasant and people didn't need many clothes. We all had enough to eat.

'And then I left for England to study at the London School of Economics. Suddenly real poverty, hardship and social injustice struck me for the first time.

'I was appalled by it. If ever I dreamt of changing the world, it was then', he said with a wry chuckle.

And although he and his social planning colleagues of the thirties and forties may not have influenced thought beyond Australian shores, they started quietly at home with banking and fiscal policies. Coombs soon emerged in the forefront of the times.

'When I was at the London School of Economics it was economically largely a conservative institution dominated by Professors L. Robbins and F. von Hayek. I was writing a PhD thesis on central banking. At that time Australia, being a federation of states, neither had nor had felt the need for a central banking policy. I guess I came in at the right time because the Scullin (Labor) Government had been forced

{p. 2} to realise that monetary policy was important but little was known about it.

'At that stage the Commonwealth Bank issued notes but was rather unprofessional in its lack of policy. Of course central banking wasn't highly organised anywhere except in European financial centres and in America '.

On returning to Australia in 1935 Coombs went as assistant economist to the Commonwealth Bank in Sydney but within a short time he came to the attention of Roland Wilson (later Sir), then Commonwealth Statistician and Economic Adviser (later Secretary) of the Treasury, who brought him to Canberra as an economist to the Treasury in 1939.

He soon came into contact with Menzies, Spender and Fadden, Treasurers in succession, and Curtin who was then Leader of the Opposition.

The Treasury appointment signalled the commencement of Coombs' most charismatic role in public life, adviser to seven successive Prime Ministers - Curtin, Chifley, Menzies, Holt, Gorton, McMahon and Whitlam. Despite their differing range of political views, all have been forthcoming in praising his integrity, sincerity and devotion to work.

Characteristically, Coombs describes this advisory role, unparalleled in Australian history, in terms of 'I've been lucky. I've been round at the time when someone was needed'.

In 1941, with Australia involved in the War, John Curtin became Prime Minister and Chifley, a former engine driver, his Treasurer. Curtin, a West Australian, usually stayed in Canberra on the weekends while other parliamentarians from the closer states went to their electorates. This also helped Coombs.

'I used to meet Curtin at weekend football matches where we would chat. I was lucky that both he and Chifley liked me: they gave me many opportunities .

'Although I am a pacifist by conviction my views weakened when the Japanese made advances in the Pacific. I had joined the V.D.C when Curtin asked me to become Director of Rationing in 1941 and in 1943 I became Director-General of Post-War Reconstruction ' .

And it was as Director-General of Post-War Reconstruction, the most difficult job of the 40s, that Coombs' name became known in every Australian household.

Dr Coombs has never been a member of a political party, except for a brief period during his student days in the University of Western Australia's Labor Club; nevertheless he exudes an air of excitement when he speaks of the forties under Labor management.

'The forties were very special years for several reasons', he explained. 'The depression and the war brought about a strong spirit of nationalism, and a desire to change things for the better. It was a creative time and social planning seemed the first essential of the new life. I greatly enjoyed the challenges of that period'.

And challenges they were. Among the foremost was creating the 1945 White Paper on full employment, advocating a doctrine which has become for Australians something of an eleventh commandment ... as successive governments which have not heeded the creed have learnt.

Some other current ideas were brought together by Post-War Reconstruction and led, after much discussion, to the formation of the Australian National University .

{p. 3} In numerous ways', he said, 'the University was the product of war and social thinking. Curtin, in 1944, asked Howard Florey (later Lord) to Australia to advise on the practicability and desirability of setting up a medical research centre in Australia.

'The war also brought home the need for Australia to know more about its neighbours, particularly in the Pacific, and Dr Evatt, the then foreign minister, urged that a centre for Pacific research be established. He hoped it would also serve to train young diplomats and Asian students', Dr Coombs said.

Another challenge lay in reversing the brain-drain of talented young scientists who, through lack of research opportunities, left Australia.

Concurrently the Minister for War Organisation of Industry, John Dedman, sensed a need for the formulation of a Commonwealth policy on education. In 1943 an interdepartmental committee was set up which among other things advised that a national university in Canberra be formed. A second committee. with Coombs as a member, considered the first committee's proposal on a postgraduate and research centre and sent its report to Cabinet, combining the current suggestions in one body. In August 1945 Dedman announced the decision to establish a postgraduate and research university in Canberra.

During 1946 four committees were set up to advise on the proposed research schools - medical sciences, Pacific affairs, social sciences and physical sciences.

'Then I think about those times', he said, 'I am always most amused about the rationale for setting up a physical sciences school. The Commonwealth Astronomer, Dr R. V. D. R. (Dick) Woolley (later Sir Richard) argued that you should have a centre for theoretical research because it would be the one really cheap research school.

"Just a few chaps sitting round desks with pens and pencils", Woolley used to say. He claimed they would work on theoretical maths and physics, offshoots of astronomy.

'Of course, Woolley was forgetting the Oliphants and Tittertons of the physics world with their enormously expensive machines for nuclear physics and the other costly branches', he said, chuckling again.

Following membership of the 1946 Interim Council, Coombs was a member of the first ANU Council and has been on Council ever since, serving as Deputy Chairman since 1957, Pro-Chancellor from 1959 and Chancellor from 1968.

Dr Coombs was asked how the University has lived up to its title as the 'National University' and its role, envisaged in the 40s, as a 'powerhouse for social reconstruction'.

'When we put forward the Cabinet submission early in 1945 I favoured calling it the Canberra University. After all, there was a tradition that universities were called after the cities in which they were located.

'But the title was changed in Cabinet to the Australian National University. I recollect that it was Arthur Calwell who strongly argued in favour of the national title and this was a real piece of political thinking. He saw that the tide of feeling was nationalistic and the new name cashed in on those sentiments. I then thought it was a rather chauvinistic and pompous title, but, all in all, the advantages of the name have outweighed the disadvantages'.

What then were the advantages of the 'National' title?

'Firstly ANU got considerable government support because of its title.

Because it was to be a place where the ideas and facts on which policies to remodel the world (another chuckle) were to be based, the government was generous in its support'.

Has, then, the University not lived up to the aspirations the creators had for it?

Here Coombs the realist, the man who has seen decades of fashions come and go, answers.

'You see, after all the inspiration, the planning and the nationalism of the forties, people grew tired. They wanted to be free simply to plan their own lives, not to change the world. The academics appointed to the University were soon caught up in the reaction against social planning. The community as a whole rejected Labor in 1949, starting a new era.

'As the new Prime Minister, Menzies did a lot for the University in financial terms but it became a more traditional centre for learning. Neither he nor the majority of academics saw it as an instrument for social change.

'Now society seems to have gone full

{p. 4} circle. In the seventies there is again a cry for relevance. People see the need to think about themselves in a corporate way and this consciousness produces nationalism.

'The "new nationalism" is evident in people's concern for planning in education, health and environmental matters. Students want courses which have a bearing on the social issues of the day'.

Has the University, set up as a research centre, played a special role in Australian tertiary life?

'I think that would be an exaggeration', he said reflectively. 'Perhaps the region in which ANU has influenced other universities and hence the community is in its attitude to research. Now most universities expect to have research facilities as a necessary component of their university .

'It was inevitable and not to be regretted that ANU's national role has been diminished by the establishment of national research centres in other parts of the country. I don't see any reason whv ANU should be unique in this respect. It will always have a large research component and therefore a distinctive character, but that can be said about State universities, for different reasons, as well. Because of its geographical position in the Federal capital, it may keep its role in providing material for governments, but too much of the "special role" reputation incites envy.

