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The M ungana Affair State Mining and Political

Corruption in the 1920s

K. H. Kennedy

University of Queensland Press

© University of Queensland Press, St. Lucia, Queensland, 1978

This book is copyright. Apart from any fair dealing for the purposes of private study, research, criticism, or review, as permitted under the Copyright Act, no part may be reproduced by any process without written permission. Enquiries should be made to the publishers.

Typeset by Academy Press Pty Ltd, Brisbane. Printed and bound by Silex En�se and Prin!ing Co., Hong Kong

Distributed in the United Kingdo�� Middle East, Africa, and the Caribbean by Prentice-Hall International, International Book Distributors Ltd., 66 Wood Lane End, Hemel Hempstead, Herts., England

National Library of Australia Cataloguing-in-Publication data

Kennedy, Kett Howard. The Mungana affair.

Index. Bibliography. ISBN 0 7022 1028 S.

1. Theodore, Edward Granville, 1884- 1 950. 2. McCormack, William, 1879- 1 94 7. 3. Corruption (in politics)-Queensland. 4. Queensland-Politics and Government-1 9 19. 5. Mining leases-Queensland-Mungana. I. Title.

354.94300996

UNIVERSITY OF QUEENSLANU L.ldHYAR·IES THATCHER MEMORIAL UBRAR

Contents

Abbreviations xi

Introduction xiii

List of Illustrations vii

Acknowledgments X

Chapter I

Chapter 2 20

Chapter 3

The Chillagoe/Mungana Purchases Failure of the State Enterprise Allegations of Political Corruption

Chapter 4 The Mungana Commission 55

Chapter 5 Campbell's Report and Theodore's Resignation 74

The Civil Proceedings Chapter 6

Chapter 7 Political Ramifications Conclusion: Mungana Re-assessed Appendixes:

I Metal Prices 1908-1928 125

86

108

117

II Synopsis of Reports on the Mungana Mines 127

1

39

III Terms of the State Acquisition of the Leases from Mungana Mines Limited 129

IV Capital Expenditure on the M ungana Mines by the State Smelters 130

V Financial Position at Chillagoe 1920-

1927 131

VI Terms of Reference for the Royal Commission, 1930 132 .

VII W. McCormack to V. Macrossan, 4 June 1930 134

VIII Jury Questions and Answers, 1931 139

Notes to Text 143

Select Bibliography 160

Index 167

List of Illllst.ratiolls

Map of the Chillagoe and Etheridge Mineral Fields Endpapers Smith's Week(v p. 1 Frontispiece Chillagoe State Smelters 18 Front of Smelter Buildings 18 Huntington Heberlein Plant and Edwards Furnace Buildings 18 Chillagoe Township 19 Lady Jane Mine 19 Girofla Mine 19 Assay Offic� Chillagoe Smelters View of Chillagoe Works 35 The Main Offi� Chillagoe Smelters The Ore Bins- Chillagoe Smelters Lead Furnace� Chillagoe Smelters Township of Mungana 37

35

36 36

37

Mammoth Company's Traction Engines at Mungana Paddock of Roasted Ore at Mungana 38 A.E. Moore 53 R. Bedford 53 H.E. Sizer 54 Abandoned Smelter Yards after 1927 ClosureDr. H. I. Jensen 7 3 W. McCormack 73 E.G. Theodore 73 Personalities in the Mungana Case 84 Artist's impression of the Court Scene 85 Scene outside Court after ""Not Guilty" VerdictChillagoe Smdter Ruins circa 1971 107 Chillagoe Smelter Ruins circa 1971 107 Page from Courier-�lai/, 7 July 1930 126

54

106

38

The Mungana Affair originated before the Australian Labor party (Queensland Branch) officially adopted the spelling "Labor", in November 1 9 1 8. Notwithstanding, Hansard reporters, journalists and writers persisted with the spelling "Labour" for many years. Throughout this book "Labour" has been used except where a passage has been quoted in which the official spelling occurred. Similarly, the imperial measures and sterling units in use at th� time of the Mungana Affair have been retained.

Acknowledgments

The author wishes to acknowledge the assistance of the officers of the Queensland State Archives, James Cook University Library, Australian Railways Union (Queensland Branch), Australian Labor Party (Queensland Branch) and the Queensland Department of Justice, in arranging access torecords. Many individuals were helpful by providing interviews or by discuss­ing the project, including George Rymer, Sir Alan Mansfield, the late Hubert Sizer, Denis Murphy and Roger Joyce. Special mention should be afforded Brian Dalton of James Cook University for his painstaking scrutiny of the various drafts, and for invaluable criticism. Helen Stokes spent long hours onthe typescript.

A.L.P. A.R.U. A.W.A. C.L.R. C.P. C.P.D. C.P.P. F.P.L.P. H.S.A.N.Z. J.R.A.H.S. K.C. Kt Lib. M.H.A. M.H.R. M.L.A. M.L.C. Nat. Q.C.E. Q.G.G. Q.L.P. Q.P.D. Q.P.P. Q.S.A. T.L.C. U.A.P.

A b bre.via tions

Australian Labor Party Australian Railways' Union Amalgamated Workers' Association Commonwealth Law Reports Country Party Commonwealth Parliamentary Debates Commonwealth Parliamentary Papers Federal Parliamentary Labor Party Historical Studies: Australia and New ZealandJournal of the Royal Australian Historical Society King's Counsel Knight Liberal Member of the House of Assembly Member of the House of Representatives Member of the Legislative Assembly Member of the Legislative Council Nationalist Party Queensland Central Executive Queensland Government Gazette Queensland Labor Party Queensland Parliamentary Debates Queensland Parliamentary Popers Queensland State Archives Trades and Labour Council United Australia Party

The Mungana Affair ranks as one of the most widely known and least understood scandals in Australian political history. Its impact on both Australian and Queensland politics can be viewed from at least five different aspects. First, it was a recurrent issue in Queensland that dis­rupted state political life for many years and culminated in periodic bitter party clashes between 1926 and 1 93 1. Second, it impinged upon federal politics and at one point indirectly h astened the disintegration of the federal Labour government by removing from office its treasurer, E.G. Theodore,1 at a time when Australia was confronted by the onslaught of the Great Depression. Third, it injured and in some cases ruined several political careers, including those of William McCormack,2 the former Queensland premier; N.F. Macgroarty,3 the Queensland attorney-general; A.D. McGill,4 chairman of the Country­National party in Queensland; and Theodore himself. Fourth, it il­lustrated some of the problems inherent in state capitalism, highlighting the most outstanding example of government inability to successfully operate a state enterprise in mining and smelting. Andfifth, it evinced questions of political morality, particularly in the stand taken by the Queensland Country-National party leader, A.E. Moore,5 on conflict of interest, a subject which has too seldom been given serious attention in Australia.

The names of Theodore and McCormack have remained syn­onymous with Mungana. This connection has probably contributed tothe lack of treatment given them by political biographers, although their contributions to unionism, the Labour Party and public office were very significant for Queensland and even Australian history. Mungana is now a ghost town with a vivid and economically impor­tant past. It has innumerable parallels in Australia with, however, one difference. The names of most deserted or near-deserted mining settle­ments mean nothing to present-day Australians, but Mungana has retained special significance as the name of a resounding political scandal. Perhaps the one piece of writing that has rekindled the Mungana Affair and Theodore's involvement in it, is Frank Hardy's

xiv The Mungana AJ!air

fictional version of Ted Thurgood and the Mulgara Company in Power Without Glory. •

It has been almost customary for historians to mention theMungana episode with caution, and to underestimate its impact on political life in 1930-3 1 . Histories of Queensland have without excep­tion contained only a brief report of the royal commission or merely the verdict of the 1 9 3 1 trial. Writers on federal politics have either referred non-committally to the event or have assumed quite incorrect­ly that the failure of the civil suit against Theodore demonstrated his innocence. Moreover, since 1 93 1 , historians and sundry writers have attempted to vindicate Theodore for his part in the Mungana Affair. It is now an article of faith among Labour people that Theodore was framed by calculating Nationalist party strategists, and that he was ex­onerated by his acquittal in the legal action which followed the royal commission of 1 930. Recent examples amply illustrate this conviction. In his foreword to Irwin Young's biography of Theodore,6 the former Labour prime minister, E.G. Whitlam, wrote, "the dishonour of Mungana lay not with Theodore but with those of both parties who used Mungana to destroy a great Australian's political career and a great Australian." Further, he expressed the hope that Young's biography would "explode the myth of Mungana". This line was reiterated by Colin Hughes in a review of the biography.' He asserted that it "probably settles the question once and for all". In fact, Young's biography, completed by another hand after the author'sdeath, is wholly unsatisfactory in its treatment of Mungana.

The complexity of the i�sues involved and the elusiveness of much of the evidence partly explain the limited analysis to date, particularly of the events that culminated in the civil prosecution of Theodore and of his lifelong friend William McCormack. A study of the scandal and its elements of mystery and intrigue, based on official records and on some important private letters to and from McCormack, has resulted in a reinterpretation of the traditional views presented by historians and writers. Accordingly, this book claims to give a full and detailed account of the Mungana Affair, despite the ·refusal of the Queensland Mines Department to permit access to records relating to the Chil­lagoe smelters. It is doubtful whether any evidence that may subse­quently come to light will modify the conclusions reached.

• F. Hardy, Power Without Glory (Melbourne, 1 9SO). In a subsequent work, TheHard Way (London, 196 1 ), p. 47, Hardy acknowledges that his account of theMungana scandal was based on Dr H.I. Jensen's recollections, which in part ex­plains his inability to accurately relate developments. More likely, as Hardy hasstated in a letter to the author, "an historical novelist can make 'inspired guesses',and I probably did so."

CHAPTER 1

The Chillagoe Mungana Purchases

The events which culminated in The Mungana Affair began soon after the Labour party in Queensland, having a majority for the ftrst time, 1 formed a government in 1 9 1 S with the politically moderate T .J. Ryan 2 as premier. Since 1898, the Queensland Labour party had been com­mitted to a policy of state enterprise in what had become an extensive list of activities. These state enterprise proposals were designed to counter monopolies and, in general, to lower consumer prices, so they were popular with many people for whom more far-reaching socialist measures held little appeal. Indeed, both parliamentarian� and party officials agreed that state enterprise was the aspect of the party's plat­form most popular with diverse interest groups, such as miners, farmers and metropolitan workers. Between 1 9 1 S and 1 9 1 8 the Ryan government set up butcher shops, cattle stations, sawmills, coal mines, a fishery and an hotel at Babinda, all of which were financed and ad­ministered by the state.

These schemes had been opposed from the very outset by private business interests, on the ground that they constitued an undesirable intrusion into a free enterprise economy. For their part, Labour politicans remained determined that they should stand by the party's platform and ideological convictions. It was not as though state trading was a new experiment. In New South Wales, the McGowen and Holman ministries had operated state enterprises, including brickworks, sawmills, trawlers an4 shipbuilding yards. Similarly, theScadden Labour ministry in Western Australia had established state­owned butcher shops, meat-works, hotels, brickworks and sawmills.3

In 1 9 1 6, however, the A.L.P. split over a fundamental ideological issue: conscription. Almost overnight, the respective Labour ministries throughout Australia were defeated. Only the Ryan ministry in Queensland remained in office, and it was left to T.J. Ryan and his deputy, E.G. Theodore, to restore the party image by example in policy and administration. Yet, one of the most vulnerable parts of Labour's policy in Queensland was that of state enterprise. On the one hand, anti-Labour attacks on the state enterprises had gained added strength from the fact that most were running at a loss. On the other

2 The Mungana A.ffair

hand, A.L.P. defence of the state enterprise policy had become a mat­ter of faith transcending reason.4 Even ·by the 1 920s, Labour's op­timism and economic justification for the state enterprises were still beng propagated by its leaders. Theodore asserted in 1 923 that state enterprises "were not inaugurated as the commencement of a State­wide scheme of nationalization of industry." Instead, they were "intended as a check on profiteering and a regulation on commodity prices", and while not always yielding profits, "the influence of each in keeping down the price levels of the commodity they trade in has un­doubtedly justified their existence. "5

A major item of policy for the 1 9 1 5 general election had been the creation of a state enterprise in the mining areas of north Queensland. Ryan and Theodore had proposed the resumption of mining andsmelting operations in the areas formerly worked by the Chillagoe Company, that huge monopoly which had dominated mining in the north in pre-war days. In 1 888, William Atherton of the Chillagoe Sta­tion had told John Moffat,6 a gently-spoken Scot who had pioneered silver-lead smelting at Calcifer, about ore-bearing lodes in the area. Moffat took up leases in 1 894, but when he found that more capital was required he sold out to the Chillagoe Company which was formed in Melbourne in 1 897 .7 This Company immediately entered into negotiations with the Queensland government to build a private railway from Mareeba to Chillagoe as part of an ambitious project to develop mining and smelting in the area. As a result, the M areeba to Chillagoe Railway Act 1 897 extended to fifty years the tenure of the mining leases taken over from Moffat; exempted the company from labour conditions ; transferred Crown Lands required for the railway ; permitted the company to set its own tariffs ; and provided for the government to take over after fifty years. 8

The railway was completed in 1 900. In the following year, smelters were opened at Chillagoe to service not only the company's own leases which had been sublet to independent mining companies, but also those of small "gougers". The Chillagoe Company had not intended initially to invest in mining, preferring to encourage the flotation of in­dependent mining companies, such as the Mungana Mining Company, to supply the smelters. However, after a few years the Chillagoe Com­pany found that inadequate ore supplies had made . smelting operations uneconomic, and, that it was unable to meet debenture payments in 1904. Consequently, the company commenced mining operations at the Einasleigh field, and adopted short-term measures of advancing payments on ores and subsidizing small companies and individual prospectors, to ensure continuous operations at Chillagoe.9 In March 1904, a principal of the Chillagoe Company, J. Smith Reid,10 original­ly one of the pioneers of Broken Hill, appealed to the Queensland

The Chillagoe/Mungana Purchases 3

government for assistance to extend the railway to the Etheridge field. He warned that in the absence of more capital, which the company could not raise by its own credit, it would have to close down the smelters. He claimed if ore supplies could not be drawn from the Etheridge field,1 1 the "practical abandonment of Chillagoe" was almost certain, which "would be little short of a national disaster, at once depriving some 3,000 to 4,000 people of a livelihood."

A.J. Thynne,12 then leader of the government in the Legislative -Council and a principal of the legal firm handling the Chillagoe Com-pany's interests, took the matter up with cabinet. The Morgan govern­ment responded favourably to the Chillagoe Company's problem, and the Etheridge Railway Act 1 906 followed. When the supply of coal and coke presented further difficulties, the government again came to the company's assistance, extending the railway to the newly-opened Mount Mulligan coal mine. In both cases, the terms and concessions were similar to those stipulated in the Mareeba to Chillagoe Railway Act, and went even further in granting subsidies to assist construction. Despite extensive government assistance, the Chillagoe Company was plagued by further problems. In 1 909, a fire in the Lady Jane mine at Mungana and a slide in the Zillmanton mine deprived the smelters of two main suppliers of silver-lead ores. Two years later the smelters burnt down, leaving-the company in severe financial difficulties. Lack of ore supplies and insufficient capital forced the company to again ap­proach the Queensland government with a proposal to extend the railway southwest to Gilberton. Digby Denham,13 the Liberal premier, was unsympathetic to the company's request, considering further financial assistance a waste. In August 1 9 1 3 he refused outright the company's overture, noting that it "was very confident of the Etheridge country and represented that a railway to Charleston meant life to the Chillagoe Company, but we all know what a frost this has been."14

The smelters closed down in March 1 9 14, on the grounds of insuf­ficient high-grade ore supplies and increasing indebtedness. The general manager of the Chillagoe enterprise, J atnes Horsburgh, 15 later attributed the failure of the company to these two factors, as well as to its inability to obtain cheap fuel. He claimed that the Chillagoe Com­pany was over-ambitious in spending huge sums on railway construc­tion instead of consolidating and ensuring adequate supplies of ore and coke.16 Geoffrey Bolton has adequately summed up the repercussions from the failure of the Chillagoe Company.