'However, the setting up of ANU did create an appetite in State universities for similar funds and in turn the Federal government showed a willingness to assume this responsibilty. The logical end of this was the formation of the Australian Uniersities Commission and, through it, the Federal government has now taken full financial responsibility for tertiary education'.

Unlike many chancellors and pro-chancellors the world over, Coombs has never been content to play a merely ceremonial role. During his association with the University he has influenced its development in several directions, but outstanding are two projects which he initiated - Creative Arts Fellowships and the North Australia Research Unit.

The University's arts fellowships, which have benefited writers, poets, painters, sculptors, musicians and photographers, have also served to encourage Australians of the stature of novelist Christina Stead, musician Don Banks, painter Sidney Nolan and composer Malcolm Williamson back to Australia.

The ANU fellowships were a logical step from Coombs' actions as Chairman of the Commonwealth Bank and Chairman of the Reserve Bank when he commissioned major paintings and sculptures for the interiors and exteriors of bank buildings.

It was also Coombs who persuaded Menzies that the Government should have a role in patronising and supporting the arts, starting with the Eliabethan Theatre Trust in 1954, developing to the Australian Council for the Arts in 1968 and, more recently, under the Whitlam Government, to the Australia Council.

Under his influence, Government grants to the Arts had risen from almost nothing to a dizzy $14 million this year.

The North Australia Research Unit grew from Coombs' conviction, gained on numerous trips north in his capacity as Chairman of the Council for Aboriginal Affairs, that the area, a rich source of significant problems and material for research, had been neglected by academics.

He said in a submission on the Unit that 'apart from the economic and related problems associated with development of the north, there are sociological changes taking place there of profound importance and of great interest academically and for the future of Australian policy'.

The new Unit will involve several disciplines including sociology, geography, economics, prehistory, demography, anthropology and education.

But should the impression be given that Coombs noses about in University affairs, the illusion must be sharply corrected.

In fact, although the Chancellor is concerned at the conservative nature of the University and many of its staff, he knows, and believes it to be right, that laymen have only a limited influence on university councils. 'I think laymen in university government have to learn to mind their own business. It is the active members of the institution that must deliberate on its decisions and mould its character and policies'.

If his policy is rather the gentle art of suggestion and persuasion, why did Coombs lead the April meeting between students and Council following a sit-in in the Chancelry by aggrieved students, particularly those from the Economics Faculty?

'Firstly' he replied in his gravelly Australian accent, 'I chaired the meeting with students because I believed it was the Chancellor's duty to do so. I also had sympathy with the students' views. I believe most of the issues raised by them, particularly that of academic assessment during the year, hadn't adequately been treated by appropriate bodies, even though the complaints have been round for a time. It is surprising, but nevertheless true, that universities are quite conservative, indeed often very resistant to change and frequently dominated by male chauvinist views.

{p. 5} However I don't know that I altogether go along with the request for a course in women's studies. It may be interesting to study in itself but I don't like to think of it polarising men and women'.

Which brings the Chancellor to the issue of women in society, his own view of society and his unfulfilled hopes for it.

'One thing that saddens me about Australian society is that not only is it male-dominated, but 'male' values, in the form of power, status, force and greed, are most influential in our society.

'I believe that most men, and therefore their institutions, are more chauvinistic than they are aware of. I know I have to examine my own thoughts and actions to eliminate it in myself. I don't want to be a chauvinist. I believe that a University such as ANU, that doesn't have even one woman professor, is just about the most male-dominated of all in Australia, even if the discriminatory attitude is unconscious.

'But although I sympathise fully with the women's movement I don't like to see the extremist women's groups wanting power and to be like men. I realise that they, like other oppressed groups, may see the holding of power as the only way to bring about changes, but I hope it is only a transitional phase. I would rather see more attention in our society paid to what might be called 'feminine' characterI istics or values - tenderness, concern for others, kindness, sympathy - ideally found in both sexes.

As it happens, these are the virtues which Dr Coombs remembers most strongly in his own mother, a hardworking Protestant woman, who brought her children up to believe that the injunction 'to love one's neighbour' was meant to be applied personally and by society.

'She was a strong influence on me, as I was effectively the oldest of the five children in our family (the eldest died in infancy). She was interested in intellectual things and encouraged me to read widely. I helped around the house and, being the eldest, we were rather like companions.

'Although she was not a politically-minded woman - few were in those days - she was disappointed that social institutions didn't reflect Christian values'.

Coombs today shares the same Christian 'golden rule' concern for the welfare of others but does not accept the supernatural aspects of Christianity.

Is he a socialist?

'I don't like labels', he replied, 'but if you define socialist as someone who believes that everyone should have a fair deal in life and reasonable equality of economic opportunity, then I am a socialist. But I regard matters such as public ownership of companies and facilities as an entirely different matter. I think they are purely practical issues - not a matter of belief. I see such matters as a question of the most efficient and practical manner of doing things'.

Added to his views on a 'fair deal' for everyone he seems to have, in strong measure, the Aristotelian notion that power corrupts and money taints the owner.

In short, this is the ultimate Coombs paradox. The man who has been at the top for forty years, the friend of the rich and influential, the adviser of the powerful and great, claims to dislike the results of money and power and the seeking of them.

Above all he seems to fear the haughtiness, the status-consciousness and the inability to communicate with the more lowly that results from being powerful. This is probably why, of all the Prime Ministers he worked for, Chifley remains the most special to him.

'As I see it, the exercise of power is an insidious thing. It leaves a mark on the character and personality of those who have it. But Chifley was little affected by it. Whereas to a greater or lesser extent it went to the others' heads, he remained a simple man who was able to talk to anyone. He had a good mind and a natural capacity to understand economics. The things he wanted for Australia were good things, I think. His character was not corrupted by vanities and status-consciousness. If, in his observations, power under-

{p. 6} mines the character, how has Dr Coombs, often described as the most powerful Australian, avoided its consequences?

For a second he pauses. 'Well, for a start, I have never had the direct power of a politician. Perhaps I kid myself, but an administrator and a(iviser's power seems different. And whether I have been affected by the positions I've had is difficult for me to judge. I hope I haven't. But it is up to others to judge that'.

It. is probably the fear of power and position corrupting character that has led Coombs to turn down knighthoods and Vice-Regal positions, while his colleagues and friends have accepted them. Well then, does money motivate him'? The answer is a quick, firm 'No'. 'I dislike wealth. It's rather like power. It's a very good man that can be rich and still be good'.

What then causes him at sixty-eight to work as he does and keep up such a pace?

'I don't think I'm ambitious', he says, shaking his head. 'I have never deliberately pursued positions and achievements. I like doing things I think are important and worthwhile. I admit that I enjoy hard work and like to be active and play squash and golf regularly. But pottering round the home in retirement doesn't appeal to me'. In truth, talking about Dr Coombs' retirement seems highly hypothetical.

He has in front of him the task of heading a lengthy inquiry into the Australian Public Service. Then there is his other long-range plan - to make his own 'quiet and unostentatious' study of an Aboriginal settlement to bridge the role of professional academic and administrator.

This interest in Aborigines is not something new. It was kindled in the 1920's when as a young teacher he taught in country schools in Western Australia where he had Aboriginal students in each class.

'It was my first contact with Aborigines. All my work with Aborigines since then and on the Australian Council for Aboriginal Affairs (he has been its Chairman since 1968) has made me want to know more about them. I get pleasure from being with them. They are intensely interesting people and I would greatly like to see their position improved.

'I would also like to see Australians less impatient towards cultural differences and more tolerant of diversity. We have been isolated for a long time which has led to a too uniform social character. I would like us to value some oddity and eccentricity in our midst and foster relationships across social strata.

'Of course these are dreams', he said wistfully. 'I don't imagine I will be able to achieve much but that is what I would like'.