Consternation filled Chillagoe. The company had in many cases been partner to poor men working small mines, and for many prospectors had been their market for lead, gold and copper. This sudden closure threw many out of work, drove the main storekeeper of Chillagoe into

4 The Mungana AJ]air

bankruptcy, and caused a mass exodus from the field. A sense of resentment was not pacified when publication of the Chillagoe Com­pany's balance sheet for 1913 revealed a debit of £32,519, of which £21,811 was set down to the inexplicable category of "reconstruction expenses". A management which could go through large sums in that way ought to have had the means-many thought-to maintain the smelters which meant so much to the welfare of the district.17

Over-optimistic geological reports ; squandering of capital on railways and mines; ineptitude in company policy and management techniques ; lack of foresight in establishing smelters of such capacity for under­developed mines ; all were factors contributing to the company's failure. It was estimated that the loss on operations amounted to two million pounds sterling, not taking into consideration the smaller losses of the independent mining companies that had been forced to suspend work through failure to fmd an alternative market for their ores. In a last desperate move, the Chillagoe Company again approached the Queensland Government with proposals for financial assistance. In a letter to Walter Barnes, 18 the acting premier, dated 1 May 1 9 1 4, Smith Reid complained that the company was unable to secure more money from its shareholders and that "if an effort is to be made to retrieve lost ground, [it] must be mutual" with the state contributing substan­tial assistance.19

Smith Reid proposed on the one hand that the company would ex­tend the railway to Gilberton and give the Government the right to ac­quire it, should cabinet agree to purchase the existing railways in the interim. On the other hand the company would provide capital of £ 150,000 to recommence operations, if the government extended the railway to Gilberton at its own expense, with a guaranteed 3 per cent return from freight charges over fifteen years .20 As there was no sub­stance in Smith Reid's belief that the government had considered purchasing the company's railways from the debenture holders,21 Denham bluntly refused to consider Smith Reid's proposals, stating that he had "never led anyone interested in the Chillagoe Company to think that the Government intended to repurchase the line, and this im­pression could not have been conveyed to the debenture holders.''22 Consequently, although some £670,000 remained owing on deben­tures, there seemed little prospect of disposing of the company's assets to recompense the financial losses incurred by the venture.

The district in which the Chillagoe Company had operated was a political stronghold of the Labour party, and had returned E.G. Theodore, a former miner destined to become one of the giants in Labour history. Born in South Australia in 1 884, grandson of a Romanian bishop and son of an Adelaide tugboat operator, Theodore had gained wide experience in mining and early trade unionism at

The Chillagoe/Mungana Purchases 5

Broken Hill before he obtained employment in the Chillagoe district in 1 906. He worked in oppressive conditions in the mines, and socialized in the adventurous mining settlements where the boisterous revelry of miners and smelterers satisfying their thirst for liquor and penchant for gambling accentuated the remoteness of the Chillagoe region from the more placid, established coastal centres.

Theodore soon idenfitied himself with the workers' grievances, par­ticularly the low wages and working hours. Accustomed to the protec­tion of industrial organization at Broken Hill, he proposed the forma­tion of a miners' union to confront the Chillagoe Company's virtual monopoly on the jobs of workers in the region. Within a year the Amalgamated Workers' Association had not only scored an impres­sive victory over the company in the Etheridge dispute of 1 908-in which railway navvies had secured their demands in full, but had also aligned itself with the Labour party, encompassing under its direction all Labour supporters in the region. From his position as organizer of the A. W .A., Theodore launched himself on an outstanding political career. He was elected to state parliament for the Chillagoe region in 1 909, and was soon deputy leader of the Labour party. When Labour was swept to office in 19 1 5, Theodore became treasurer and deputy premier. Four years later Theodore was elected premier, a position which he held until retirement from state politics in 1 925. As a politi­cian, he was tough and uncompromising, and he retained immense respect among the workers because of his skill in oratory, astute finan­cial and administrative capability and shrewd political perception.

In the adjacent electorate of Cairns, "Big Bill" McCormack com­manded a substantial majority. McCormack was Theodore's senior by five years and had been closely associated with him in the A.W.A. as its general secretary, before entering parliament in 1 9 1 2. He was to re­main a lifelong friend. McCormack was born in St Lawrence, Queensland, in 1 879, the son of a small grazier of Irish background. He had worked in the Chillagoe region since 1 904 and his position in the trade union movement and forceful personality contributed to his widespread following. McCormack became speaker in 1 9 1 5, and between 1 9 1 9 and 1 929 he served successively as home secretary, secretary for public lands and premier of Queensland. No less than three other neighbouring electorates returned Labour members, which in some degree demonstrated the party's reliance on mining in the north. There were, however, many Labour politicians, in particular T.J. Ryan, who had even less sympathy for the plight of the Chillagoe Company than their Liberal predecessors. Ryan believed that the com­pany had held over any government in-· power the threat that the dis­trict would be idle unless the government periodically came to its as­sist�ce. 23 All the same, the economic and social consequences of the

6 The Mungana A/fair

company's abandonment of operations had to be weighed with political considerations. The town's fame was Australia-wide, echoing even in London's financial circles, as the mining capital of far north Queensland, second only to Charters Towers. The company employed over two thousand workers, and indirectly employed a further three thousand who serviced its activities. In all, according to Theodore's es­timates in 1 9 1 7 , nearly twenty thousand people relied on the mining industry in the Chillagoe region.24 Ryan had committed himself during the 1 9 1 5 general election campaign to the creation of a state enterprise in mining and smelting.25 He would be able to redeem that promise by acquiring the assets of the C hillagoe Company, and at the same time be able to offer employment to thousands of workers, all to Labour's electoral advantage.

On 7 December 1 9 16, Ryan initiated a bill "to authorize the ac­quirement of the Chillagoe Railway, Etheridge Railway and other property". He informed parliament that he had opened negotiations with the debenture holders on the proposal to purchase the company's assets immediately after taking office in 1 9 1 5 . Both Ryan and Theodore justified such a bill on the grounds that state control of the mining and smelting ventures would stabilize industry in the north ; in­crease the wealth of the state through mineral production ; create employment ; and reverse the population exodus from the mining areas of north Queensland.26 Answering Opposition claims that the ore bodies had been exhausted and that mining was no longer economic in view of the Chillagoe Company's experiences, Theodore acknow­ledged that many of the surface deposits had been worked out. He nevertheless expressed faith in the potential of untapped ore reserves in the area, and argued that high metal prices would continue into the post-war period and ensure profitable working.27 The bill passed all stages in the Legislative Assembly without amendment, by virtue of the Ryan government's majority in the lower chamber.

When the bill came before the Legislative Council in January 1 9 1 7, it was referred to a select committee of inquiry, which obtained evidence from six witnesses, including Theodore. The Committee sub­sequently found that it was unable to recommend passage of the bill, because it was not satisfied "that payable reserve ores exist[ed] in suf­ficient quantity to justify the State in embarking on what may be con­sidered a speculative enterprise."28 The Council accordingly referred the bill back to the Legislative Assemb_ly for further consideration, for it was strongly opposed both to the entry of the State into mining in the wake of the failure of the Chillagoe Company, and, even more, to Ryan's policy of creating additional state enterprises. This bill was but one of the many that had been rejected by the Council in which the Labour party was in a minority. Ryan ultimately overcame the ob-

The Chillagoe/Mungana Purchases 7

stacle by introducing the Constitution Act Amendment Bill to abolish the upper house, and by making a number of Labour party appoint­ments to the Council to facilitate the passage of the government's legislative programme. The Legislative Council later ceased to exist, from 23 March 1922.

Meanwhile, the Chillagoe and Etheridge Railway Bill was resubmit­ted to the Council in mid- 1 9 1 7 . The Legislative Council again referred the bill to a select committee of inquiry of that chamber, consisting of two Labour appointees and four non-Labour supporters. -Fifteen witnesses were called, the two most important being Brigadier-General Hughes, representing the debenture holders and himself a former director of the Chillagoe Company, and Alexander Macdonald,29 general manager of the Mammoth Copper Mines. Hughes stated that the Chillagoe Company had invested some £5,800,000, but even that was not sufficient capital for the size of operations. He explained that the commitment to mining, and the processes adopted in smelting had been very costly, but he believed that with more capital the project would succeed. Hughes and other witnesses warned of the cost and uncertainty of mining ; but Macdonald recommended that the govern­ment would be wise to participate in mining, if only to guarantee ore supplies. Insisting that the Chillagoe district, especially the Mungana group of mines, was "one of the richest mineral areas in the whole world", Macdonald argued that not only was it "a fair investment" but also that the ore bodies "should be worked at a profit."30

The committee, having reached its decision solely on financial con­siderations, again regretted "that the evidence was not of a nature to justify your Committee in recommending the Council to pass the Bill". The report acknowledged the importance of the venture to the Chil­lagoe district, but recommended that if the state was determined to go ahead with the project, it should consider relocating the smelters and decreasing their capacity, to ensure more economical workings. The committee was still firmly opposed to the state engaging in mining.3 1 However, the two Labour members of the committee entered a minority report, urging the Legislative Council to pass the bill "in the interests of the area served by the Chillagoe and Etheridge Railway systems". They contended that any advantage gained from relocating the smelters would be more than offset by the cost of a new railway network. Predictably, they stressed the benefits that would accrue to the state from the establishment of a state enterprise in that area ; they argued that the proposed bill provided the means of rescuing the dis­trict from the economic repercussions of the Chillagoe Company's failure, as Ryan had argued at an earlier date when justifying the in­itiation of the bill.32

Granted leave for further inquiry, the committee reconvened, and

8 The Mungana A/fair

journeyed to _Chillagoe to interview several miners in the area, all ofwhom claimed that the railways and the smelters were necessary for the resumption of mining in the district. The two most important witnesses to give evidence were James Horsburgh, the former manager of the Chillagoe smelters, and E.J.J. Rodda former manager of the Mungana Mining Company.33 Horsburgh recounted the problems that had forced the company to close down, and recommended that the state should appoint a manager who would be free from political con­trol when committing expenditure to develop known reserves, for Hors­burgh did not believe that the smelters could be worked economically without assured ore supplies. Rodda stated that there were adequate reserves in the district, but that the cost of mining would be high, with little ore then remaining at surface levels. 34 Eventually the committee gave way to mounting opinion in favour of state intervention, but was unanimous in its opinion that the government would be ill-advised to engage in mining, apart from the Einasleigh field which would ensure steady ore supplies. It revised its recommendation on the relocation of the smelters, and urged the inclusion of certain provisos in the legisla­tion before it was resubmitted to the Legislative Assembly. The provisos would limit the amount of expenditure at the Einasleigh ; allow for the appointment of a general manager free from political control ; restrict any advances on ores supplied to the smelters ; and give the state a clear warrant of title for all assets at a maximum outlay of £ 70 1 ,000. 35

In November 1 9 1 8 the Ryan government rushed through parlia­ment the revised bill incorporating the committee's recommen­dations,36 and immediately concluded arrangements with the deben­ture holders of the Chillagoe Company.37 The government was authorized to purchase the railways for £66 1 ,000 ; the smelters for £ 30,000; the Einasleigh mine for £9,000 ; and the mining plant and machinery for £ 1 ,000. Despite continued warnings by James For­syth,38 a member who-baa experienced the mining boom in the gulf country,. that so much depended on fluctuations in metal prices, Theodore was optimistic that there was a great future in mining in the north. For that reason he was urging the passage of the bill, and not because of "the political advantage I can get out of it as a result of in­creased population of C hillagoe. The object is far larger than that, and the motives of the Government far higher than personal motives of that kind."39 The forcible approach of this young Labour treasurer, who was able to boast not only of first-hand experience, but also of an intimate knowledge of the mining industry in north Queensland, silenced a great deal of the Opposition's criticism of the scheme. With the security of adequate state finance, the escalation of prices for silver-lead and copper and the clamour of a ready market for metals to

The Chillagoe/Mungana Purchases 9

meet wartime demands, the venture's profitability seemed assured. Furthermore, Theodore's judgment and optimism were shared by min­ing communities in north Queensland, and it seemed that Chillagoe had been given a new lease of life when the bill was finally passed, on strictly party lines, and assented to, on 16 November 1 9 1 8.

The state government proceeded with its plans to re-open the smelters, by advertising for applications for the position of general manager. Under section 7 of the Act, a general manager was to be ap­pointed for three years, and would be eligible for reappointment by cabinet for a further five years. Subsection 2 set down definite rules of conduct and provisions for vacating office. The general manager was deemed to vacate office: (i) if he engages, during his term of office in any employment outside

the duty of his office . . . (iv) if he becomes in any way concerned or interested in any contract

or agreement made by or on behalf of the Crown, or in any way participates or claims to be entitled to participate in the profit thereof or in any involvement arising therefrom . . . 40

There would not have been a Mungana Affair if these clauses of the Act had been administered to the letter and more importantly, if the state's role in mining had been limited in accordance with the recom­mendations of the select committee of inquiry.

It was announced on 22 April 1 9 1 9 that Peter Louis Goddard41 had been successful in his application for the position of general manager, ahead of three others, including Dr H.I. Jensen,42 temporary geologist with the mines department. Goddard's only previous experience had been as a smelter foreman at Mount Elliott, although his application was strongly supported by W.H. Corbould,43 a leading mining and smelting authority and soon to become the first general manager of Mount Isa Mines Limited. Goddard was appointed for only twelve months because it was the opinion of cabinet that he should prove his abilities before being confirmed in the statutory position.

While the bill to purchase the Chillagoe Company's assets was progressing through parliament, Fred. Reid,44 a local miner, applied for and was granted ten acres of leases. Numbered officially 502 and 503 , the leases covered part of the area formerly worked by the Mungana Mining Company, and included the Lady Jane and Girofla mines. Originally held by the Chillagoe Company, these leases had been sublet by an agreement in which the Mungana Mining Company was responsible for rent payments. The leases had been declared forfeit for the non-payment of annual rent, and had reverted to the Crown in April 1 9 1 7. It was correct procedure that the leases had reverted to the Crown, for mines department regulations always ex­tended three months' grace each year from 1 January. Yet, when Reid

I 0 The Mungana Affair

lodged his application on 1 1 September 1 9 1 7, the Mungana Mining Company reacted with a similar application, which was rejected by the Chillagoe mining warden, R.A. Dunlop.45 On 29 October, Dunlop recommended Reid's application to the mines department. Reid automatically applied for and was granted an exemption of six months from specific conditions of labour-from the obligation to employ a stated number of men, based on the reasoning that he had first to un­water the mines which had not been worked for three years. Another exemption of six months was granted on 1 1 May 1 9 1 8, even though Reid had made no effort to unwater the mines.46

In November 1 9 1 7 Reid had journeyed to Brisbane and then to Sydney, to raise capital and to consult on the prospects of the Mungana Mines with the former manager, E.J.J. Rodda. For a con­sideration of twenty-five pounds,47 Rodda furnished Reid with a writ­ten report on the two major mines-the Lady Jane and Girofla, in which he outlined the development of the mines, the estimated ore reserves and the problems associated with working the ore bodies. Rodda reported that the Lady Jane shaft had been sunk to 440 feet and levels opened at 1 00, 220, 320 and 420 feet. Although the ore bodies above the 220 feet level had been worked out, Rodda claimed that some 50,000 tons with "a gross metal value at present prices of . . . £675,000 in all" remained in the stopes between the levels of 220 and 320 feet. In addition, "a small body of ore about 3 sets square, i.e. 1 8 ft. of very high grade copper ore" was still undeveloped at the 320 feet level before the mine was flooded in 1 909 to extinguish the frre. The Girofla had been sunk to 830 feet, with levels at 1 00, 1 50, 200, 300, 4 1 0, 5 1 0, 6 1 0, 7 10 and 8 10 feet. Like the Lady Jane Mine, the Girofla had been virtually worked out at the higher levels, and Rodda claimed that little ore remained above the level of 6 1 0 feet. He was confident, nevertheless, that between the levels of 6 10 and 8 1 0 feet "nearly 1 00,000 tons" could be extracted, with "a gross metal value of 98/­per ton", or £498,000 at prevailing market prices.