Post-war planning: some reflections on the results

by J. G. Crawford

The University's former Vice-Chancellor, Sir John Crawford, and the Chancellor, Dr H. C. Coombs, have been friends and colleagues for more than thirty years. In this article Sir John pays tribute to Dr Coombs' leading role in post-war planning but takes issue with him on some aspects of the role of ANU in Australian life and its influence on other tertiary institutions .

It is difficult to do full justice to Dr Coombs' role in the early post-war period. The interview recorded in these pages does reveal something of the motivation that drove him. And it is this I would like to discuss a little. He once described his post-war team as a band 'of pragmatic idealists who laboured in Post-War Reconstruction (PWR) and who gave to Australian political and economic thinking its characteristic patterns during the forties and early fifties'.

This was right and the leadership was his although the inspiration also strongly reflected the views of Ministers like Curtin, Chifley and Dedman and the hold they had on civil service loyalties and affection. We were indeed pragmatic idealists and I like to think it hasn't all disappeared. The band included such people as Fin Crisp (ANU), Alan Brown (later Secretary, Prime Minister's Department), Perc Judd (who became a senior and successful United Nations official in rural economic affairs ), Bill Lockwood (biochemist), Dr Pike Curtin (later Reserve Bank), Gerald Firth (Professor, University of Tasmania), Lloyd Ross, and many others. Many in the regular executive departments participated in the work of PWR. Professor R. C. Millwas not the least among these, playing a key role in the formation of the ANU.

The social and economic background of Coombs' band of 'new style civil servant' hasn't, to my knowledge, been fully written. The fact is, however, that most of us came from low income family backgrounds. Coombs and I

{p. 7} had at least one thing in common: our fathers were station-masters (mine a coal-miner in his very early teens But perhaps the most influential link between us was that we all had experienced the Great Depression of the early thirties and had seen what it did to people. No wonder we all willingly slaved away at draft after draft of the White Paper on Full Employment. As a pseudo historian in recent years, I have, I think, fairly labelled this document as 'one of the most prescient documents to be written on economic policy in Australia'. Among other things, it foresaw the economic and social problems of overfull employment - but alas we were not too'sure of the solutions. (Nor have our successors done any better. ) Even so, we were sure that these problems were a small price to pay for the abolition of the pre-war 'norm' for unemployment of eight to ten per cent, let alone the recurrence of anything like life in the thirties.

Except when 'the Doc' was abroad selling full employment to the heathen and converted alike among the nations, or was arguing problems with ministers in Cabinet, many of us were in informal and lively seminars with him defending our blue prints for the post-war world and sometimes resisting his. Full employment had pride of place, but rural policy and regional planning had a strong (but, perhaps, too imaginative) hold on our thinking. It is ironic, but not unhopeful, that principles we expounded at our seminars are now 'in things' - especially in the regional (including rural) planning area.

The times were stirring and the discourse heady. Alas the wine of evening discourses (hardly less frequent than the daytime sessions) was not really vintage - all too often, for my taste, it was rather acidy homebrewed beer. (I hope there is some Statute of Limitations that defuses his admission.)

In all our efforts to shape things to come, Coombs was the central figure. Although the realities of the post-war were often tougher than forecast, the ideas hammered out under his guidance served the country well. Whether by our grand design or by accident of economic circumstances we did gain full employment: so much so that unemployment at or over two per cent is probably now politically disastrous for any government. On the other hand, it has banished, one hopes, for ever the spectre of the 1930s. When lecturing to students I often wonder that they know so little about it. Then I remember they are, after all, postwar babies born, for good or ill, into an affluence the Coombs' band hardly knew.

Much is rightly made of Coombs' part in the foundation of the ANU. I like to think that one small factor in it was the way Post-War Reconstruction functioned as a continuing seminar on post-war problems. Appropriately, our offices were in A block of the old Hospital Building which we knew was on ground dedicated to a university of the future. I still cannot visit that building without vivid and somewhat nostalgic memories of PWR. Part of the nostalgia is no doubt for the tennis we played on the nearby court. (But I never could understand the Director-General's mania for golf!)

Having read the interview with Dr Coombs, published in this issue of ANU News on page 1, I hope I will be pardoned for taking issue with him on two points. I believe he quite understates the significant part played by the ANU's 'laymen' on Council. True they have carefully and wisely respected the views of the academic members of the University and refreshingly supported efforts to increase sensible participation by students. Nevertheless their careful discussion of issues often led to significant rethinking on academic matters which was much welcomed. The Chancellor has proved fully capable of taking issue on academic matters. As a former Vice-Chancellor I had ample experience of this.

The other understatement is his too heavy discounting of the University's achievements which I regard as considerable. Any largish institution has to struggle with inertia and ANU is no exception. But it is impossible to look over the history of the Research Schools and some of the School of GeneraI Studies faculties without realising that their achievement has been direct in many fields of science and humanities as well as in national affairs. The achievement goes much beyond developing and encouraging positive attitudes to research in other universities of which the Chancellor speaks. Not least, was the reversal of the post-war brain drain achieved by ANU: and for this many Australian universities have cause to be grateful. If the dreamer cum pragmatist of the 1940's is a little disappointed, he must, nevertheless, know that the cry again for relevance has met with increasing response in the faculties. For good or ill, also, not many universities can surpass the ANU contribution to a reinvigoration of government in recent times I hope that as Royal Commissioner, leading an inquiry into the Public Service, he will not overlook the fact that interaction between universities and government is good for both. I like to think that the Director-General of PWR (now the Chancellor of ANU) and his Director of Research in PWR (later Vice-Chancellor, ANU, 1968-73) have always agreed on this.

{p. 8} Nugget and the National University by R. Douglas Wright

There is probably no member of the University's Council who has had more continuous asbociation with ANU from it beginning than Professor R. D. Wright - except for the Chancellor, Dr H. C. Coombs - about whom he writes here. Wright met Coombs while the former was Professor of Physiology at the University of Melbourne (a post he held from 1939-71) and Coombs was Director of Rationing in the mid-war years. A few years later Professor Wright was asked to join the group to advise on the form medical research should take in the national university. He also served as honorary secretary of the Interim Council from 1946-48 and on Council from its formation to the present. In this article Professor Wright provides insights into the role of Coombs in the affairs of the University since its conception and reveals some of the tussles, manoeuvres and achievements of those years.

The Australian National University in 1974 is an outstanding example of successful acclimation. In 1946 the seeds of a graduate university were set and now there are seven graduate schools - each of a standard which attracts interstate and international applications at all levels from postdoctoral to directorial. It has taken on a symbiont undergraduate component with advantage to both sections. Its campus is well developed and developing well - already it has had to be remodelled to correct for the latifundian tendencies of our early designers. It has led the thinking in Australia which has brought universities from trade schools for school teachers, parsons, technologists - medical and material - to places of high intellectual endeavour and ferment.

How did this all happen?

The start of the change was in 1941 when the Curtin government came to power at an unpromising period of the war. But there were a number of members of this government who were pragmatist-idealists and in our context the outstanding ones were Jack Dedman and Ben Chifley. On 3 November 1942 Jack Dedman, as Minister for War Organisation of Industry, addressed the vice-chancellors of the universities on the government's plans for reserving students for essential courses, giving these reserved students stipends but keeping the other courses going and open to suitable students 'maintaining that continuity of cultural studies which is an essential part of what we are fighting for'. 'Our ideal should be that of the Chinese, who have kept their universities going in the face of almost unbelievable difficulties, and whose guerilla fighters have even maintained a university behind the Japanese lines ...' 'It is necessary to start thinking of plans for the post war problems which must arise'. 'The Government has decided to appoint for these purposes a small commission of three, responsible to myself' - Professor R. C. Mills was appointed as Chairman.