In spite of his opinion "that further exploratory work would disclose another ore body", Rodda acknowledged that the major problem con­fronting Reid would be the unwatering of both mines. The Lady Jane and Girofla ore bodies were situated in limestone terrain and "it naturally follows that in lowering the water at any one point it lowers it for some distance around". Rodda estimated that it would take from six to nine months to unwater the Lady Jane to 250 feet and would cost "nearly 1 /- per 1 ,000 (one thousand) gallons, or for 200,000,000 gallons, £ 1 0,000''. He gave no estimate of the volume of water for the Girofla, although stated that it would have to be unwatered to the 7 10 feet level .48 The report, although somewhat general, seemed to favour further exploitation. It was obvious that a great deal of work was

The Chillagoe/Mungana Purchases II

necessary in both mines , in particular to unwater and to make new drives to the untapped ore bodies. Rodda's estimates did not take this fully into account. Ten thousand pounds for unwatering the Lady Jane to the 250 feet level had little bearing on the cost of restoring the mines to working order. The main ore body in the Lady Jane was between the levels of 220 and 320 feet. Rodda had estimated only the cost of unwatering to 250 feet. There had, moreover, been no consideration of the costs of a drive to the ore bodies, nor of air shafts and retimbering. Again, Rodda did not report on the additional costs of unwatering the Girofla Mine to the ore bodies below 6I 0 feet. Rodda's report was also inadequate to the extent that his values were based on current metal p.rices49 (then at their peak), as well as in. its neglect of the vital ques­tion of development costs both in restoration of the mines and in open­ing up the reported ore reserves.

Reid was encouraged by Rodda's report and obtained an option from the Mungana Mining Company on the purchase of machinery and plant then at the mines, at a cost of £2,870. In a personal inter­view with Theodore at Cairns on I6 March I9 1 8, Reid proposed that the government assist him to re-open the mines, by advancing· the capital that he had failed to raise in the south. Reid set out two proposals in a letter to Theodore, four days later. He enclosed Rodda's report as evidence of the economic feasibility of the mines but he in­dicated that he had considered the estimates for unwatering to be un­duly high. The failure of his efforts to rai�e £ 1 7,000 of private capital Reid attributed partly "to the fact that mining investors are invariably dubious of mines which have once been worked and subsequently shut down by their previous owners, but chiefly ... to the unfortunate fact that the properties had at one time been connected with the luckless Chillagoe Company". He estimated the "total expense of getting both mines on a proper working basis" to be £ 1 5 ,000, and claimed that he himself could furnish £5 ,000. All that would be necessary to com­mence the venture was additional money, preferably in the form ·of a government loan of £ 10,000.50

Theodore strongly supported Reid's application for such a loan and forwarded it to the secretary for mines, A.J. Jones.5 1 Theodore stres­sed the importance of the Mungana mines as a source of ores for the Chillagoe smelters which he was virtually certain would be re-opened as a state enterprise, even though the necessary legislation was still before the select committee of inquiry. (This letter was later resur­rected to implicate Theodore in the scandal.)

This is an application for £ 10,000 by way of.loan, on a basis of £2 for £ 1, to enable the applicant to secure the machinery upon and dewater the Girofla and Lady Jane mines at Mungana. The proposition is thoroughly sound from a business point of view and there should be

1 2 The Mungana A/fair

ample security to cover the Government. When the Chillagoe smelters are reopened (as they probably will be shortly as a Government con­cern), they will draw their principal supplies of silver-lead ore fromthese mines. There is no doubt about the quantity of ore reserves, nor is there any doubt that the ore is of sufficient value to make it profitable to treat at Chillagoe. The dewatering will take some timeand that is a reason for an early consideration of this application. As the future prosperity of the Chillagoe field depends upon the suc­cessful operation of the Chillagoe works and such mines as the Mungana properties, and as I can vouch for the bona fides of the ap­plicant in this case, I desire as favourable consideration of the applica­tion as possible. 52

The application was referred for comment to Sydney Horsley,53 the in­spector of mines. He considered that Rodda had underestimated by two-thirds the cost of getting the mines back into production. He also drew attention to the "pitiably neglected condition" of the machinery : the boilers were "badly corroded and need retubing, but fresh tubes are unprocurable" ; the stores, tools and spare parts had been sold ; and "much useful material" had been broken up as "scrap". That was not all. Horsley stated that not only was all underground ironwork unsafe, but also that the cost of new equipment and the added labour costs would require "an expenditure of £20,000 stg . . . before any ore can be won from the 'Lady Jane' mine" and that a further £29,000 was re­quired for unwatering, repairs and a new shaft in the Girofla. He con­cluded that careful planning and costing, would be necessary to re­open the mines, notwithstanding the "hope deferred" in the history of the mines, for "continual inbursts of large volumes of water, extensive creeps and subsidences, high temperatures causing strikes with con­stant and expensive breakages have rendered every effort profitless."54

On 14 June 1 9 1 8 Executive Council approved an advance loan to Reid of £2,800. This advance was almost exactly the amount Reid had paid to the Mungana Company for the plant on the leases ; and would be covered by capital equipment. Interest payments on the ad­vance were required on 3 1 December 1 9 1 8, before any profits were to be appropriated from the mines. The government was really driving quite a hard bargain and taking little risk. After two months Reid ap­plied for a further advance of £300, again through Theodore; to start work on a shaft in the Lady Jane mine. Five days later, on 1 3 August 19 1 8, Theodore again wrote to Jones, explaining developments at Mungana and endorsing Reid's application for the extra advance.

I have to advise that Mr. Fred Reid of Mungana saw me while in Brisbane recently regarding his intention to make application for a small loan on a £ 1 to £ 1 basis to enable him to do some preliminary work at the Lady Jane mine preparatory to commencing on a larger scale when the Chillagoe smelters are reopened. Mr Reid explained to

The Chillagoe/Mungana Purchases 1 3

me that he did not want to start unwatering the mine until he was sure the Chillagoe Bill would pass, and that there would be reasonable prospect of the furnace being started at Chillagoe. I have already vouched for Mr. Reid's bona fides and think assistance to the extent he asks can safely be ·granted to him. 55

Reid was granted the full loan of three hundred pounds ; and in three months the Chillagoe bill passed its final reading. Yet before the smelters were re-opened under Goddard's management, Reid withdrew applications 502 and 503 , and applied for four new leases of fifty-seven acres in the same area. These leases, officially numbered 556, 55 7, 558, 559, took in the Lady Jane, Lady Jane Extended, Girofla and Girofla Extended.56 No opposition was encountered, and the leases were granted in February 1 9 1 9. With the available machinery, Reid began unwatering, and at the same time transported small tonnages of ore from the Lady Jane dumps to the smelters' yard.

In the course of routine duty, Dr H.I. Jensen inspected the Mungana Mines and in April 1 9 1 9 flled a report on his observations. Jensen's report tended to support Horsley's conclusions about the ex­pense and time involved in restoring the mines. He commented that Rodda's estimation of the value of ore reserves was far too high, partly because of the fall in metal prices, and also because the cost involved in development work and mining was greater than Rodda's estimate. However, Jensen predicted that substantial untapped ore bodies would be found within the area of the leases. He acknowledged that the smelters would be dependent on Mungana silver-lead ores, which rein­forced Theodore's contention in his letter to Jones (March 1 9 1 8) sup­porting Reid's application for a loan of ten thousand pounds.57

The smelters re-commenced operations in June 1 9 1 9, and in the fol­lowing April Goddard was promoted to the statutory position of general manager. It was later admitted that the decision was influenced by indications that the smelters would return a small profit for the year 1 9 1 9 - 20. The auditor-general in his 1 9 1 9- 20 report acknowledged that the Mungana ores were important, and added that it was un-economic to keep only the copper furnaces operating while adequate supplies of silver-lead ores were being stockpiled for intermittent smelting campaigns. He recommended that the Chillagoe-Etheridge Railway Act should be amended to allow the general manager of the smelters to commit more expenditure to mining in areas apart from the Einasleigh, if only to obtain ores by tribute agreements with private miners. The auditor-general commented that section 6, (a) and (b), per­mitted state mining only at Einasleigh, although under the provisions of the Act the government had acquired several other leases that con­tinued to remain idle because of legislative restrictions. 58

Theodore, who was then premier, announced on 1 December 1 920

1 4 The Mungana Affair

that in view of the auditor- general's recommendations the government intended to amend the Chillagoe-Etheridge Railway Act of 1 9 18 to permit Goddard to allocate more expenditure to mining. In drawing up the amendment, Theodore went further than the auditor-general's recommendations and wrote in provisions to empower the government to purchase or lease additional privately-owned mines which were con­sidered necessary for the profitable operation of the Chillagoe smelters. Theodore had in fact removed the limitations imposed by the Legislative Council, which the select committee had designed initially in order to safeguard the government from problems like those ex­perienced by the Chillagoe Company. The Chillagoe-Etheridge Railway Act A mendment Act of 1 920, which received royal assent on 1 6 December, authorized the state "to acquire, whether by purchase or lease or on tribute or on a royalty basis, any mine or mining lands the ore won from which, in the opinion of the Government, will further the profitable carrying on of the business referred to [and] to open up, work and develop such . . . provided that no expenditure in excess of one hundred thousand pounds shall be incurred for the objects referred to . . . "59 Paradoxically, the Amendment Act in part destroyed the ob­ject of the Ryan government in taking over the Chillagoe smelters and railways. Having acquired these assets to promote and revive private mining in the area, the government was now itself to undertake mining in order to keep the smelters operating. It is doubtful whether any members of the Labour caucus had reservations about the widsom of committing more public funds to the Chillagoe venture. Little could the caucus have realized that the decision would in ten years rebound on the Labour movement with a fatal impact.

On 1 3 December 1 920, while the amending legislation was in its final stages, Goddard advised Jones by telegram of the need to con­sider the purchase of the Mungana mines, to ensure ore supplies for the coming smelting campaign. Jones immediately instructed Goddard on the authority of his reply telegram to enter negotiations with Reid. There can be little doubt that Goddard had already been in contact with Reid, because on 1 6 December, only three days after his telegram to Jones, he was able to make a detailed written proposal to the minister. Reid offered "my Company's mining properties at Mungana" to the government for £40,000, payable on the following terms : "£ 10,000 payable by way of deposit immediately upon the purchasers entering into possession, the remaining £30,000 payable by way of royalty computed at the rate of 4/- per ton (dry weight) of all ore removed from time to time from any of the leases."60 The "Company" to which Reid referred was the result of an agreement between Reid as lessee of the mines, and unknown associates. Although the company was registered on 1 6 November 1 920, articles

The Chillagoe/Mungana Purchases 1 5

of agreement were not compiled until 2 1 December, five days after Reid had put his official proposition to Goddard. The company, which now replaced Reid as lessee of the mines, was known as Mungana Mines Limited and had a nominal capital of £20,000 which was made up of ten thousand fully paid shares of one pound, and another ten thousand held in reserve.6 1 There was no evidence that shareholders had paid one pound per share. Reid and his Chillagoe solicitor, D.C . McDiarmid, were appointed company directors and were authorized to negotiate further arrangements on behalf of the shareholders.

Goddard, on receiving Reid's offer, immediately recommended that the government purchase the mines as "the price and conditions of payment are reasonable", and as the mines "will be the most impor­tant factor in the future development of the Chillagoe enterprise". He further claimed that "the possibilities of the [Girofla] mine look better than at any previous occasion", as Mungana ores were worth fifty shillings a ton and cost only thirty shillings a ton to mine. Indeed, Goddard urged that "fmality be arrived at with the least possible delay as the matter of ore supplies is causing great anxiety".62 The Queensland mines minister (Jones) lost little time in travelling to Chil­lagoe to inspect the smelters and the Mungana mines. On 1 7 January 1 92 1 he wired Theodore to press Cabinet to authorize an immediate purchase, claiming that "metal prices [were] immaterial" as the smelters "cannot restart unless Mungana ore [was] secured".63 Jones' claim was soon given added weight by B.C. Saint-Smith,64 an accom­panying government geologist, who also considered that the mines were essential to the future of the smelters, and "extremely cheap at the prices asked", because "no other known important deposit in this region is of anything like the same value, either as regards metal con­tents or tonnages." Saint-Smith offered another reason the government should act promptly, by warning that "the present mine owners could erect and profitably run a furnace at Mungana itself for an insignifi­cant sum."65

Saint-Smith acknowledged that he had relied heavily in his report on Rodda's estimates which Reid had handed to him. He was unable to inspect the ore bodies in the mines and, moreover, his valuation of the surface equipment and machinery seemed particularly generous because Reid had neither added to his plant that he had purchased for £2,870, nor completed the unwatering of the Lady Jane mine. Despite reports and overtures by Goddard, Jones and Saint-Smith, cabinet was not agreed on the wisdom of such a purchase. For his part, Goddard was becoming very anxious to formalize some arrangement with Reid. On 1 2 February 1 92 1 Goddard telegraphed an alternative proposal to the mines minister, whereby the government would be able to secure the mines on tribute for two years, with a right of renewal for a further

1 6 The Mungana AJ]air

two years, during which time a purchase for £40,000 could also be ef­fected. Goddard considered this new offer "better and cheaper than outright purchase".66 Considerable correspondence was exchanged between Goddard and Jones, in which Goddard persistently pressed the government to secure Mungana ores. C abinet then agreed to authorize Goddard to formalize a tribute agreement with Reid on 4 June 192 1 , only a matter of weeks before the 1 92 1 smelting campaign began in earnest. At the same time the government obtained an option on purchase within two years from 1 9 February 1 92 1 .67

The smelters apparently operated to capacity during the 1 92 1 cam­paign, although it was noticeable that the Mungana mines had sup­plied the bulk of lead ores. In his annual report for the year ended 3 1 December 192 1 , Goddard stated that the low prices for lead had caused other miners near Chillagoe to abandon operations, compelling the smelters to obtain all ores from the Girofla mine. He added that "splendid results" had been achieved at the Girofla although it had been necessary "to do a great deal of work on the surface machinery to bring this portion of the plant to a fair state of efficiency"; and recommended opening the Lady Jane mine on which no work had been undertaken to date. Goddard forecast optimistically that "with adequate supply of ores for the copper and lead furnaces and reduced cost of fuels which will shortly be an accomplished fact, the Chillagoe enterprise could soon be placed on a strong self supporting basis."68 Goddard's report strengthened the government's case for exercising the option to purchase Mungana. Still stronger support was given in another expert's report-that of, William Poole69 of Julius, Poole and Gibson, whom cabinet had appointed in December 1 92 1 to investigate the Mungana proposition. Poole's findings, dated 27 January 1922, confirmed Rodda's estimates of the size of known ore reserves, and predicted confidently that important and profitable new ore bodies would be found even though "the water problem of the Mungana mines is the heaviest pumping proposition in Queensland". Poole stres­sed the folly of continuing to depend on outside sources for ore, and warned, as had Saint-Smith, that Mungana could readily set up its own smelters. He estimated that the reserves would give a profit of eighteen shillings per ton, "or a total profit of £54,000 which is suf­ficient to pay for the mines and also give a profit". Finally, Poole ad­vised the government to exercise its option to purchase as it had already committed large amounts of money not only to the smelters but also to the Mungana mines, all of which would be lost and "would render it very difficult to operate the Chillagoe smelters".70 Poole's report was by far the most favourable71 of the several reports submit­ted on the Mungana mines. It appears to have been decisive in over­coming doubts which had been based on falling metal prices, costs for

The Chillagoe/Mungana Purchases 1 7

redeveloping the Mungana ore bodies, the risk of operating losses, and the fact that the tribute agreement had successfully maintained satisfactory supplies of ore. Poole had satisfied each of these points, but probably the most weighty consideration was the absolute dependence of the smelters upon Mungana which could in theory at least, manage without Chillagoe.