Mills had been on the Banking Commission with Chifley and a deep trust was between them. Dr H. C. Coombs was one of the new recruits to the Treasury and a senior adviser to Chifley. When the Ministry of PostWar Reconstruction was set up with Jack Dedman as Minister, Coombs transferred to become civil head of it. Another new recruit was Bert Goodes who came to the Treasury from West Australia and grew with and of Ben Chifley's Social Services Section of the Treasury. Both Goodes and Coombs had come through the no-fee Western Australian University. Consequently when an Inter-Departmental Committee to consider the future of university

{p. 9} development at Canberra was set up there was academic strength to draw on with trustworthy access to the points of power.

A feature of Australia's isolation at that time was the desire of some expatriate Australians to come to supervise the installation of major developments with which they had been associated - the two outstanding in relation to the National University were Mark Oliphant - in regard to radar - and Sir Howard Florey - in regard to penicillin. The details of their influence on thinking about post-war university development is recorded elsewhere but this stage calls for emphasis on Coombs' companionableness - he likes people and when he accompanied Ben Chifley on his whirlwind post-war tour in 1946 they met Florey and Oliphant in London. This reinforced the proposals that a new level for universities should be set up in Canberra: a graduate university with a level of establishment which would interest people of the stature of Florey and Oliphant. The Bill to establish the Australian National University was presented by the Minister for Post-War Reconstruction, the Hon. J. J. Dedman; the Interim Council was set up and naturally Dr H. C. Coombs was on it and happy that his old mate Mills was available to be Chairman. Coombs was always on hand to make suggestions and keep things moving. When the people thought of as Directors of the proposed research schools (Oliphant, Florey, Hancock and Firth) came to Canberra to confer with the Council in February 1947 it was a new experience to some of us to see Mills, Goodes and Coombs going to and coming from the Treasury in the negotiation of how much the physics school could have - the statutory endowment had looked good by old standards but it was not enough by contemporary costs and the Treasurer accepted the advice of his trusted advisers.

But still the four invitees mentioned above would not believe that there was yet enough will and muscle for a graduate university to attract them from their own excellently placed chairs. So there was to be a conference in England which Coombs took in with one of his trade conferences and I as honorary secretary of Council. The elasticity of Nugget is shown by an episode during this occasion. The invitees wanted first hand knowledge of some of the organisational characteristics of graduate universities in the USA and suggested that I should go over and find out - with the barbed suggestion that if this could not be done the level of support of ANU might prove to be traditional poor Australian university level. With support from Coombs I cabled to the Interim Council a request for approval and supply. Apparently oriented to 'no trips to the boys' they cabled refusal. Nugget agreed that I could approach Sir Errol Knox, Managing Editor of the 'Argus' who was at the Savoy, for currency (severely rationed at that time). He agreed to supply it and to be silent. But my cable 'Proceeding to America by courtesy Melbourne Argus' gave us both a giggle and the expected reply providing fares. And at the end of the mission we had to be content with setting up the Academic Advisory Committee - not appointing four directors. But this did lead to the appointment of Mark Oliphant to Physics, Florey agreeing to give his close attention to the building and staffing of the Medical School and great assistance from Hancock and Firth. Thus as ever, Coombs, conditioned by his long years of negotiation with parties who don't have to agree with you, found partial agreement better and more useful than no agreement at all.

This was well exemplified when the Menzies Government decided that the Canberra University College should be incorporated into the ANU to give a 'normal' western university pattern. The graduate school had had thirteen years to develop its four schools to a high level and had done so. Its effect on other universities had been enshrined in the Murray Committee's report and the establishment of the Universities' Commission and all were elevated. A long step forward from Dedman's statement of 1942 had been taken. Now the Government was insisting that ANU also walk on two legs. To many of the academic staff this seemed like a great step backward

{p. 10} - to some it seemed the chance to do for the undergraduate scene in Australia what we had done for the graduate section. Much innovation has come - both sections have moved forward. It reflects somewhat the forecasts put forward by Coombs in the early forties in memoranda for Chifley on the benefits of full employment .

The Department of Astronomy has grown in a way which reflects the influence and techniques of the ANU. The head of the Commonwealth Observatory, Dick Woolley, was an old friend of Dr Coombs. When the National University was to be set up the question of Astronomy as one of the traditional disciplines was well to the fore. But Woolley accepted appointment as Astronomer Royal in Great Britain and almost moved out of the scene. By great good fortune and the keen ear of Mark Oliphant it came to be known that Bart Bok would be interested in appointment to a working observatory with a southern view. And so negotiations for the transfer of the observatory (minus the time service) to the University were opened and proceeded. Then there were stumbles and hesitations - A. A. Calwell asked me was it a fact that this was being done so that an American could be appointed and take control of the heavens over Australia. The notion of Bart Bok as CIA agent was an index of the degree to which conspiratorial theories can go. However the transfer occurred without real hindrance and it is common knowledge how the Department proceeded under Bok's leadership. The next stage was the development of resources at Sidings Spring Mountain and then the location there of the jointly owned and run British and Australian telescope. There was every opportunity for impasses in these negotiations but the old Coombs recipe of the acceptability of a productive workable compromise has kept the project active.

The ANU could easily have settled in to being a place of paper and pencil study. Some influence has, however, always been active to keep its sensorium receiving from real situations. The New Guinea research unit, the Fijian demography, archives, law workshop, myxomatosis and many other instances of productive contact with real human activities have occurred. The present surge from the market place to corridors indicates that Dedman's wartime attitude might have to be revived - namely that maintaining continuity of cultural studies at the University is the basic function of universities.

Not every event along the road has been to the advantage of the University. There was, for instance, the famous conversation in the Park in Britain between Copland and Hancock which led to the latter withdrawing from us and has never been a subject of serious inquiry. It all came right in the end when Hancock's tactful revelation of attitudes in his book Country and Calling opened the direction to new approaches. Similarly, Melville's consolidation policy for the foetal stage of development of 1954 led to Florey's remonstrance and final denunciation of 1956. But it was all played cool - the walls of ANU did not fall down and indeed more flowers sprang up. One day however the ANU may find that full scale requirement of highest academic standards is the sine qua non of survival at the highest level.

There have been many instances where the ANU has had unacceptable pressures applied and has withstood them. In the early fifties it was fully to be expected that in the atmosphere of Spry and Petrov there would be pressure to take into account the political affiliations or even attitudes of applicants for appointments. This was deflated by undertaking to take in to account any attitude which was known to pollute an applicant's academic performance. Members of staff have sought to influence their promotion by a selection of 'games people play' but frank inquiry and report has revealed the source of trouble. Accusations of racism have been the mask of inverted racism. And always in the councils on the side of the preservation of academic safeguards Nugget has been a persuasive anchor point.

A feature of the ANU which was a welcome revival of ancient customs in universities has been the policy of encouraging opportunities for cultivated (I prefer this to cultural) practices. Music and music rooms, acquisition and display of art objects, creative art fellowships etc. have been actively advanced and greatly promoted by the Chancellor over the three decades of his association with the University. Indeed the University has been the unifying influence in his life. Outside it he has been economic theorist, rationing officer, national reconstructor, banker, art director, counsel for indigenes and ballet master and most recently chief choreographer of the Public Service show. I fear for them, for the only time he and I were ever irreconcilably opposed was when the Executive of FAUSA directly negotiated a salary adjustment with John Gorton and did not consult the cancellarial officers while successfully doing so! We can hope that he will present his design of an efficient public service which will incorporate his same-as-before mixture - common sense and warm sentiments which he has engendered in the National University. We know from his eponymous lectures that he could make of all these experiences an inspiring history - we should see him next soon as a creative arts fellow for there is so much that only he can tell.