The government could not afford, apart from its ideological com­mitment to state enterprise, the political consequences of a failure at Chillagoe. Its political position had been weakened by the results of the 1 920 general election when the whole policy of state enterprise had been severely attacked.72 Within six weeks of the tabling of the Poole report, cabinet had agreed to go ahead with the purchase of the Mungana leases. On 1 6 March 1 922 the government contracted to purchase the mines from Mungana Mines Limited, on the following terms: (a) Purchase price £40,000; £ 10,000 of which was to be paid

forthwith as a deposit. (b) The balance of £ 30,000 was payable by royalty at the rate of 4

percent of the gross metal contents of ore up to £5 per ton, and 5 percent of gross metal contents of ore exceeding £5 per ton.

(c) Royalty payments made since the tribute agreement of 4 June 1 92 1 , were to be considered part of the deposit.

(d) The sum necessary to liquidate the company's indebtedness to the Mines Department incurred by the two advances to Reid, was to be deducted from the deposit.

The mines became government property on 25 March 1 922. Mungana Mines Limited was not restructured; its interest in mining ceased and it was to be struck from the register of joint stock companies when the government settled the balance of payments. For his part, Frederick Reid remained active in the Chi.llagoe area as an independent miner, working abandoned surface ore bodies and dumps.

Chillagoe State Smelters

Front of Smelter Buildings

Huntington- Heberlein Plant and Edwards Furnace Buildings

Chillagoe Township

,

Lady Jane Mine

Girofla Mine

C HAPTE R 2

Failure of the State E nterprise

Suggestions that there might be something shady about the Mungana purchase were made on only a few public occasions up to 1 926. In July 1922, the former mayor of Brisbane, J.F. Maxwell,1 then member for Toowong, directed a series of questions on the Mungana purchase to the secretary for mines. First he asked on what grounds the govern­ment justified the purchase "when the mines had been previously forfeited by previous owners". Jones replied by reminding Maxwell that Reid had obtained the leases before the government's acquisition of the smelters, and he cited two grounds warranting the takeover of the Mungana mines : the necessity for continuous ore supplies for the smelters ; and the favourable "reports by experts" which recommended the purchase as a businesslike proposition.2 Second, Maxwell drew the minister's attention to the forfeiture of the mines by the original Mungana Mining Company in 1 9 1 7 through non-fulftlment of the con­ditions of their leases, and Maxwell wanted to know how much work had been undertaken by Reid and his undisclosed partners from 1 9 1 7 to 1 920, and whether the state had undertaken any work at Mungana prior to the purchase. Jones answered evasively that the Reid syn­dicate had complied with the provisions of the Mining Act, and simply that the mines department had worked the Mungana mines on tribute.3 Whatever Maxwell's reasons for asking these questions, he was prob­ing deeply ; probably more deeply that he realized. Full answers to his questions would have revealed that Reid had done virtually nothing to get the mines into production, whereas the mines department had been obliged to invest a considerable amount in order to obtain the neces­sary supplies of ore for the Chillagoe smelters. The incident however attracted little attention ; no one referred to it again in parliament or in the newspapers.

Over the next three years the fmancial position of the whole Chil­lagoe venture attracted increasingly critical attention. The annual report of the auditor-general for the fmancial year 1 92 1 - 22 revealed an operating loss of over £ 72,000, including treasury interest of some £22,000, bringing to £ 1 20,000 the accumulated loss since operations began three years before. In reporting these figures, the auditor-general

Failure ofthe State Enterprise 2 1

attributed the losses to depressed metal prices, high interest charges and expenditure at Mungana in developing the ore bodies.4 The finan­cial analysis of operating losses included the payment of more than £ 10,000 in royalties and purchase money to Mungana Mines Limited. In addition, there had been capital expenditure of more than £4 1 ,000 on the Mungana mines, of which two-thirds was incurred for unwater­ing the lower levels of the Girofla mine and repairing the main shaft, and the remainder for retimbering and opening up the Lady Jane mine.� Criticism was muted by Goddard's optimistic reports as general manager presented in December 1 92 1 and 1 922. In the first report, Goddard predicted improved results in general terms,6 and in the second, he indicated that increased supplies of ores, resulting from vigorous development at Mlingana, could be expected to offset the mounting financial losses on smelting operations.'

In fact, no significant improvement occurred in the following year. Although the operating loss for the year had fallen, it was still nearly £59,000, and the accumulated loss had risen to over £ 1 78,000. Royalties to Mungana Mines Limited amounted to more than £3,000, and capital expenditure on the Lady Jane and Girofla Mines totalled £58,000. Still more damaging was the revelation that the total debt in­curred by the treasury on account of the enterprise had risen to more than £700,000. The only solid facts presented in explanation of these figures were the continuing low metal prices for copper and lead on the London exchange: the 1 923 prices were about 26 per cent lower than those ruling in 1 920.8

On 25 October 1 923, during the debate on mining estimates, the leader of the Opposition, conservative Charles Taylor,9 described the Chillagoe enterprise as "a forlorn hope" and "most grievous blunder".10 Taylor had little talent for inspired debate, and the other Opposition members, in a sustained criticism of the Labour govern­ment's handling of mining and of state enterprises based on mining, persistently referred to the Chillagoe venture as "Theodore's circus" and "Jones' folly". 1 1 When a government member defended the role of the smelters in north Queensland mining, one backbencher interjected "Produce for use and not for profit" ;12 while A.E. Moore,13 the earnest but gentlemanly member for Aubigny, asserted that after "the developmental stage it does not matter how much metal is recovered, it is useless to go on with it unless it can be obtained at a profit". Moore further pointed out that Chillagoe was simply an extreme example of the general failure of the state enterprises to work profitably. This provoked from the secretary for mines a strongly-worded and almost dogmatic defence of Labour's state enterprise policy, in particular of the aims of the Chillagoe concern. Jones blamed the losses on low metal prices ; extolled Goddard's achievements as " a splendid

22 The Mungana A/fair

manager, and one of the best in Australia" ; and professed confidence that the management would succeed in making the undertaking profitable. 14

Over the next two years Jones' hopes for an improved financial position at Chillagoe were dashed. The annual reports of the auditor­general for the years 1 923 -24 and 1 924 -25 revealed the same monotonous pattern of heavy losses. The loss for the year 1 923 -24 in­creased to £ 103 ,000, including interest of some £46,000, and the treasury indebtedness of the enterprise spiralled to £975,000. During that year an additional £39,000 had been spent on the Mungana mines to secure ores for which Mungana Mines Limited had received royalty payments of £ 1 1 ,000.15 Official figures for 1 924- 25 revealed a loss on operations of only £30,000, and treasury indebtedness standing at over £800,000. This significant reduction in both losses and treasury indebtedness had been brought about by the suspension from 30 June 1 924 of interest payments on the accumulated treasury indebtedness, and by the writing ofT from the same date of losses close to £282,000. Without this measure of relief, the total indebtedness of the Chillagoe undertaking would have been in excess of £ 1 ,000,000. As it was, these devices made the figures look somewhat improved without changing the real facts of the financial disaster that plagued the Chillagoe ven­ture. Again, huge sums had been committed to the Mungana mines : almost £ 1 5,000 had been spent on development projects, and another £ 1 5,000 had gone in royalties, although by 29 June 1 925, the purchase agreement with the Mungana Mines Limited had been fmalized by a balance payment.16

The financial situation at Chillagoe was embarrassing for the government, although concern was not publicly expressed to any great extent. An even more embarrassing development occurred in December 1 925 with the publication of Goddard's annual report. In his previous report (for 1 924) Goddard had revealed that all reserves above the levels of 4 10 feet in the Girofla mine had been worked out, and that no new ore bodies had been located in the Lady J ane.17 Then, in 1 925 , he confirmed the virtual exhaustion of all known ore deposits of both the Girofla and Lady Jane. 18 Hopes had been centred on the capacity of the Girofla and the possibility of new discoveries at the lower levels of that mine. Instead, the significant fall in production, and the increasing dependence on ores railed over eight hundred miles from Cloncurry, indicated that the government had concurred with the expenditure of huge sums in restoring the Mungana mines only to dis­cover that the known ore reserves had been over-estimated. To develop new levels would involve such capital expenditure that mining would be unprofitable from the start. Goddard's report for 1 925 clear­ly showed that Moore's criticism of the Chillagoe venture had been

Failure of the State Enterprise 23

justified, when, in debate on mining estimates, only two months earlier, he had denounced the folly of maintaining operations at Chillagoe.19

Fortunately for the government's prestige, there was little public criticism of the Mungana situation because parliament was in Christmas recess when Goddard's report was filed with the mines department. It was in this period, however, that quite by chance a new development occurred which turned _Mungana into one of the most sensational issues in Australian politics.

While campaigning in February 1 926 for the Eacham by-election,20 two of the Opposition members heard rumours which had been cir­culating in the north of malpracti�es at Chillagoe involving Labour politicians. H.E. Sizer,2 1 the member for Sandgate, was a young, in­tense and extremely vocal Opposition frontbencher who had heard that preferential treatment was being extended by the management of the smelters to selected miners in the Chillagoe district. At almost the same time, Moore allegedly heard that "Labour politicians were somehow involved at Chillagoe."22 Although Sizer thought the rumour worth reporting to the party room on his return to Brisbane, there was nothing on which to base a public accusation or charge, for that could only recoil on the Opposition if there were no solid facts and evidence to support any allegation.

The matter might have rested, but for the militant editor of The Ad­vocate, George Rymer,23 who as president of the Australian Railways' Union had no inhibitions to restrain his bitter opposition to the new premier (McCormack) who had assumed the Labour leadership only a few months beforehand. Rymer had heard of an intrigue implicating Labour politicians in Chillagoe, with one additional allegation : that McCormack himself was somehow directly involved in the under­taking. 24 Rymer had opposed McCormack and his cabinet with their strong Australian Workers' Union affiliation, ever since the 1 925 railway strike and the subsequent anti-communist pledge decision2� which had effectively reduced his union's influence within the Labour party machine. Rymer's policy of printing any material embarrassing to the Labour government reflected the existing split in the union ranks, and although (on his later admission) he had nothing definite to go on, Rymer used this hint of intrigue to further his personal cam­paign of opposition to McCormack.

On 15 February 1926 The Advocate implied under the headline "McCormack Must Go!"' that McCormack was improperly as­sociated with Reid in influencing the government to purchase the Mungana mines. The article stated : "The public will be wiser, par­ticularly during the discussion of the part you [McCormack] played in the Government's purchase of the Mungana Mining leases for £40,000 from the same person [Reid] and those associated with him

24 The Mungatkl A/fair

to whom they were previously 'given away'."26 Although such vague allegations could have been easily dismissed as an axe that Rymer had to grind, there we.re several repercussions. On 10 March 1 926 the secretary for mines (Jones) addressed a Trades Hall meeting of union delegates on the subject of state enterprise in the mining industry. In reply to a delegate who had asked why the government did not take up the Mungana leases in 1 9 1 7, Jones said there had been three . reasons. The government had no smelting works at the time; the legislation to acquire the Chillagoe Company's assets "was not passed until one year and two months after Reid became possessed of the leases" ; and the Act "had a clause inserted by the Legislative Council against the wish of the Legislative Assembly precluding the Mines Department from working any mine with the exception of the Einasleigh Mine". Jones also contended that the favourable reports of Saint-Smith and Poole justified the later acquisition of the Mungana leases.27 Brisbane's only pro-labour mass circulation newspaper, the Daily Standard, reprinted Jones' address in full, as well as several of the questions asked by the delegates. "Mungana Innuendos Completely Smashed" headed an article praising the minister for his frankness and clarity in answering questions from the floor.28 But the Brisbane Courier's report of the meeting was less satisfactory ; and an editorial com­mented : "Until Mr. Jones . . . passes his knowledge to the public, the clouds of suspicion will hang over the Mungana leases".29 It was noticeable that the A.R.U. delegates were absent both from that meeting and from the council meeting of the Trades Hall, at which a motion was passed commending the �1ungana purchase as "a clean, businesslike and judicious transaction".30

Four days after Jones had answered questions on the Mungana purchase, the member for Nundah, William Kelso,3 1 a qualified ac­countant known as "sticky-beak" among his colleagues, made a thorough search of the companies register, which not only revealed fresh information on Mungana but also gave some substance to The Advocate's charge against McCormack. Kelso disclosed the fresh in­formation on Mungana in identical letters to the Telegraph and The Advocate32 The crux of his letter was the question : Was William Mc­Cormack, Premier of Queensland, the same William McCormack of Brisbane in whose name were listed 388 shares in the Mungana Mines Limited? He pointed out, too, that this company had breached the Companies Act by failing to lodge annual returns. Kelso intended to damage McCormack politically, but he had also chosen his media shrewdly because the Telegraph was hostile to any shade of Labour politics, and The Advocate had already displayed its willingness to attack McCormack.

It was true that McCormack appeared only as a minor shareholder

Failure of tire State Enterprise 25

with his 388 shares but it was politically damaging that his name was listed at all. Large parcels were held· by other shareholders : Fred. Reid (C hillagoe), 4,800 ; Patrick Mangan (C hillagoe) 1 ,250 ; Fred Maher (Einasleigh), 600 ; Augustus C annavan (Einasleigh), 600 and William Jackson (C hillagoe), 500.3 3 McCormack made no attempt to explain his interests, despite the importance of this disclosure. However, the Telegraph was not prepared to let the matter rest, and magnified the issue in a series of questions on Mungana. Why, it asked, had the leases been granted to Reid and then repurchased by the government, a transaction which gave McCormack dividends on his interests ?34 An editorial followed on 1 April 1 926, declaring in reference to M cCor­mack's silence, "The Socialist leader and all his tribe may take our as­surance that the public of Queensland is far from satisfied with his laconic 'What about it'."

The Telegraph's persistence was undoubtedly motivated by the fact that a general election was scheduled for May 1 926. Under slogan s : "Vote the Socialists Out ; Declare them Black !", the Telegraph highlighted the losses incurred by the Chillagoe operations, and the £40,000 paid for the now exhausted Mungana mines, as examples of the failure of Labour's state enterprise policy. But on 7 April, all reference to Mungana stopped. McCormack had served a writ for defamation, claiming £5 ,000 damages, on the Telegraph and two of its employees.35 (The defamatory article consisted of an allegation that McC ormack had complained bitterly after the Mirror had rejected a paid political advertisement relating to the state enterprise policy, whereupon the Telegraph had suggested that McCormack was " bully­ing" the press into printing socialist propaganda.)36 Thus, any com­ment linking McCormack and the state enterprises, particularly Chil­lagoe and Mungana, was liable to be held in contempt of court until the case had been heard. Presumably, the action was brought about to achieve this result, for the so-called defamatory article appeared harmless and after the general election the action was discontinued. The tactic was characteristic of McCormack who had long been a tough, shrewd campaigner and, when general secretary of the Amalg am ated Workers ' Association, had demonstrated hi s resourcefulness in the sugar strike of 1 9 1 1 , and later in the anti­conscription campaigns. What appeared likely to develop into a mud­flinging campaign about Chill agoe-Mungana eventuated as a mild denunciation by Moore (then Opposition leader) of the sustained los­ses of the state undertakings.37 With comment on Mungana muzzled, the government won the elections comfortably, retaining its majority of fourteen. The Opposition took not one seat from Labour, although its vote was significantly greater.

The Mungana issue clearly would be raised again, but probably as

26 The Mungana A/fair

an illustration of economic mismanagement and the failure of state enterprises in general. The Opposition could not even have possibly imagined that it had disturbed a time bomb that would devastate a future federal Labour government.

The first spark of a series that rekindled Mungana to flare into a major political issue occurred in late July 1 926 when it was made known that the Lady Jane and Girofla mines had been abandoned after failure to discover new, payable ore reserves.38 This disclosure was followed immediately by the auditor-general's annual report for 1 925 -26, which revealed that when proper accounting procedures were applied not only were the operating losses for the year greater than previously thought, but so also were the accumulated losses from past years. The auditor-general stated that the balance sheets original­ly submitted by Goddard showed an operating loss for 1 925 -26 of just under £ 67,000; but after careful questioning, Goddard had acknowledged that the realizable value of crude ores and by-products in stock had been overstated by nearly £89,000. When the necessary corrections had been made, the loss for the year totalled almost £ 1 5 6,000, the largest yet recorded. 39 This loss, together with that for the previous year-amounting to nearly £ 1 86,000, could not possibly be recovered in future operations, and would have to be written ofT like the losses accumulated to 30 June 1 924. Nor was this all. Had interest been charged on the written down debt for those two financial years from June 1 924 to June 1 926, a sum of almost £88,000 would have been added to the loss. The interest due to or foregone by the treasury on account of the Chillagoe undertaking totalled some half a million pounds. The whole sum due to the treasury was £96 1 ,73 1 , even after writing ofT nearly £282,000 for all operating losses to 30 June 1 924.40

The reasons Goddard gave for the loss in 1 925 -26, which were in­cluded in the auditor-general's report, furnished more evidence for the critics of the Chillagoe undertaking, because they represented a series of errors and miscalculations on the part of the general manager. First, "doubtful assets" comprising ore worth £26,000 in the Lady Jane mine and "flue dust and other by products" at the smelters had to be written ofT as incapable of yielding any profit; second, the smelters had incurred losses of over £25 ,000 through the purchase of low-grade Cloncurry ores ; third, the stockpile of Mungana ores had been over­valued and was written down ; and finally, the low smelting charges on ores shipped to the smelters by outside suppliers had caused the works to run at a loss. In addition to the losses sustained by the Chillagoe smelters, the capital expended the Mungana mines would have to be written off, as known ore bodies had been exhausted. Other state operated mines in the region, with the exception of Redcap, had all shut down as a result of continued operating losses sustained bv the

Failure of the State Enterprise 27

high cost of mining low-grade ore bodies. In view of this, and as no depreciation had been charged, it was inevitable that capital assets would be revalued and the value of machinery and plant written down.41

After this disclosure of the vast financial loss at Chillagoe­M ungana, the auditor-general's censure of a transaction in May 1 926 seemed petty ; although "quite irregular", it seemed only a technicality that had cost the state nothing. But in fact it portrayed the very ele­ments of intrigue and irregularity in business transactions that later became known as the Mungana Affair. An agreement between the general manager and the Tarzali sawmill, operated by Fred Reid and Dunlop, the mining warden, to 4)Upply sawn timber to Mount Mul­ligan,42 provoked severe criticism from the auditor-general. The value of the timber had been credited to Reid's account with the state smelters, while Mount Mulligan, on receiving the timber, had credited its value against charges for coal supplied to the smelters. As the auditor-general pointed out, "the State smelters paid an account of £2,500 owing to itself, and allowed the debtor to adjust the account by supplying timber for use at another State undertaking."43

The report constituted the most serious indictment to date of the failure of operations at Chillagoe and Mungana. At the same time the report exposed the vast amounts of capital that had been unprofitably sunk into the venture and would, under the prevailing conditions, have to be written off. It was only a matter of time before the auditor­general's disclosures would be used against the government by the Op­position. In the debate on appropriations to the state enterprises, on 22 October 1926, the leader of the Opposition voiced concern about the position at Chillagoe. He stated, on reading the auditor-general's report, that "faked" balance sheets had apparently been lodged in the past, and commented, "If a balance sheet is put before us in which we are given merely the gross value of the ore in a heap, not taking into account the realization cost, surely that balance sheet is not worth the paper it is written on ."44 Moore demanded that the true position of the enterprise should be made known to parliament, in particular because the Mungana mines had been shown as an asset valued at £207,000 in 1 925 , but had since been abandoned by the minister as valueless.

McCormack immediately rose to defend the government's purpose in undertaking such a venture at Chillagoe. For the Labour party, the expenditure was incurred not only to stabilize the mining community, but also to spur further development throughout north Queensland. But he acknowledged that operations at Chillagoe would have to be drastically curtailed and continued solely to provide smelting facilities for private miners in the region. Even on this reduced scale of opera­tions, McCormack did not venture to predict profitability.45 It was not

28 The Mungana A/fair

to be expected that so general a statement would satisfy the Opposi­tion after the revelations in the auditor-general's report. As an­ticipated, the attack on the Chillagoe enterprise was renewed in early November 1 926. The Opposition concentrated not upon the financial losses incurred, of which there was no doubt, but upon allegations of fraud in the supply of ore, about which, they had limited evidence to advance. In a loosely worded speech that lessened the effectiveness of his attack, Moore revealed what he considered to be the "grave ir­regularities" that had occurred at Chillagoe. The principal charge was that the state smelters had been extending "differential treatment" to Frederick Reid by allowing him preference on payments for ores he supplied . Moore claimed that Reid had been supplying low-grade ores from mullock heaps, and blended ores, for which he was paid high prices without any deductions on the metal content.46 He also alleged that such malpractices had contributed to the losses at Chillagoe.

Moore went on to level the charge of collusion between Reid and public officials. He cited the Tarzali sa\¥mill contract which included Reid and Dunlop ; and the participation of Goddard and Reid in the Fluorspar and Argentum mines, even though the lists of shareholders in the companies operating these mines had not been ftled in the Supreme Court. The third issue raised by Moore was the granting of the Mungana leases to Reid, particularly because it had been emphasized that Mungana was essential to operations at Chillagoe. Moore criticized the government in that "if they took over the smelters, they could not profitably work them if they allowed the leases to be taken up." Quite aware of this fact, the government had given away "valuable leases that provided 65 per cent of the ore sup-

� pli�s" for the smelters.47 Moore implied that McCormack was part of the intrigue that had been rumoured at Chillagoe, and that he was con­nected with Reid in Mungana Mines Limited, by his interest of 388 shares. Finally, Moore attacked the mismanagement of the smelters, substantiating his allegations with a letter from the Queensland Prospectors and Ore Producers' Association at Chillagoe, which demanded an inquiry "to ascertain how the great financial loss comes about, and to locate where apparent gross mismanagement takes place, and that for the purposes of making such an inquiry the Government be requested at once to appoint a Royal Commission."48

Moore repeated that over a period of six years the treasury had lost nearly one million pounds at Chillagoe, and that rumour had it that all was not right at the smelters. He stated that given these allegations of mismanagement on Goddard's part, in addition to the "faked" balance sheets and the preferences given to Reid, a royal commission was well warranted to investigate the situation at Chillagoe.

We have got the position that the General Manager of the State

Failure of the State Enterprise 29

smelters has been purchasing ore at a price which is altogether out­rageous, and we also know that Reid has been receiving differential treatment. We have got a connection between Mr. Reid and the Government, because Mr. McCormack, the Premier of Queensland, was a shareholder in the mines in which Mr. Reid was interested. Should these things be allowed to go on in the way they are going . . . [We] want an efficient Royal Commission to go into the whole ques­tion.49

In reply, the secretary for mines, amid persistent interjection, defended the Chillagoe undertaking in terms that were almost as damaging to the government's policy as any attack yet made, for he spoke of it as "working with obsolete plant and adopting obsolete methods". He acknowledged that the government had lost a substantial sum of money in the venture, attributable to excessive overheads including salaries, interest and depreciation ; lack of high-grade ore deposits ; the high cost of developing and extracting ores from the known mines ; and low metal prices. However, much of his speech was aimed at ridiculing Moore and the Queensland Prospectors and Ore Producers' Association, "who neither prospect nor produce ore", without touching on any specific charges levelled by the leader of the Opposi­tion. His statement that it was "not possible for Mr. Goddard or any other smelter manager to make Chillagoe pay with intermittent smelting" was irrevelant to the losses at Chillagoe and the specific charges of mismanagement made against Goddard. Similarly, Jones defended Reid as "honest in every respect . . . a good citizen of the North and a good producer of ore", stating that the allegations of preference and collusion were "impossible'' and "quite untrue".50

Turning to Mungana, Jones recounted the Chillagoe railway purchase, and the acquisition of the leases by Reid, reasserting that the favourable reports of Saint-Smith and Poole justified the purchase of the Mungana leases. He went so far as to state that the ore won from the Mungana mines had fully repaid the purchase price, and that the losses incurred at Mungana stemmed from the cost of developing the ore bodies and mining the ore. Amid interjections, calling for the names of those who had shared in the Mungana purchase money, Jones abruptly stated "I do not know the shareholders of Mungana and I do not care."5 1 Jones' defence of the Tarzali sawmill contract was equally unsatisfactory. He argued that although the contracted amount had been credited to Reid's account with the smelters, and the order only partly fulfilled to date, it was a legitimate transaction-if somewhat irregular for accounting purposes-because the timber was required urgently at Mount Mulligan. He concluded by rebuking Moore for his "groundless" charges and "scurrilous attack on a big enterprise because it is harder to control a speculative enterprise than other enterprises", and reatrrrmed his faith in both Reid and Goddard

30 The Mungana Affair

" against whom hon. members opposite have thrown mud".52

The Opposition attack was taken up by frontbenchers, including Taylor, Sizer, Barnes and A.C . Elphinstone.53 The Opposition as a whole persistently pressed at least five separate issues. The soundness of the decision to acquire C hillagoe after the failure of the C hillagoe Company, at a time when high wartime metal prices falsely emphasized the possibilities of profitability, was re-examined and severely criticized . Further, members questioned the competence with which the venture had been conducted in the face of accumulated los­ses close to one million pounds. This fact alone had rais�d many doubts as to the honesty of the man agement of the smelters, especially after there h ad been definite charges in parliament of preference and collusion between Reid and Goddard. A more disturbing allegation against the government pressed by Sizer and others was that relating to the propriety of at least one cabinet minister and two public ser­vants being privately involved, even honestly, in transactions at Chil­lagoe. McC ormack's interest was kept in the forefront in the latter part of the debate, along with Dunlop's interest in Tarzali, and the rumour that Goddard held shares in Fluorspar and Argentum in breach of the Act governing his appointment. The Opposition did not claim that any misconduct had been proved, but they insisted that clear evidence of mi smanagement, together with uncertainty about many of the facts, fully warranted a royal commission to investigate Moore's charges.54

John O'Keefe,55 the newly elected member for C hillagoe, who had replaced Theodore in September 1 925 , tried to stem criticism of the C hillagoe enterprise, but only succeeded in stimulating Opposition in­terjection and confidence by inexpertly offering praise of the govern­ment's state enterprise policies in mining. He claimed that the auditor­general was wrong in his valuations of flue dust, slag, and blended ores ; and that the Opposition had produced a false document in the letter from the Queensland Prospectors and Ore Producers' Associa­tion. " If there had been anything wrong, one would have thought the Secretary would have sent the complaint to me . . . I believe it is a forged document."56 In O'Keefe's opinion, Reid was a man of "integrity and honesty", who had made a significant contribution to ore supplies for the smelters ; moreover preference was given only by way of tariff concession on the bulk of ore that he had supplied. O'Keefe was confident that there was ' 'no dishonesty" at C hillagoe, and even · the Reid-Tarzali contract was nothing more than "reciprocity of business".

The debate was going very badly for the government, when McCor­mack, who had been absent during much of the debate, rose to address the House. Labour members had been unab

.le to satisfactorily counter

allegations about the C hillagoe enterprise, hence a great deal depended

Failure of the State Enterprise 3 1

on the premier, master of debate when in full flight, to stem the Op­position attacks in this particularly rowdy encounter. Predictably, Mc­Cormack accused the Opposition of conducting "a campaign of slander and innuendo" against him, and of being "more concerned with the political capital that is to be made from the matter than with investigating the case."57 McCormack stated that members should "examine the credentials of these men who are charging Mr. Goddard with not knowing his business before we condemn him" and that God­dard would "stake his reputation that no one can prove there is anything dishonest". But he announced that there would be a departmental inquiry under the auditor-general's authority. There would not, however, be a royal commission, for "a Royal Commission does not investigate anything, and never did. Royal Commissions, as a rule are only whitewashing bodies." The premier then assured parlia­ment, "if there is anything in the charges then the men responsible will get short shrift from the Government."58

McCormack for the first time acknowledged publicly that he was a. shareholder in Mungana Mines Limited, and had held an interest in Reid's venture from the time that he was speaker of the Legislative As­sembly. He stoutly denied that there was anything improper or con­cealed in his action.

I had this interest. I never sold it when the company was formed, but took my percentage of shares in the company. I never made any at­tempt to conceal the fact because I did not think there was anything wrong in holding that interest . . . [It] was a legitimate speculation on my part. When it was proposed to purchase the mine, I took the first opportunity of informing every member in the Cabinet that I was in­terested in it . . . I can at least stand before my fellow men and say that there is nothing dishonest or unfair in the whole transactions as far as I am concerned. I know of no member of the Opposition who would ac­cuse me of being in it wrongly or of using my influence for that pur­pose if they knew the facts about the case . . . When I was Speaker I registered my interest in the syndicate in the Warden's Court in Chil­lagoe, and, when it became a company my holding was registered in the Supreme Court . . . No Royal Commission could find out any more than I have already stated tonight. 59

McCormack's speech exhausted the debate, yet his explanation of his interests did not remove the doubts of impropriety. Registering his in­terest in the Warden's Court and the Supreme Court was merely com­plying with the law. Only in the most technical sense could it be called making his interest public, and it had no bearing on the question whether he should be involved in a company that had dealings with the government. What is more, McCormack's admission that he had been in partnership with Reid from the very beginning, and had later revealed this interest to cabinet, merely added to the question of

3 2 The Mungana A/fair

propriety for he had undoubtedly benefited fmancially from the government purchase. As for the disclosure to cabinet of his interest, none of the four remaining cabinet ministers of the day had ever verified this in past debate, not even Jones.60

Moore had effectively revitalized discussions on Chillagoe­Mungana, at the same time causing the government and its leadership considerable discomfort on this then delicate issue. Nevertheless, there seemed to be no more than rumour and surmise to go on at this stage, although as Sizer later stated, there were ample grounds for pursuing the subject because "the reaction of certain Cabinet Ministers in­dicated that there was more in the question t�an what met the eye .. �6 1

The mass-circulation newspapers responded with mixed comment. The anti-government Brisbane Courier supported Moore's call for ·a royal commission, assuring its readers "that Mr. Moore is not pur­suing anybody with vindictive or political motive."62 On the other hand, the Daily Standard maintained its pro-Labour front, withheld editorial comment, . and merely highlighted the speeches of McCormack and Jones in its report on the debate ;63 while the Daily Mail, not usually known for strong political bias, readily believed that a royal commis­sion was warranted if only "to afford to all private individuals whose names have been mentioned in Parliament, the satisfaction of a public and judicial enquiry".64 Cabinet was under considerable pressure from public opinion when it decided to go ahead with McCormack's recom­mendation to authorize the new auditor-general, G.L. Beal,6� to "investigate the charges made in the House against mismanagement . . . based mainly upon alleged preference to Mr. F. Reid in respect to payment for ores . . . . '' Beal was a former treasury official who had been appointed in September 1 926. He made a detailed examination of the accounts, purchase notes and assay records at Chillagoe, with the assistance of an independent metallurgist, and submitted his findings to parliament in a special report dated 24 August 1 927.66

The auditor-general's report showed that Reid had not only received favourable treatment in both tariff concessions and delivery preference, but had also "benefited to the amount of £8 ,775" made up of discrepancies in payments for ores, all of which substantiated the charges of mismanagement made in parliament. Most of Reid's ores had been purchased under a 60-40 tariff agreement, which, as Beal ex­plained, was the payment "to the seller of 60 per cent of the wet assay value of lead in the ore supplied, plus 95 per cent less 1 oz of the value of the silver''. This tariff "[which] works out very favourable terms to the seller of low grade ores, but has been costly to the Chillagoe smelters", had been cancelled on 30 September 1 926, and on that final day, Reid had contracted to supply over 2,500 tons of ore valued at £6,700. Yet at 30 June 1 927, nearly 1 ,000 tons were still oustanding,

Failure of the State Enterprise 3 3

despite the closure of the smelters, and were in fact never delivered. Reid's profit on this transaction was substantial. Even more damaging evidence was shown in the irregularity of the non-deduction of the I oz silver from metal payments, a departure not extended to other sup­pliers and one that had resulted in additional payments of near £440 in the six months to 30 June 1 926.