ANU News July 1974 {end}

(3) Gough Whitlam's eulogy at the funeral of Nugget Coombs

the file (rtf):

[The Whitlam Institute] St Mary's Cathedral, Sydney, Friday 14 November 1997, 1330 Hours

Prime Ministers like to describe themselves as the servants of the people. The most striking claim of the Supreme Pontiff is to be the servant of the servants of God. If, in this setting and as the last of the seven Prime Ministers whom Nugget Coombs served, I were to suggest an epitaph for him, it would be "the servant of the servants of the people".

Nugget was destined to be a central banker. In 1930 he graduated from the University of Western Australia, the only free university in Australia. His bride Lallie went with him to London in 1931, the year in which, because Australia had no central bank, the State Savings Bank of New South Wales closed its doors and had to be taken over by the Commonwealth Bank. In 1933, Nugget was awarded a doctorate at the London School of Economics for his thesis on central banking, The Dominions' Exchanges.

In 1935 he was appointed an assistant economist at the Commonwealth Bank's head office in Sydney. The student who used to dine with Keynes on the other side of Piccadilly from Green Park now regularly met the Keynesian economists from the Commonwealth Bank and the Bank of New South Wales in Repin's coffee shops. On the outbreak of World War II he was appointed Economist to the Treasury. Two years later, J.B.Chifley became his fourth Treasurer; they had met in 1936 and 1937 when Chifley was a member of the Royal Commission on the Monetary and Banking Systems of Australia. One of John Curtin's first acts as Prime Minister was to appoint Coombs to the Commonwealth Bank Board. At an Australian Rules match in Canberra in May 1942 Curtin asked Coombs to be Director of Rationing. In December 1942, a year after Pearl Harbour, Curtin made Chifley Minister of Post-war Reconstruction.

My admiration for Dr Coombs goes back more than half a century, my association with him exactly a quarter of a century. In January 1944, while on home leave with my wife and our baby son in Sydney, I decided to spend some of the Australia Day weekend with my parents in Canberra. Coombs used to walk over Capital Hill with my father on their way from Forrest to West Block. My father took me to the Albert Hall to hear Dr Coombs, Director-General of Post-war Reconstruction. I remember the zest with which he was fulfilling the war-time promises of a better world.

Between the legislation in March 1944 and the referendum in August for the 14 Powers - No.14 was "the people of the Aboriginal race" - my squadron moved from the airstrip at Cooktown Mission to a new airstrip at the Yirrkala Mission. I now know that the Aborigines at the former had adopted names such as Costello and Pearson and at the latter still used names such as Yunupingu, Marika and Djerrkura. My first political campaign was in support of the referendum. There was a large majority in favour in our squadron and in the armed forces but a civilian majority in only two States. I was devastated and forthwith decided to take a continuing interest in politics.

During and after the War Nugget was engaged in the Keynesian Crusade for a new international economic order. It involved various organizations, companions and places - FAO, GATT, IMF and World Bank, Chifley, H.V.Evatt and John Dedman, Washington, New York, London, Paris, Geneva and Tokyo. In January 1949 Nugget was appointed Governor of the Commonwealth Bank. R.G.Menzies was restored to power in December and came to rely on his Seven Dwarfs. All except Coombs were transformed into knights. (In June 1975 Coombs was among the first Companions of the Order of Australia. Knighthoods were introduced in the Order in May 1976; Coombs resigned in June.)

Let me illustrate how Nugget brought out the best in his four Liberal Prime Ministers. Menzies had little interest in any of the Arts. Nugget, no doubt inspired by the example of such bankers as Keynes and the Medici, became a patron of the arts. His splendid collection was exhibited at the Reserve Bank in Martin Place five years ago. In 1954 Nugget turned the first visit by our Head of State to brilliant account by securing Menzies's blessing for the Australian Elizabethan Theatre Trust; Nugget remained chairman of its Board till 1968.

In May 1967 Harold Holt submitted the Aborigines referendum which Menzies had resisted. He sought advice: "You know, Nugget, I've never spoken to one. I don't think I've ever met one". In September Holt announced a Council for Aboriginal Affairs and in November an Australian Council for the Arts. Nugget was to chair both. Nugget found that John Gorton's interest in the arts centred on films and television. He showed how to extend the role of the Council for the Arts in that area. He retired as Governor of the Bank in July 1968.

Bill McMahon asked Nugget to accompany him on his visit to Washington, New York and London in October 1971. Exactly 25 years ago, on my initiative, Nugget agreed that it should be known that he was as willing to advise me as he had been to work with McMahon.

I inherited the habit of walking to work with Nugget. These walks led to the one billion dollar Budget savings recommended by the expenditure review task force appointed in March 1973 and chaired by Coombs, the 25% tariff cuts recommended by the committee appointed in June and chaired by Alf Rattigan and the Green Paper on Rural Policy prepared by the working group appointed in December and chaired by Stuart Harris. Fred Gruen, who died on the same day as Nugget, was a member of the Rattigan committee and the Harris group. In June 1974 my Government appointed the Royal Commission on Australian Government Administration, chaired by Nugget; its report was presented in August 1976.

In October and November 1973 I took Nugget and Lallie to Tokyo and Beijing. They had previously made an unpublicised visit to study central banking in China and the USSR in 1961. In Australia Nugget arranged many meetings for me with Torres Strait Islanders and Aborigines. In August 1975, after the Parliament had passed acts to establish the Aboriginal Loans Commission and Aboriginal Land Fund, to override Queensland's discriminatory laws and to enact the 1965 United Nations Racial Discrimination Convention, Nugget arranged for me to visit Daguragu. When I ceremoniously poured some soil into Vincent Lingiari's hands I delivered the words that Nugget had drafted.

Late in 1978 Nugget and I were visiting fellows at the ANU, where Nugget had been pro-Chancellor from 1952 and the first Australia-based Chancellor from 1968 to 1976. I was with him at University House and in the H.C.Coombs Building for three years. His book Kulinma, Listening to Aboriginal Australians, was launched in February 1979. I treasure my copy, which he inscribed Your government was the first and so far the only Commonwealth Government which has listened to Aboriginal Australians. In October 1981 Nugget asked me to launch his Trial Balance, from which the Governor-General has quoted. It gives a valid and vivid account of his work with colleagues at home and his counterparts abroad, and not least with his seven Prime Ministers at home and abroad. After my time at Unesco Nugget invited me to the North Australia Research Unit that the ANU had established in Darwin along similar lines to the New Guinea Research Unit which it had established in 1964. He himself spent many months there every year. Nugget was the only whitefella to attend the crucial Eva Valley meeting in 1993, at which an indigenous position on the proposed Native Title Bill was hammered out. There can be no doubt whatsoever about the views that he would have held and expressed about the Native Title Amendment Bill which was passed by the House of Representatives on the day he died.

I last spoke to Nugget 14 months ago. I read him key passages from the Inaugural Lingiari Lecture, "Some Signposts from Daguragu", which the Governor-General delivered at the Northern Territory University in August 1996. Nugget clearly grasped the points, although he was not well enough to articulate a response. I thank John Coombs QC, a recent President of the Bar Association, for briefing me on behalf of the family last July on this service of thanksgiving. I have tried to show how Nugget influenced me throughout my working life and, I believe, for the better. At some time or in some place or in some way the life of everybody in this gathering and in our country would have been touched by Nugget's manifold activities and enriched by his talents. He was given many talents. He produced great dividends on them. All Australians can say, in the words of the parable, "well done, thou good and faithful servant".

(4) The Aboriginal Legacies of Dr "Nugget" Coombs (Peter Myers)

Dr Coombs both helped and harmed Aboriginal interests.