It was clear that Reid's relationship with Goddard had led to open abuse of the normal procedures adopted in smelting. Beal further showed that roasting charges, which involved a penalty of fifteen shill­ings per ton of ores assaying 4 per cent and over of sulphur, were not levied on Reid during the 1 926 smelting campaign. Three other sup­pliers benefited from this departure in policy, by £ 1 56 in all ; but Reid's additional payments amounted to £2,900. Another area in which Reid had advantages was the bonus system of payment to sup­pliers designed to encourage ore production. Reid collected nearly £ 1 ,400 in bonuses, while the only two other suppliers who qualified grossed a combined payment of £ 1 38. Beal was very critical of the bonus system for although "the tonnage bonus was open to all sup­pliers the management must have realized that the bulk of the payment would go to F. Reid".

Beal reported that Reid had also received delivery preference on his ores, particularly with slag fluxes which the management considered were needed at Chillagoe, although the smelters had supplies stockpiled at various sidings. This charge was even more serious when it was shown that Reid was receiving payment on the full metal con­tents of the slag, instead of payment at the gazetted tariff rate, resulting in additional payments of over £ 1 ,300. Furthermore, Reid's ores had been purchased at the rail sidings at the ruling price for the month, "instead of the price quoted for the month of delivery to the smelters", from which he received additional payments of some £2,700, through falling metal prices, between July 1 925 and February 1 927.

The report also revealed that Reid had received cash advances, in breach of the Act, at times even before the ores had been delivered. Beal pointed out one example wherein Reid was credited in June 1 926 with £7, 1 73 for ores, to liquidate his overdraft and obviate his name appearing as a sundry debtor at the end of the fmancial year. The ores were not delivered to the smelters, however, until October, four months into the new financial year. Nor was this all. In 1 925 the smelters purchased a motor lorry for £ 1 ,3 1 5, which Reid immediately acquired ; and his account with the smelters was debited the cost Reid returned the vehicle in February 1 926, and the full purchase price was credited his account The vehicle was then leased by Reid on a tonnage rate which returned £ 1 26. 10.0 in all to February 1 927, when the

34 The Mungana A/fair

smelters repossessed the vehicle. It was then valued at £400, after £ 268 had been spent on repairs, involving a loss of some £ 1 ,000 to be written ofT. The total cost to the treasury of the Chillagoe undertaking was now confirmed by the report to be £ 1 , 1 64,822. Beal attributed a considerable part of the losses sustained to, on the one hand, over­valuation of crude ores, fluxes and by-products, and on the other to the false indication in the past of the financial position because of the accounting methods adopted, which had made possible an inflation of the current stocks.

Beal recommended a heavy writing down of fixed assets, incll!ding the Mungana mines with a "total capital value of £222,646 in the books which is undoubtedly excessive". Two other state mines, the Einasleigh and Consol, valued at £65,000, would also have to be writ­ten ofT entirely. Despite the obvious mismanagement that was God­dard's sole responsibility, Beal did not comment upon the quality of Goddard's management, thinking possibly that the facts spoke for themselves. He did conclude his report by stating that Goddard had resigned in February 1 927. There was no reference to collusion between Goddard and Reid, and none to the allegations of collusion between Reid and Dunlop, nor to McCormack's involvement in M ungana, which had not been clearly included in the terms of reference for the inquiry.

If, as might be suggested, McCormack had hoped by setting up a purely departmental inquiry to minimize criticism of the Chillagoe un­dertaking and ultimately of the state enterprise policies, he mis­calculated badly. The special report provided the Opposition with more evidence to support their demands for a royal commission to publicly investigate the Chillagoe enterprise. Rumours of improper financial transactions were stepped up, particularly where McCor­mack was concerned. The Labour government's handling of the Chil­lagoe enterprise was questioned, and its credibility, in particular that of Jones and O'Keefe who had vigorously defended Goddard, Reid and the enterprise itself, appeared in an unsatisfactory light. The Opposi­tion were presented with a strong issue for the May 1 929 elections and in the short term, one with which to harass the government.

Assay Office, Chillagoe Smelters

View of Chillagoe Works

The Main Office, Chillagoe Smelters

t 1 i

t 4

\t "-t •

\ ~

The Ore Bins, Chilla~oe Smelters

Lead Furnaces, Chillagoe Smelters

To~nship of M

Mammoth Company's Traction Engines at Mungana

Paddock of Roasted Ore at Mungana

C H APT E R 3

Allegations of Political Corrupt ion

Arthur Moore understandably treated the auditor-general's report as a vindication of his own stand. He immediately renewed his call for a royal commission. Speaking on 20 October 1 927, in the debate on Estimates-in-Chief for 1 927- 28, Moore attacked the government for allowing such a state of affairs to continue at Chillagoe and expressed determination to pursue the matter, not only to ascertain who was responsible but also to clear up the entire business. In a lengthy ad­dress he persisted with the charges of faked balance sheets and "a system of chicanery and swindling which has been going on at the Chillagoe works for years". The government, he argued, had responded to "whisperings, innuendos and definite statements" with a policy of "hush" and "cover-up". Beat's report was labelled a whitewash, notwithstanding its revelations, and the government by merely accepting Goddard's resignation as general manager was said to be guilty of "acquiesence" and of protecting individuals from legal prosecution. "I say that a man who deliberately uses a false balance sheet-and the Auditor-General says it is false, is liable."1

Charles Taylor was one of the several Opposition speakers who en­dorsed Moore's demands. The member for Windsor alleged con­spiracy and collusion between Reid and Goddard in order to profit from the undertaking. He described them as "two very clever men . . . a jolly sight too clever for the Minister and his department, otherwise the State would not have suffered to the extent it has in regard to Chil­lagoe."2 The Opposition was keen to inculpate McCormack and to embarrass the government still more. Sizer implied that the premier's association with Reid was questionable, particularly because suspi­cions of intrigue at Chillagoe were rife. "The whole history of the operations at Chillagoe is from beginning to end rampant with dis­honesty, fraud and swindling." Sizer claimed, "Now that he has become Premier of the State it is for the honour of the State and for his own honour that the whole matter should be cleared up in the interests of the good name of this Parliament. "3 Opposition speakers dominated the debate, apart from a very brief speech by O'Keefe, the member for Chillagoe. He insisted that Beal had misrepresented the situation in his

40 The Mungana AJ!air

report, in particular because "a large ore body of great value" remained in the Girofla. After many Opposition speakers had ad­dressed the House, each in turn echoing Moore's call for a royal com­mission, McCormack's deputy, Forgan Smith-a wily Scot, repeated the government's attitude to Chillagoe-Mungana, maintaining that Moore's charges had been investigated and the facts revealed. Follow­ing Beal's report, what had been merely rumour and innuendo were replaced by definite charges, and a further inquiry was, then, no longer warranted. Forgan-Smith concluded that although the state had lost large sums at Chillagoe through unsatisfactory management methods and control, the government's hands were tied because Goddard had been given "authority by Parliament, placing it outside the scope of political control".4 Elphinstone, the Nationalist member for Oxley, im­mediately labelled Forgan-Smith's speech "a policy of bluff to a very serious charge"; whereupon the Opposition continued to dominate the debate until the House adjourned.

Five days later, on resumption of the debate, McCormack, who alone had the answers to the Opposition allegations, addressed the parliament. He conceded that the charges of mismanagement and preferential treatment for which Goddard must accept responsibility, had been substantiated. McCormack argued, however, that there was no evidence of criminal intent in Goddard's behaviour. Mismanage­ment had occurred only in so far as "we were not kept properly in­formed with regard to the position of the proposition, and consequent­ly we continued long after it should have been stopped and closed down." Furthermore, Goddard had justified preferential treatment as ''it was impossible to keep the smelting proposition going unless he secured ore" ; yet, McCormack stated, he believed there was no collu­sion in the enterprise between Reid and Goddard. 5 McCormack briefly defended his connection with Mungana Mines Limited, insisting that there had been no conflict of interest. "I was Speaker at the time, and quite outside of politics." Viewing the Opposition's tactics as an at­tempt "to caste some slur on me", he implied that his connection with Reid had been severed. "If it is suggested that because at one period I was associated with Reid as a shareholder in the Mungana Company, I must forever and ever carry the stigma of anything Mr. Reid or someone else does during their lifetime then I am in a very unhappy position."6 Rumours circulating in North Queensland, McCormack said, were part of a policy to defame the government and induce "fears of charges of corruption . . . If I get an opportunity, I will institute an action for criminal libel against these people who are defaming me."7 He drew attention to an address made in Cairns by a man named Jackson who had stated that the evidence of John Stones (a night watchman who had been sacked by Goddard after breaking into his

Allegations of Political Corruption 4 1

office) was sufficient to show that both McCormack and his close friend, former premier E.G. Theodore, were implicated in Mungana to an extent that would "give these political crooks ten years in gaol". McCormack declared, "Hon. Members are continually making political capital out of it," and he invited anyone "to say straight out that he can prove my association with Chillagoe or Mungana has been dishonest . . . [This] is only doing damage generally by making in­ferences, which are not true, against my personal reputation."8

McCormack's defence was shaky. His attempt to press the blame of mismanagement entirely on to Goddard, and the belief that his resignation and the closure of the smelters had concluded the whole business, were but poor efforts of bluff and evasion. As for his own in­terests, McCormack's statement that he was "Speaker" and "quite outside of politics" was unrealistic, for as a member of caucus he would have been well aware of the intention to purchase the assets of the Chillagoe Company ; and from experience he recognized the value of the Mungana mines to the smelters. Moreover, he clearly implied that he was no longer a shareholder or party to the transactions, which was later revealed to be untrue and a deliberate attempt to mislead parliament. It was quite inconsistent of McCormack to complain of slanderous attacks, and at the same time to refuse a royal commission which would, if he were right, prove any personal attacks to be groundless.

The deputy leader of the Opposition, R.M. King,9 immediately laid the specific charges invited by McCormack. He said that a royal com­mission was justified on the following grounds :

[i ] That the circumstances connected with the purchase by the Government of the Mungana Mines for £40,000 furnish grave reasons for suspicion that the present Premier (then Home Secretary) and perhaps other members of the Government (present and past) wrongfully used their public positions for the purpose of the acquire­ment of private gain . . .

[ii] The present Premier was a member of that syndicate and shared in the £40,000 paid for these mines . . .

[iii] It was only after the public exposure in March, 1 926, by a member of the Opposition of the fact that William McCormack was a shareholder with Frederick Reid that the Premier admitted his associa­tion with the Mungana transactions . . .

[iv] The Special report of the Auditor-General on the Chillagoe Enterprises, following the charges made by the Opposition last year, definitely discloses that the same Frederick Reid has obtained from the Chillagoe State smelters, large sums to which he was not entitled, and

42 The Mungana AJlair

in view of the Premier's association with him in the Mungana transac­tions, and the fact that all answers to questions by and statements of responsible members of the Government have in the past evidenced a strong desire to shield this individual-sound grounds exist for belief that one or more members of the Government are implicated in this misappropriation of public funds. 10

Despite King's charges, subsequent debate proved to be an anticlimax, for McCormack had walked out of the House immediately after con­cluding his speech. The mines minister (Jones) took up the govern­ment's case, but ignored the charges made. He tactfully subjected the House to a longwinded defence of his personal conduct and ad­ministration as secretary for mines, and, finally, to a shallow repetition of the government's stand on the auditor-general's report. From this point, Labour speakers dominated the floor until debating time had ex­pired, understandably intent on minimizing the damage done by the Opposition. It was all very unsatisfactory for King and his colleagues, because although the wording of King's charges conveyed that the Op­position were still not sure of their grounds, the government's intran­sigence on the issue frustrated efforts to gain further political mileage.

The impact of the auditor-general's report upon McCormack's ad­ministration had been pa:rtly cushioned by the fact that it coincided with an acute crisis within the Labour movement in September 1 927. In order to support employees of the South Johnstone sugar mill in a strike already three months old, over the principle of job preference for union members, railway workers had resolved not to handle "black" sugar. McCormack had found himself for a brief interlude at the head of an alliance comprising the cabinet, the Opposition, the press and most of the general public, in defence of "law and order", against the militant unions of Trades Hall with their assertions of union principles. Under normal circumstances the anti-Labour press would have given considerable attention to the auditor-general's report published a few days beforehand, but at this time the press was supporting McCor­mack's policies in the labour dispute. Inevitably, this alliance survived only until after the strike collapsed in late September, after McCor­mack had "locked out" 1 8,000 railway employees, but the auditor­general's report had by then faded from immediate public interest. The hostility of the unions was entrenched, added as it was to old scores dating back to Theodore's lowering of the basic wage in 1 922 and to his subsequent purging of the Trades Hall militants. Consequently, outside parliament, those who struck back at McCormack were not the normal opponents of his ministry but his opponents within the Trades Hall group under George Rymer. They re-publicized the Mungana issue after the Labour · party had frustrated Opposition at­tempts to uncover the real extent of the premier's involvement. In the

Allegations of Political Corruption 43

November issue of The Advocate, Rymer devoted considerable space to the Opposition charges made in parliament. King's speech was af­forded the whole front page under a large banner : "More About Mungana : Defmite Charges Made in Parliament". Rymer referred readers to the stand taken in raising the question of the Mungana leases in 1 926, and pointed to Jones' "professed ignorance of the names associated with Frederick Reid" in his address to delegates of the Trades Hall in March that year. He stated that the A.R.U. en­dorsed King's charges for " [the] Government has repeatedly replied to the frequent discussions re Mungana with a request that definite charges should be made." Finally, notice was given that the militant unions intended to raise the matter at the coming Labour-in-Politics Convention.1 1 Hence, with the left wing of the Labour party making the running on Mungana, the official Opposition could afford to bide its time.

The convention was held in Townsville in May 1 928. Of the eighty­three delegates present, union representation was only twenty-five, giv­ing the branch delegates a large majority, twenty of whom were members of the parliamentary party. It was very much a pro-Labour­government composition, with only a handful of critics representing the militant unions. The president of the Queensland Central Ex­ecutive, William Demaine,l2 aware of the intense hostility of this minority, called for unity and continued allegiance to the McCormack administration. Significantly, his speech in part revealed his desire to play down the Mungana issue. He claimed, "there is no room for dis­ruptors no matter what their designation". In an obvious reference to McCormack, who was not only popular but much respected within the Labour machine, Demaine asserted that Labour politicians were "presumably . . . straight and honest", and, until proven guilty of an of­fence, "should be protected from those who are always out to harry and vilify better men than themselves".13

Despite Demaine's appeal, the militant Postal Workers' delegate, Eastaughe, immediately on completion of formal business moved to have the Mungana issue discussed, by calling for "a full inquiry into the Mungana and Chillagoe leases . . . by a Committee appointed from this Convention".14 Eastaughe skilfully turned Demaine's call for unity against McCormack, arguing that unity was threatened by the failure to clear up the Mungana issue through an effective investigation. He insisted that the controversy had reflected seriously on the Labour movement, and stated that not only had McCormack erred in Parlia­ment in refusing further "inquiry, but also had failed to "give good and sufficient reasons in replying to the charges" to reassure the rank and ftle that the accusations were groundless. "If an impartial investigation exonerated Mr. McCormack and everyone associated with the trans-

44 The Mungana Affair

action, it would be a good thing not only for him but for everyone as­sociated with the Movement."15 H .C. Jones of the Waterside Workers' Federation seconded the motion, but immediately an amendment was proposed by Raper, the Sandgate electorate delegate, to insert "Royal Commission" in place of "Committee appointed by this Convention", on the ground that it "would have been wiser to have acceded to the request for a Royal Commission . . . the only effective method of clear­ing the name of the Party". 16 No sooner had the amendment been seconded by the Amalgamated Engineering Union delegate, Watson, than McCormack rose to address the convention.

The premier responded with a spirited defence of his interests in Mungana, and the subsequent government decision to purchase the leases . He explained "that he was a registered shareholder of the Mungana mines . . . [with] 333 shares",17 yet stated that critics "were more concerned in an attempt to damage his reputation than to recognize that he bought and sold shares privately as a speculation". He re-emphasized the innocence of his association with the company.

The leases were thrown up again and after that the syndicate of which he was a member took them up and worked them. The syndicate com­prised of 40 or 50 people who put in a certain sum of money and worked them prior to any thought of the purchase of Chillagoe . . . Was there anything to prohibit him or anybody else from becoming as­sociated with a group of other people long before the Government ever thought of taking over Chillagoe . . . ? 18

McCormack argued in addition that his interests had not in any way conflicted with his duty as premier, citing actions such as the closing down of the smelters ; the indirect demands for Goddard's resignation ; and the authorization of the auditor-general's inquiry; as indications that he had acted responsibly and honestly. He concluded with a reasoned plea for moral support on the issue, extolling his virtues as a staunch Labourite. "Whatever the charges made against anyone else connected with the Chillagoe smelters" he felt "quite safe about his as­sociation with either the Chillagoe Smelters or the Mungana Mines." In the last election, despite the innuendoes over his connection with M ungana, the Queensland electorate had returned his government with a sound majority. He deplored the constant criticism of Labour leaders by factions within the party, and invited the convention to move a resolution to dismiss him, reminding delegates that they "only had to carry it, but if they did so he would still be a better Labourite and a better disciplinarian than many of the delegates present" .19 The only other speaker was the parliamentary deputy leader, Forgan Smith, who faithfully endorsed "the truth of every word he [McCor­mack] had uttered". A motion of "complete confidence in him and his Cabinet" was carried unanimously, amid loud cheers and a vociferous

Allegations of Political Corruption 45

singing of "For He's A Jolly Good Fellow".20 The vote was mis­leading, however, as an indication of the Labour movement as a whole. Rymer and the A.R.U. delegates had been excluded from the convention, and it was soon apparent that their opposition to McCor­mack remained unchanged. As Rymer wrote in a later edition of The Advocate, "McCormack has 'dodged' the issue of the Mungana purchase, though it stinks in the nostrils of the Labour Movement."21

Indeed, there were many questions of central importance that beg­ged further explanation, especially because several of McCormack's statements were contradictory. McCormack's claim that he had ac­quired his shares "prior to any thought of the purchase of Chillagoe" was just not true. A state enterprise in the north, based on mining, was a part of Ryan's election pledges in 1 9 1 5 and, furthermore, the bill to acquire the assets of the Chillagoe Company was before the House in December 19 16 , nine months before Reid's application for the leases. To suggest that he was not aware that he was investing in a syndicate that would supply the state smelters was unrealistic. McCormack still offered no explanation as to why the government allowed Reid to take up the leases, knowing that Chillagoe was dependent on Mungana ore. At the very time that Reid's application was approved, the bill was still before the select committee which had not yet inserted the restriction on government mining operations. Again, it was known that Reid had received payment from the smelters for ore he had supplied from aban­doned surface dumps. It seemed impossible to justify these payments which he had done nothing to earn, and part of which had gone to Mc­Cormack. The government had then obtained ores on tribute, only to find that it would be committed to a huge capital outlay to maintain ore supplies. Finally, at no stage did McCormack advance any reason why it should not be considered improper for him to share in the pay­ments made to Mungana Mines Limited. Hence, it was obvious that he had left himself, and the government's policy on the Chillagoe enterprise, open to Opposition criticism in the face of a general elec­tion.

On 1 7 M ay 1 9 29 , the M cC ormack Government wasoverwhelmingly defeated, polling only 40. 1 6 per cent of the vote-thelowest recorded by the Labour party since 1 909. No fewer than six-teen seats were lost, including those held by the speaker and threeministers. Only the debacle of 1 9 1 5, when the A.L.P. routed the Denham Liberal government, has paralleled this defeat of a Queensland government.22 There were several explanations for Labour's defeat, the most significant of which was the economic situa-tion, reflected by the increasing numbers of unemployed and apparent government stringencies. Added to these factors were the bitterness of the industrial unions and their hostility towards the McCormack ad-

46 The Mungana A/fair

ministration, longstanding since the 1 927 railway lockout, that deprived Labour of a traditional area of support. Nevertheless, the unity and vitality of the Opposition forces was evident in a well­organized campaign which exposed many of the government's weaknesses. Moore had pledged assistance to the economically depressed areas and the winding up of the state enterprises, and at the same time employed slogans like "Change the Government", "Give the Boy a Chance", and "£2,000,000 for 10,000 jobs".

Labour had expected to lose seats but not office. The Chillagoe­Mungana issue was prominent throughout the campaign. Moore refer­red continually to the losses sustained at Chillagoe, and attacked cabinet for condoning mismanagement and then whitewashing the business by closing down the smelters.23 He promised to dispense with state enterprise and in particular to re-open the Chillagoe smelters as a co-operative for local miners, after having first of all appointed a royal commission to inquire into Chillagoe-Mungana. There was little direct comment on McCormack's personal participation in the Mungana transactions, as he had made known on earlier occasions his wil­lingness to take legal action for defamation. However, there were ever­present the spectre of suspicion abo.ut malpractices and doubts about McCormack's credibility, as witnessed by an exchange in Townsville. McCormack was speaking about his initiative in promoting the Mount Isa expansion, when a voice interjected, "How many shares have you got in the Mount Isa Company?" McCormack replied, "None!"24

In the week following the elections, there was a great deal of speculation about the composition of Moore's cabinet, in particular of the portfolios of attorney-general and minister for mines, because the initiative for a royal commission on Chillagoe-Mungana would have to come from these appointees. The Brisbane Courier predicted that either King, the new deputy premier, or N.F. Macgroarty would be attorney-general, and either the experienced Godfrey Morgan25 or Ernest Atherton26 would be given the mines department. Moor�'s cabinet was announced on 2 1 May 1929, and surprisingly included not only Atherton but also Macgroarty, both of whom were politically inexperienced, having been elected to parliament in the previous week. Atherton was a member of the well-known grazing family which had pioneered the Chillagoe area, and he was the only cabinet member representing the northern interests of the state.27 Macgroarty was a Brisbane lawyer, chosen to contest the South Brisbane seat because of his affiliation with the Irish Association. It was anticipated that he would probably capitalize on the large catholic vote in the electorate. In the same week, the A.L.P. experienced a change of leadership. Mc­Cormack although handsomely returned in Cairns, resigned the leadership of the party on the grounds of ill health, though the bit-

Allegations of Political Corruption 4 7

terness of defeat was probably a great influence. He was succeeded by Forgan Smith, the member for Mackay.

Moore had repeatedly committed himself to holding a royal com­mission on Chillagoe-Mungana if he became premier, but the first five months of his ministry passed without any step being taken to redeem this pledge. Nor was there any move to prosecute Goddard for derelic­tion of duty under the provisions of the Act, although Moore had time and again argued that Goddard was criminally liable for presenting faked balance sheets. Furthermore, it was known that Goddard had been associated with the Fluorspar and Argentum mining companies, contrary to the provisions of his appointment. 28 Sizer had recently stated that lack of evidence had prevented Moore from proceeding with a royal commission ;29 while, in the case of Goddard, it was desirable to have the entire Chillagoe-Mungana transactions disclosed in the first instance, because there was no statute of limitation im­peding the eventual prosecution of Goddard should the government desire to proceed.

This interlude ended abruptly with a dramatic succession of events in early October 1 929. The first brought strong suspicion of corrupt dealings in Mount Isa shares, not only upon McCormack but upon the ·

mighty Theodore, then deputy leader of the federal Labour party. The second provided evidence that McCormack had been more deeply in­volved in Mungana than he had made out. Both incidents showed that McCormack and Theodore, to a lesser extent, had lied publicly about their private interests, and furnished grounds for Moore to proceed with a royal commission.

During parliamentary debate on mining legislation, on 4 October, Nationalist members made allegations that certain former cabinet ministers had in years past trafficked in Mount Isa shares. The allega­tions were linked with McCormack's shareholdings in Mungana Mines Limited, as a political tactic to discredit the former leadership of the Labour party. Kelso, the backbencher who had initially uncovered McCormack's shareholding in Mungana Mines referred by name to McCormack, Theodore, and Jones, declaring "I say that Mungana is only a trifle compared to the concessions given by these men . . . who ought to have protected the public purse of Queensland."30 Another Nationalist member alleged that parcels of shares had been given to Labour cabinet ministers to influence passage of the Duchess to Mount lsa Railway Bill in 1 925, and he accused these men of "utiliz­ing public funds and prostituting the high offices which they held in this State".3 1 Randolph Bedford,32 the prime target of the allegations, as the promoter of one of the Mount Isa companies, successfully gained withdrawal of any suggestion that he had bribed cabinet ministers with parcels of shares as a consideration to promote the

48 The Mungana Affair

legislation. Bedford declared that the shares to Theodore, McCormack and Jones were merely gestures of friendship.

The value of the shares I gave away to friends in mere goodwill, would be today about £ 1 1 ,000; and I don't expect mean little suburban 'pikers' to understand either mateship, gratitude or generosity. A fur­tive man could have covered up these gifts, but I never had any reason for concealment, and all the facts and figures . . . were public property nearly five and a half years ago.33

The debate witnessed several heated exchanges between government and Opposition members. Labour representatives complained that the government was blackening the character of the former premiers, Theodore and McCormack, to create public enthusiasm for an inquiry into Chillagoe-Mungana. There is little doubt that such attacks were, in the short term, aimed at damaging Theodore's reputation on the eve of a federal election. Theodore was the trump in the federal Labour party's election campaign, for his oratorical ability and national prestige had been acclaimed throughout the country. The press subse­quently released a statement made by Theodore in which he denied any suggestion of improper conduct and claimed that the Nationalists were electioneering. "I have never held more than 500 5/- shares in the Mount I sa Proprietary Co. These suggestions of improper dealings are only raised by Conservative politicians, under a shelter of Parliamen­tary privilege, during an election campaign to endeavour to discredit Labour leaders."34

From the morning of 9 October 1 929, events moved in rapid suc­cession and confusion. No sooner had Theodore's statement been cir­culated, than Moore gave notice of intention to the Legislative As-·sembly of a royal commission to investigate both the Mount Isa andMungana allegations. This shock decision had been taken followingevidence at a court hearing at which Fred Reid, the former lessee ofthe Mungana mines, had applied for a bankruptcy declaration from anhotel business in Cairns, owned in partnership with Goddard theformer manager of the Chillagoe smelters. Under the examination ofA.D. McGill for the public curator, Reid disclosed the history of hisinterests in the Mungana mines. McGill who as chairman of theCountry-National Political Organization had a particular interest inthe proceedings, was relentless in his questioning of Reid, especially onthe breakdown of the respective individual shareholders in the com­pany. McGill's personal interest in the case became obvious as soon asReid disclosed that McCormack held a half interest in the company,not merely the 388 shares registered in his name.

McGILL : Tell us some of the most prominent [shareholders] ? REID : McCormack was the most prominent. Who .were the next? Mr.

Allegadons of Political Corruption 4 9

Goddard, Mr. Theodore? No, he had no shares. Did he get any? Notthat I know of. Did he get any interest? Not that I know of. HIS HONOUR: I suppose Mr. McGill, this is relevant to the in­solvency action? McGILL: Yes. HIS HONOUR : Because I am not sitting here except to inquire into the bankruptcy . . . McGILL: Did he [McCormack] back you and finance you? No, I did not want any. He did not put in anything? He put in about £100. HIS HONOUR : What did you agree to give him for that interest? I agreed to give him half the profits I received after I floated it or the profits from what I might make out of it. McGILL: A half share in the profits? Yes . . . HIS HONOUR: Under your agreement with Mr. McCormack did you give him £5,000 shares? Yes. Is that so, now? Yes, that is so, buthe and I gave Mr. Goddard some shares out of our shares. I am not right when I say he had 5,000 shares. He had nominees . . . 35 [Italicsadded]

This was the most damaging evidence to hand in the Mungana issue, even though Reid had cleared Theodore's name, at least on the sur­face. The hearing revealed that McCormack was heavily involved in Mungana, and that he had lied to parliament, the public and the delegates to the Labour-in-Politics Convention. It was also known that Goddard was implicated and had secretly shared in the proceeds of the state purchase that he himself had consistently urged. Suspicions of malpractice and conspiracy were advanced by Reid's unexplained motives in giving away half his profits for a mere hundred pounds which he did not need, if the Mungana venture was only a simple business transaction. To McCormack's supporters, it was most un­satisfactory, and a great disappointment that they had been misled in the past. For Moore, it was the very evidence that would justify a broad commission into both Chillagoe and Mungana. He announced his intention to clear up the secrecy surrounding the transactions,36 and declared to the press, "We are going to ascertain who is guilty and whether we can prosecute."37 Most newspapers were guarded in the comments on the bankruptcy disclosures and Moore's reaction. The Brisbane Courier, however, readily defended Moore's stand, declaring that he was "not actuated by any paltry feelings or even party feeling . . . Ministers of the Crown and other members of Parliament must be above suspicion."38

If the reputation of the Labour party had been tarnished by the dis­closures of the bankruptcy hearing and the exposure of McCormack's blatant untruths, party officials were not prepared for the additional damage that was inflicted the following day. It was revealed in parlia­ment that Theodore also had misled the public in his statement about

50 The Mungana A/fair

his Mount Isa interests. Atherton in reply to a question by Kelso, stated :

[T]he share register discloses that Mr. Theodore held 1 ,000 shares in the Mount Isa Proprietary Company-500 allotted on 22nd April, 1 924, and a further 500 on 20th February, 1 925 . In 1 925, he held 250 shares of £20 each in Mount Isa Mines Limited; but these were not ac­tually transferred into his name until after the passing of the Duchess to Mt. Isa Railway Act. On 25th February, 1 926, they were transfer­red to him from T.W. Biggs, solicitor, as 5,000 shares of £ 1 each. On 25th February, 1 926, he was allotted a further 480 shares, making a total of 5,480 in this Company.39

Indeed, Theodore had significantly understated his interests in Mount Isa, and the government tried to gain political mileage by linking Mount Isa with Mungana. Both the Mount Isa disclosures and the Reid bankruptcy case combined to afford Moore justification for the proposed royal commission, and this was probably the turning point in the Mungana Affair. Further, it also marks the commencement of criticisms that were transformed into a political exercise to discredit the Labour party, particularly on the part of McGill. His assiduous probing into matters quite tangential to the purpose of the bankruptcy hearing, which in attempting to inculpate Theodore had earned him the judge's rebuke, clearly owes more to his political role than to his legal duties. McGill's political motives seemed unimportant at the time in comparison with the information his questioning revealed, but they subsequently helped enable Labour sympathizers to dismiss the whole affair as a political vendetta against upright public men.40

Mungana and the outside interests of the former premiers were the issue of the day for Queensland voters who, on 1 2 October 1 929, gave the Nationalists an overwhelming vote of confidence in the federal elections, when every other Australian state recorded a large swing to Labour.41 Despite the bitter Queensland campaign's suggestions of im­proper conduct it appears that the effects were only localized, for Theodore himself was returned with a record majority in his New South Wales electorate of Dalley. McCormack, however, was in a dif­ferent position. Exposed for telling barefaced lies to obtain assurances and votes of confidence in both parliament and the Labour party in the past, his credibility was brought even further into question by his belated reaction to the Mount Isa allegations. On 1 4 October he was quoted in the press as having never held any interest in Mount lsa. "I did not hold a single share in any company operating on the Mount Isa field, nor have I since held any interest."42 It seems unbelievable that McCormack should make such a statement, for only two days later, Atherton tabled information in parliament that showed McCor­mack had again tried to deceive his critics.