In 1992, Australia's High Court recognized a new type of title to land, Native Title. After a decade of claims and deliberations by courts, aboriginal people by 2002 owned 15% of the Australian continent. Most of this land is in the Outback, i.e. the hot, flat, dry inland or the remote monsoonal north.

Dr H. C. Coombs was one of the key movers in achieving this result; among Aborigines he gained the nick-name "Short Father". Coombs was head of Australia's publicly-owned central bank, the Reserve Bank, in the postwar years; his signature was familiar on Australia's bank-notes.

He gained his Ph.D. with a thesis on central banking  at the London School of Economics, whose teaching staff included free-marketeer Friedrich von Hayek and the Jewish Marxist Harold Laski:

He occupied many important posts, including Chancellor of Australia's leading research university, the Australian National University (ANU) in Canberra. The building housing the leading Research Schools in History, Social Sciences, Economics etc is named after him, the Coombs Building.

The ANU Library catalogue's listing of Coombs' publications shows his strong orientation to Aboriginal issues:,5,59,B/exact&F=acoombs+h+c+herbert+cole+1906&1,55

When the (New Left) Labor Government of Gough Whitlam came to power in 1972, Coombs was given a new role: to draft finance policies that would cut away the subsidies which underlay the Agrarian Socialism of the postwar years, and divert the funds into creating a Welfare system. Whitlam commissioned the Coombs Task Force to produce a major report:,5,59,B/frameset&F=acoombs+h+c+herbert+cole+1906&39,,55,5,59,B/frameset&F=acoombs+h+c+herbert+cole+1906&40,,55

Gough Whitlam wrote of Coombs, at

I inherited the habit of walking to work with Nugget. These walks led to the one billion dollar Budget savings recommended by the expenditure review task force appointed in March 1973 and chaired by Coombs, the 25% tariff cuts recommended by the committee  appointed in June and chaired by Alf Rattigan and the  Green Paper on Rural Policy prepared by the working  group appointed in December and chaired by Stuart Harris.

In his book The Whitlam Government:1972-1975 (Penguin, Ringwood, 1986), Whitlam wrote,

{p. 196} In March 1973 Cabinet decided that 'action be set in train to apply a close scrutiny to continuing programs of the previous Government so that room may be found for our own higher priority programs'. After discussions with Coombs I agreed that a high-level task force had to be set up and he agreed to be the leader of it. Most of the research was done by Stone, then Deputy Secretary (Economic) in the Treasury, but Coombs took sole responsibility for any judgements or comments made by the Task Force. Its report was given to me on 24 June in time for the consideration of Ministers in formulating the 1973 Budget.

{p. 270} The Coombs Task Force provided an effective means by which the Government could rationalise its assistance to rural producers. ... Coombs recommended and the Government acted upon the abolition of several forms of rural assistance.
{end quotes}

Prior to these changes, Australia had a nation-building kind of socialism in one country, with budget measures to ensure that people living in rural areas did not pay higher prices than the cities, for the necessities of life. The Federal Budget was devoted not to welfare handouts, but to creating industries which employed people.

Coombs' report laid the blueprint for the abandonment of this self-sufficient economy, a major shift of population from rural areas to cities, greater dependence on imports, and massive welfare pay-outs.

Coombs did try to help Aborigines create businesses, and otherwise establish themselves financially; some of these projects will no doubt be successful.

But the overwhelming welfare dependency subsequent to his Task Force Report was to have disastrous effects on Aborigines, counter to the benefits Coombs brought them.

Despite all the unfairness of the pre-Whitlam era, Aboriginal culture had survived in remote areas, and Aborigines had jobs as stockmen on cattle stations. Post-Whitlam, many Aborigines moved from the remote stations to mission settlements, the missionaries replaced  by New Left advisers. At the same time, passive welfare was making many Aboriginal communities dysfunctional. Alcohol and idleness led to a break in the transmission of the culture to the younger generation, which instead learned to follow Hollywood and the city fashions. An independent culture came to an end, partly through the efforts of utopian One-Worlders.

As it was dying, the New Left's SBS TV was presenting artificial images depicting a dynamic revival, an illusion which was only burst when Aboriginal leader Noel Pearson repeatedly admitted the rampant substance-abuse and domestic violence which welfare-dependency had led to.

(5) An exchange between Dr Coombs and myself

My Letter to Dr Coombs, dated March 4, 1995:

{quote} 21 Blair St.,
Watson ACT 2602
(06) 2475187 4/3/95

Dear Dr Coombs,

With regard to your recently reported comments, I put the following points to you:

1. Credit for the Keynesian policies from the forties to the seventies belongs to leaders of all parties: ALP (Chifley etc.), Liberal (Menzies), Country (McEwen), as well as yourself. It is not a party matter.

2. Keynes saw his economy as Post-Capitalist. It had elements of Socialism; one might see it as midway between Capitalism and Central-Planned: it was controlled capitalism, market socialism. Right-wingers still dismiss the New Deal as "socialist", while Communists dismissed it as "capitalist". They are both right - it was midway. But the Keynes economy is not a welfare state: it provides jobs instead of welfare. Whitlam prefered Welfare.

2. The abandonment of Keynes was begun by the Whitlam Government. Whitlam was an "Internationalist", whereas Keynes had argued that "knowledge should be international but goods home-spun". Further, Whitlam had little interest in the economy; he took it as an article of faith that Australia would remain wealthy and strong. (I supported Whitlam; I was bitterly disappointed over the Dismissal; but I make these points nonetheless).

3. You yourself, a stalwart of the Keynesian period, contributed to its dismantling via your 1973 Report, commissioned by Whitlam. (I am one of your admirers, but I must put this to you. The current hardships of rural Australia surely go back, in part, to that Report. I am keen to have your rebuttal or other observations on this matter.) You no doubt disagree with me, but I call on you to abide by your own rules of integrity, and engage me in debate - the lifeblood of intellectual life - by answering me. I hope for your reply.

Your observations about aboriginal culture are most interesting. Most "Enlightenment" intellectuals seem to have "Social Evolutionist" beliefs, i.e. that "more evolved" societies are superior to "less evolved" and show them the way, the path being linear. Some "Enlightenment" intellectuals however posit an initial "Golden Age" corresponding to the Garden of Eden. For some, this was Ancient Greece; for others, aboriginal societies. I incline to your view about the latter, but I think that an overromantic or "constructed" view is as harmful as a dismissive one.

If you read once again The Social Contract, by Jean-Jacques Rousseau, forerunner of Marx and the architect of our Enlightenment Age (now drawing to an end, with such agony - you express it well!), you will note some interesting anomalies in his views about aboriginal peoples (his perspective mainly came from European encounter with America). On the one hand, he praises their society, as superior to that of Europe. On the other, he makes no attempt to draw upon their culture when drafting a blueprint for an Enlightened society; instead he draws lessons from Plato's Republic, Sparta and Rome. To sum up, he uses Aboriginal Society to de-legitimate the Old Order of Europe, but not to reconstruct the New Order. Why so? I am sure that this dilemna is central to your own thoughts.

Yours Sincerely,
Peter Myers {endquote}

Dr Coombs' letter to me, dated March 15, 1995:

{quote} 15 March, 1995

Mr Peter Myers
21 Blair Street

Dear Mr Myers,

Thank you for your letter of 4 March 1995. I was interested in your views about 'the dismantling of the Keynesian period' to which you believe my report for the Whitlam Government on expenditure policies of the previous government, contributed.

I think your comments on the effects of that report are based on misunderstandings. The essence of the Keynesian doctrine was, and is, that aggregate income and employment is a reflection of aggregate expenditure and that it is generally desirable for government policy to increase or stimulate expenditure unless resources (and labour in particular) is at, or close to, very fully employed. It is a necessary corollary of that proposition that, if aggregate expenditure, private and government, for consumption and capital investment is causing inflationary rises in the cost of these resources and prices generally, it becomes necessary for policy to constrain or reduce expenditure. In such circumstances it will be wise to reduce or constrain expenditure selectively judged by criteria about their purposes and related considerations.

In the Whitlam period it was believed (I think correctly) that resources, including labour were fully employed and that costs and prices were rising and threatening to damage our capacity to balance our international payments, to maintain reasonably stable prices etc.

Since the Whitlam Government had plans for expenditure (eg. on developing social welfare, education, the protection of the environment etc. which in their opinion (and generally speaking, in mine) they needed to reduce some expenditure - government or private - directly or by increased taxation or similar means.

The choices made in the Report reflect the preferences and prejudices of the Committee, including mine. It is true that I thought expenditure on so-called Defence was excessive, that large dams on rivers often did more harm than good and that valuable as migration was socially and as a source of growth, we were overstraining our capacity to absorb and use migrants wisely.

I feel in retrospect some agreement with your concern about the rural scene but I think the balance of rural expenditure by governments at that time was socially biased and economically misdirected, ignoring ecological and other environmental considerations. Little had been done, or was proposed to give effect to the recommendations of the Rural Reconstruction Commission set up as part of the Post War Reconstruction. A different and preferred set of recommendations could have been put forward with approximately the same aggregate effect on expenditure, employment etc.

Your criticism (and mine) are not directed at the Keynesian component but at the social and political choices the report proposed.

Yours sincerely,

H.C. Coombs
Visiting Fellow {endquote}

An image of Dr Coombs' letter to me: coombs950315.jpg.

The impact of those reports of 1973 and 1974 on rural Australia has been very great. The lives of millions of people have been affected. The rural towns, apart from retirement areas & hippy areas, have been gutted; in many, there are few young people left, and there's also a shortage of women.

There were other influences too, not just these Reports. Whitlam & Tom Uren wanted to build the cities. Even so, those Reports were the turning point for rural Australia.

Meat, which is produced in rural areas, now costs twice as much in small towns, as in the cities, because new rules prevent local butchers from killing meat for sale - it must be done in big attatoirs. Country people pay much higher prices for groceries, petrol etc than city people, especially in small towns; and usually have much lower incomes.

In referring to rural expenditure as "socially biased", Dr Coombs probably implies that Whitlam wanted to target the Pitt Street farmers, i.e. the city-based professionals (doctors, lawyers, bankers etc) who own farms. But those people, and city-based Agribusiness, have been beneficiaries of the hardship of family farmers in recent decades, buying up the farms cheaply after the bankruptcy sale.

(6) Banana Republic? No, Banana Colony, by Dr H. C. Coombs

The former Governor of the Reserve Bank Dr H. C. Coombs, who has been described as the Australian of the century, argues that Australia 's crisis will not go away until we regain our economic independence.

Australian Business Monthly, March, 1992

It is a pity that Paul Keating, in announcing the success of his challenge for the prime ministership, repudiated his earlier judgment that "this was a recession we had to have."

Like the utterances of all oracles, this statement was cryptic and its meaning obscure. But it at least conveyed the suggestion that the recession could be a consequence of what had gone before - that it derived from perhaps unwarranted assumptions and misguided judgments which, at least in part, underlay our government's earlier policies. It therefore could have been interpreted as expressing a willingness to think again.

Such an interpretation would have afforded more closely with Keating's earlier one-liner, that he feared Australia was on its way to becoming a "banana republic"; in other words, that he feared the Australian economy was becoming so burdened with debt to the outside world that it had lost the ownership and control of its own resources and industries and had beeome simply an instrument of the capital, the enterprise and the technology of its dominant imperial power. There was wisdom in that judgment.

{Keating used it to justify the deregulation and privatisation which brought this result about.  The public's worry over foreign debt was used as an excuse to further sell off Australian assets}

Unfortunately, Keating identified the destructive debt only as that arising from the government's borrowing. To his credit he acted forcefully to redirect fiscal policy to the reduction of that debt. But he ignored the need to reduce the greater burden on the economy imposed by payments abroad to which the private sector was increasingly committed.

Enterprises taken over by, or merged into, overseas interests are now committed to remit interest and dividends; to hire technological property from their principals; and to employ expensive consultants, accountants and others providing professional services from firms associated with those principals or with their Australian branches or subsidiaries. These commitments, like those of governments to overseas creditors, have to be met from the proceeds of the Australian economy's production or, increasingly, from the sale of the nation's assets.

Had the government acted as promptly to see that these commitments were repatriated and the relevant services provided by our own knowledge and skills and financed from our own savings as it had to bring government indebtedness under control, the dilemna now facing the economy would be less absolute.

That dilemma is classical. At present we are impaled on the horn of unemployment, flagging expenditure and investment. But if the government is too enthusiastic in its attempts to blunt that horn or to enable the economy to evade it, we may swing to face the horn of even greater deficits in the balance of our international payments, of increasing losses of our national assets and of rising levels of inflation.

But that is not all.

So far the businessmen, union and community leaders with whom the Prime Minister has chosen to consult seem to be interpreting the recession as just another minor hiccup in the flood of expenditure which essentially has been running strongly for the last 40 years. This flood had its origins in the colossal scientific and technological innovations stimulated by World War II and was financed largely by the vast accumulation of international purchasing capacity which the US derived from the obligations towards it incurred by its allies and enemies.

That international purchasing power has been used to help rebuild the war-damaged economies of Europe and Asia, to set in train the industrial colonisation of the third world and to impose a pattern of international trade specialisation on the world which is highly favourable to U.S interests and those of other industrialised and creditor nations.

But clearly that exercise in economic imperialism is flagging. The rate of innovation has slackened and the incentive to spend on research and development and on investment has slackened with it.

Furthermore, the very optimistic assumptions which underlay the attempt to industrialise the whole world now seem to have been mistaken. The physical world is in revolt against the progressive exhaustion of resources and rising pollution, and against population growth beyond the capacity of world agriculture to feed it, even after the Green Revolution.

In other words, it cannot be assumed that this recession is a temporary or limited phenomenon, or that the Australian economy can be kick-started into renewed consumer and investment spending, and so resume and maintain its confident progress.

We in Australia have substantially shared the optimistic assumptions of surging industrialisation and have acquiesced in the pattern of international trade specialisation which has gone along with it. Our economy, as well as the economies of other colonised countries, bears the marks of the effects.

As we come to look more closely at what our business and community leaders propose, I fear we will realise that those marks are evidence of structural defects in our economy, in its priorities, its allocation of resources, and its relevance to the world in which we will have to live.

But first let us look at the relationship between the threats embodied in the two horns of the dilemma to which I have referred: at how far it is possible to stimulate domestic expenditure without dangerous inflation or unacceptable deficits on our balance of payments.

It is easy to increase employment, but not without changing other aspeets of the economy. Employment is closely linked to levels of expenditure. Action can be taken to stimulate consumption expenditure, for instance, by increasing social security benefits, by tax concessions, by subsidies, or even by allowing Aborigines a modest share of the profits arising from the exploitation of the minerals and other resources of the lands we have stolen from them.

However pessimistic industry may be, there are urgent capital investment tasks appropriate to the public sector that are crying out for action: to reduce pollution, to restore the waterways, the forests, the beaches; to protect the ozone layer; to provide adequate, well-equipped schools, health and other facilities for all communities and their children.

The submissions to the groups recently studying the prospects for sustainable development especially those from the CSIRO the Australian Conservation foundation and other science-based "green" sources, have highlighted opportunities arising from resources and research results available in Australia. These could provide a more sustainable stimulus, comparable in effectiveness with that from which the imperialist expansion of the post-war world emerged. Action to increase expenditure on any of these would increase the incomes of those employed in the projects and lead to increased production of the goods and services on which those incomes could be spent.

But any action to increase domestic incomes and employment would bring us sharply on to the other horn of the dilemma: the effect of increased domestic spending on the balance ofour international payments and on the level of our prices and costs of production.

As employment increases, expenditure abroad increases also - partly because of consumers' choice of imported goods and services, but also because Australian industry incurs costs (directly or indirectly) in foreign currencies in the process of producing, financing, transporting and marketing their nominally Australian-made goods and services.

It is the increasing participation of non-Australian enterprise in the Australian economy which has brought closer and more sharply under notice the reality and imminence of this horn of the dilemma. Between 1969-70 and 1989-90 our total exenditure on imports of goods and services, debt servicing and other debits rose from $5.865 billion to $91.133 billion and on services and other debits from $2.304 billion to $40.342 billion.

We have, for decades, tended to ignore that part of this remarkable increase which was ircurred throuh the costs of Australian production. An important part of this increase is in the servicing of private sector debts, in the greater dividends and other shares in the profits of Australian-based enterprises, in payments for the use of foreign-owned technology, patents and the like, and in the hiring of foreign experts to design, organise, transport, advertise, market, deliver and service the goods and services produced by the Australian private sector.

Successive balance of payments problems arising, at least in part, from these growing costs have been deferred by fiscal and monetary policies including relatively high interest rates and progressive downward adjustments in the value of the Australian currency. This has encouraged the sale to non-Australian interests of the natural capital resources of the country and the ownership of profitable enterprises. It is hard to remember that when the gold value of the Australian dollar was fixed with the IMF at the time decimal currency was introduced, it was set at $US1.1. Such policies have not merely made it easier and cheaper for non-Australians to buy our goods and scrvices, but also to own the enterprises which produce them and the natural resources which they consume and often progressively exhaust.

In contemporary "Newspeak" this is referred to as "foreign investment" rather than a loss of capital, and is talked of as if it were the solution to our problems rather than merely their deferment. Recent trends in the foreign exchange market and in official responses to them indicate that the mind of the new Treasurer is running on similar lines. Decisions affecting our mineral and forestry resources suggest that the "new" government is even more determined to sell off what remains of the farm as rapidly as possibly - a certain recipe for the realisation of Keating's prophecy of our descent into "banana republic" status.

Much is currently being said about the "benefits" to farmers, mining companies and other exporters from the increased money incomes which they derive as a result of depreciation. Let it be clear that those benefits derive internally, from decreased real incomes of other Australians, especially consumers, wage and salary earners, pensioners and others who live on fixed incomes. Such income shifts may be justifiable components of economic policy, but the real advantage to the government of achieving them by exchange depreciation is that it does not have to justify them to Parliament, nor to suffer the electoral reaction of those who are on the losing end of the deal.

If one can judge by past experience, it should also be realised that some of the effects of these shifts are promptly offset or reversed: for example, by the highly organised or politically powerful, such as key unions or members of parliament. The stimulus to export production provided in this way can prove to be temporary and, therefore, to serve as a misleading guide to enterprises affected.

A glance at the economic history of acknowledged "banana republics" will show a long record of progressive exchange depreciation and inflation, followed by increasing domination of productive enterprises by foreign owners, combined with declining real domestic incomes and employment for the peasant and wage-dependent populations.

Is it a road we wish to travel?

If we wish to avoid it we must earnestly and promptly seek an alternative economic strategy from the one we have been following in |recent decades: one which will enable us to confront or evade both horns of the dilemma; which will halt the growth of our overseas indebtedness and commitments, private as well as public: which will enable us to begin to stop selling off the farm; to maintain, indeed increase, Australian ownership of the productive enterprises upon which our international and domestic income depends; which will progressively enable us to rely more adequately on our own savings, our own science and technology, our own skills, initiative and enterprise, and in due course to buy back some of those assets which have been passing into foreign hands.

But also, in the immediate future, we must find ways to restore domestic expenditure to levels which will revive employment opportunities and provide access to essential living standards for the Australian people.

These immediate objectives are vital and urgent, and their achievement requires that governments increase some levels of expenditure and accept an increase in their indebtedness, at least for the present. If this is not to call into question the practicability of these policies it is important that:

¥ The new expenditure should create jobs and productive opportunities in sustainable enterprises in a more independent Australian economy; and

¥ The new indebtedness should be internal, owed to Australian citizens and balanced by increased savings (including debt reduction) from personal and corporate incomes. The critical, and most difficult component of this recipe, is to achieve the higher level of savings.

I suggest, therefore, that Mr Keating's Economic Statement should announce a 10-year program to restore Australia's economic independence; to work towards more debt-free governments, households and enterprises, public and private; and to stimulate sustainable use of Australian labour, natural resources and human creativity.

Such a program should include plans to increase personal and corporate savings; to limit the depletion of exhaustible resources; to redirect development policy to give greater emphasis to regional and national self-sufficiency in meeting basic needs; to make better use of the natural resources of the continent; and to raise the level and use of Australian science-based technology. To these ends it is essential that the government and community has regular and significant access to information by which to assess the performance of corporations engaged in industry and commerce in Australia.

The adoption of such a program, with its emphasis on debt reduction, increased saving and Australian ownership, would minimise the risks of the economy being driven onto the second horn of the dilemma by a blow-out in our balance of payments. It would also help to reduce the threat of the third horn - a descent into the status of a "banana republic" - by promoting a significantly more independent economy, more regionalfy based both in its use of domestic resources and in its relationships with the rest of the world.


(7) Coombs on Central Banking and the BIS

H. C. Coombs, Trial Balance: Issues of My Working Life (Sun Papermac, South Melbourne, 1983; first published in 1981 by Sun Books)

{p. 141} Central banking is a strange institution little understood by members of the public whose interests it exists to protect, by gopvernments with whom it shares responsibilities, or by financial institutions whose activities it to some extent controls. ... This mystery was intensified, perhaps deliberately, by the personality of Montagu Norman, who for twenty-one years was Governor of the Bank of England, in his day the best-known central banker in the world. ...

It was Norman who created the international freemasonry of central bankers. He had been involved with the establishment of the Bank of International Settlements, to which all the major central banks of Europe belonged, which had been set up to ease the transfer problems caused by the payment of reparations imposed by the treaty of Versailles. This bank had its headquarters in Basle in Switzerland and the heads of the constituent central banks met there periodically. It was rumoured that these meetings continued during the Second World War and were used to provide a channel of communication between bankers of Allied and enemy countries. The United States was deeply suspicious of the institution, and exerted strong pressure to have the Bank wound up. However, it managed to survive and to provide a meeting place for central bankers.

But Norman's influence extended beyond Europe. Between

{p. 142} the two world wars there was a rush for nations to establish their own central banks, indeed they became like a national flag, a symbol of sovereignty. Many of these were modelled on the Bank of England and many turned to that bank for guidance and frequently for top executives to establish and administer them in their early years.

It was Norman too who established the tradition that central banks act as agents for one another, without charge and maintain communication by confidential letters and visits. There is a story that not long after the 1917 Bolshevik revolution the new government caused havoc in the London gold market by selling large quantities of gold, causing a dramatic fall in prices. Norman got in touch withg the State Bank of the USSR, drew their attention to the losses they had incurred by their lack of expertise and offered to act for them confidentially and without charge. The offer was accepted and a working relationshipo established which both protected London gold traders and gave the Soviet a significantly better return.

I cannot vouch for the truth of the story, but in my tome the Bank of England was better informed about the Soviet economy than any other official agency of which I was aware.

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