Allegations of Political Corruption 5 l

[T]he share register of the Mount I sa Proprietary Silver Lead Limited, discloses that Mr. McCormack obtained by allotment 400 shares on 23rd February, 1924; 250 shares on 22nd April, 1924 ; and 650 shares on 1 1 th November, 1 925 , making a total of 1 ,300 shares. The share register of Mount Isa Mines Limited discloses that Mr. McCormack obtained by allotment 100 £20 shares on 1 5th February, 1 924, and 100 £20 shares on 1 1th June, 1 925. These shares were on 1st December, 1 925, subdivided into 4,000 £ 1 shares. On 25th February, 1926, he obtained by allotment a further 625 £ 1 shares, making a total of 4,625 £ 1 shares. His allotted shares in the two companies totalled 5,925 shares.43

It cannot be readily explained why Theodore and McCormack grossly underestimated the extent of their outside interests in Mount I sa, when that was so easily exposed. For McCormack's part, it might be sug­gested that because Mungana was such a burning political issue, he was hoping to minimize damage to the party and to stall any more hints of corruption involving himself. If this was so, it was a very amateur effort at deception, which probably exacerbated the public antagonism that was at a high pitch.

On 25 October, nine days later, Bedford raised the matter in parlia­ment. He expressed concern that allegations of corruption and bribery had pla�ed the Mount Isa field in an unfavourable light, particularly since the Mungana issue had been "tacked on". Bedford claimed that government members were "scandal mongering . . . purely for the ef­fect it might have on the Federal election". He assured the House that the gifts of shares had been a clean transaction, and McCormack's as­sociation with the Mount lsa companies was in no way reflected in the nature of the Mungana transactions. He stated openly that not only he, but also the party had been deceived by McCormack in the case of M ungana. "If there is proof of the truth of the statement made to that very opportune inquiry into the bankruptcy of Mr. Reid, then this party has had its leg pulled very badly ; but this party can only plead guilty to believing that the statement made by its leader was correct."44 Moore responded that he was prepared to accept Bedford's explana- ·

tion that the shares allotted to Theodore and McCormack were made as a gesture of friendship, but he questioned their wisdom in accepting shares that obviously created a conflict of interest with their duties as ministers. "The whole point at issue is not a question of whether the bon. member for W arrego gave away these shares, or whether he did not do so ; but . . . are men occupying Ministerial positions justified in accepting these shares and afterwards voting for a railway, which enhanced the value of those shares ?"45

Moore afterwards admitted that there were no grounds, apart from strong suspicion of corrupt influence, for having Mount lsa in­vestigated by a royal commission. He recognized that there was a

52 The Mungana Affair

parallel with Mungana in that Labour ministers had held shares in companies having dealings with the government.46 Although to some of Moore's colleagues the matter of the shares alone was clearly suf­ficient reason to set up an inquiry, to Moore-a man of complete in­tegrity who was outraged at the thought of corruption and not com­pletely influenced by motives of political advantage-it was enough to expose Theodore's and McCormack's involvement in Mou�].t Isa and to shelve the issue in order to concentrate on clearing up the more serious and defmite charges over Chillagoe-Mungana.47

A. E. Moore

R. Bedford

H. E. Sizer

Abandoned Smelter Yards after 1927 Closure

CHAPTER 4

The Mungana Commission

Moore's immediate problem was to appoint a commissioner; this was soon overcome. Concerned that most Queensland judges were Labour appointees and somewhat reluctant to accept a commission on such a controversial issue,1 it was agreed to ask F.S. Boyce, the New South Wales attorney-general,2 to recommend an experienced legal man. Boyce is believed to have submitted two names : J.L. Campbell,3 a recently retired Supreme Court judge ; and A.V. Maxwell,4 a young acting judge. Campbell, with experience in mining and accounting, had already served on a royal commission into the coal industry in 1 9 1 9. Moore accordingly informed Boyce by telegram: "Will wait two months for Campbell if he can come then vitally important he should accept."5 Sizer was the new minister for labour and industry who in­terviewed Campbell in Sydney and telegraphed Moore that Campbell had accepted the commission, specifying that he would commence in late April 1 930. Sizer added that Campbell was "considered by Boyce best possible appointment and arrangements with which I agree".6 In a recent interview, Sizer recalled that he was very impressed by Campbell. "It is doubtful if he had any political prejudice or leanings whatsoever. It would be difficult to meet a more honest, straight­forward man, who adhered to the highest ethics in British judiciary. There was never any interview or conversation between Campbell and the Government, apart from his calling formally on Moore when arriv­ing in Queensland.'"

On 2 1 February 1 930, McCormack resigned his seat in parliament on account of his health. He had recently returned from London after treatment for heart trouble and was awaiting further treatment in Sydney when the terms of reference of the royal commission were made public.8 The terms, set down under eight headings and ten sub­sections, called for an inquiry into the appointment of Goddard as manager of the Chillagoe undertaking; the management of the smelters ; Goddard's conduct as manager ; his subsequent relationship and interests in any firm or company dealing with the smelters ; Reid's acquisition of the Mungana leases and the formation of Mungana Mines Limited; the sale of those leases to the government; the

purchase of ores from leases acquired by the government; the forma­tion of both the Argentum and Fluorspar mining companies ; God­dard's dealings with Argentum and Fluorspar, the Tarzali sawmill and the Pacific Hotel in Cairns : and finally, whether any minister or crown official was guilty of any conduct in connection with these matters, which was improper in the light of his position and duty, and of the public interest.9 The terms of reference were both wide-ranging and, in some cases, very precise. The government had thoroughly researched the Chillagoe-Mungana issue since the Reid bankruptcy hearing, evidenced by the inclusion of Fluorspar and Argentum in the terms of reference. This reflected an awareness that C rown officials had in­terests in mining, for the list of shareholders of the Fluorspar Mining Company disclosed that of the 50 1 0 wholly contributing shares, Theodore held 1 ,000 and Goddard 1,23210 and Goddard's wife and son were significant shareholders in Argentum, presumably as God­dard's nominees.1 1

With the royal commission pending, it was obvious that the out­come would have widespread political repercussions, since evidence had come to light that M cCormack was a major shareholder in Mungana �d that Theodore was connected with Fluorspar, both comp_an.ies _ _ h_aving dealings with the state smelters. However, even inFebruary 1 930, supporters of the two former Labour premiers were treating the royal commission as a political smear campaign. Alex­ander Macdonald, the former manager of Mammoth Copper Mines Limited which had operated north from Chillagoe, wrote to McCor­mack offering his assistance, and expressing the view that it was "an attempt to involve Mr. Theodore and yourself into the maelstrom of political prejudice".I 2

The royal commission commenced sittings on Wednesday, 30 April 1 930, in the Land Court, Brisbane. A.D. McGill, instructed by the Crown solicitor, H.J.H. Henchman,13 assisted the commissioner : B.F. Fahey14 appeared for McCormack ; E.T. Real15 for Reid, Goddard, Dunlop and McDiarmid ; while E.E. Quinlan 16 was retained by the Queensland branch of the A.L. P. to observe proceedings in the party's interest. Over thirty witnesses were subpoenaed, and evidence was taken over nearly two months on twenty days of sitting, including three days at C hillagoe. More than a hundred documents were admit­ted as exhibits. A simple procedure was adopted. McGill addressed the commission, and in turn called witnesses, including Goddard, Reid, Dunlop (the Chillagoe mining warden), Jensen and Saint-Smith (government geologists), Beal, Peter McCafTrey17 (from the auditor­general's department) and Alfred Jones to give evidence. Counsel had the right to cross-examine, but did so on few occasions, preferring to use their closing addresses to vindicate the actions of their clients. The

The Mungallll Commission 5 7

commission adjourned sine die after McGill's closing address, and was terminated by the tabling of Campbell's report.

Significantly, neither Theodore nor McCormack responded to sub­poenas. It was clear as early as 5 April that McCormack had decided not to attend, and he expressed confidence that he could not be com­pelled to give evidence because the subpoena had been served in New South Wales. He informed his solicitor, V.E.J. Macrossan,18 to that ef­fect, and there is little doubt that the reason for his decision was the advice given by Dr H.V. Evatt19 that his actions amounted to con­spiracy. McCormack outlined Evatt's opinion in a letter dated 5 April 1930. " [My] holding shares in a Company which sold a property to the Crown can be construed into an act of conspiracy (High Court decision in Boston case). I was a Minister of the Crown at the time and he asserts that there need not be fraud or false pretence. "20

McCormack's legal advisers clearly intended to argue that his non­attendance was because of ill health, but his persistent refusal to sub­mit a medical certificate caused them obvious annoyance. They asked him to reconsider his decision in view of the seriousness of the matter, for "failure to produce a certificate will put you in a worse light than need be the case, and in a position you should endeavour to avoid".2 1 However, McCormack was adamant that he did not want the nature of his illness made known, although he did comply with Macrossan's request to prepare a written statement on his involvement in Mungana, which, if necessary could be submitted in his defence. Prepared under his solicitor's scrutiny, the statement was completed two days before the commission commenced taking evidence. In his statement, McCor- . mack claimed that he and Reid held equal shares in the Mungana mines, a fact well known in north Queensland. He maintained that his role was to fmance the venture, while Reid was responsible for mining and management; but he insisted that he "was not either directly or in­directly associated or interested with Reid in any other venture or proposition ; and I had no monetary association or interest of any kind whatsoever with Messrs. Goddard or Dunlop".22 McCormack in­dicated that the results obtained in 1 9 1 9 attracted considerable interest and speculation about the potential of the mines, particularly when Alexander Macdonald obtained an option to purchase on behalf of Henry Allan, a Glasgow shipping magnate. Even after this option had expired, Macdonald sought an extension which was refused following negotiations between Reid and Goddard during which the government obtained an option to purchase the leases. McCormack stated that his interest was immediately made known to cabinet, and that he had been instrumental in obtaining an independent mining engineer, William Poole, to report on the mines before any decision to purchase was con­sidered. "I did not make any use of my position as a Minister to induce

5 8 The Mungana A/fair

the Government to purchase the property, nor did I endeavour to in­fluence any member of the Government or any of its officers to that end."23

In concluding his statement, McCormack complained that the issue was stale and the facts

· well known, as his shareholdings had been

made an election issue as early as 1 926 ; and, further, that the commis­sion merely served a political purpose.

One of the matters into which the Commission is to inquire is, as to whether any of the transactions mentioned in the Commission was "unexpedient in the public interests". This would involve an inquiry into the policy of the Government . . . irrespective of any question of impropriety. Such an inquiry is without precedent. This gives the in­quiry a strong political complexion-its main purpose appears to me to be, not so much the elucidation of the facts . . . as to besmirch me for political purposes. I, therefore, regret the less my inability to attend the Commission.24

Yet the facts of this statement, and those which he had earlier stated to parliament and to his Labour party colleagues, were very different. The discrepancy could be seen as indicating McCormack's determina­tion to withhold or distort any information that could be ultimately used to implicate him in a conspiracy to defraud. McCormack was not alone in complaining that the whole object of the royal commission was political, especially because McGill was appearing to assist Campbell, and McGill's political connections had already resulted in Labour supporters denouncing the royal commission.25 Sizer had defended his appointment on the ground that "he was one of the most competent legal men in the State".26 Even if that were true, it was un­wise of Moore to leave the government open to attack by making the appointment.

McGill in his opening address meticulously �raced the history of negotiations between the government and the Chillagoe Company, and the passing of the Act of 1 9 1 8 which empowered the government to acquire the Chillagoe Company's assets . Particular reference was made to the provisions of the Act governing the appointment of a general manager, and strong emphasis was placed on Goddard's role in the negotiations to purchase the Mungana leases. McGill remarked that Goddard had contravened the Act by associating himself with various mining companies, outside the duties of office. "You will observe that Goddard is urging the purchase of these [Mungana] mines", stated McGill. "I will show later that in April, 1 92 1 , a man named Mangan appears in the register of that Company as the holder of 1 ,250 shares, and that they were held for Goddard."27 McGill covered nearly every aspect of operations at Chillagoe and Mungana, and skilfully accentuated the relationship between Goddard and Reid

The Mungana Commission 59

by selected correspondence from the files of both the smelters and mines department. He also examined the share registers of Fluorspar and Argentum, pointing out that it was only after Goddard's resigna­tion that two new shareholders appeared on the list for the Fluorspar Company-Goddard and Theodore, both with substantial interests.28

Turning to Mungana, McGill accused McCormack of deliberately misleading parliament, and lying publicly to the extent of his interests . , Iltch "exceeded 388 shares by many thousands". By innuendo McGill was desperately seeking to connect Theodore, even though the only evidence to hand was Theodore's interests in the Fluorspar com­pany. "Whether McCormack divided his profits with anybody else, we do not know, but we do know that he stated in Parliament that there were others in the Syndicate."29 Quoting extensively from the special report of the auditor-general, McGill urged that full inquiry be made into all transactions in which Goddard had an interest or influence. For this purpose McGill deemed it necessary to obtain copies of both Goddard's and · Reid's bank accounts. Finally, he stated that it was desirable also to obtain copies of McCormack's bank account "in order to trace what became of the money that was paid to him".30

Goddard was the first witness called to give formal evidence. Like some of the witnesses who followed him, Goddard gave the lapse of some twelve years since the events under review, as the reason for his inability to remember important details in answer to questions put to him by McGill. He was nevertheless able to answer questions from his own counsel with considerable precision. Goddard stated that he had conceived purchasing the Mungana mines from the very outset, as the smelters were heavily dependent on Mungana ore. He reasoned, and intimated that Jones had agreed, that Mungana "was the key to the situation as far as the supply of ore was concemed".3 1 Jones had authorized him to negotiate on the government's behalf, despite the fact that the amending legislation empowering the government to ac­quire the mines had not been passed. McGill suggested that Goddard's interest in Mungana- 1 ,250 shares held by Patrick Mangan, his brother-in-law and nominee, and issued twelve months before the purchase-had motivated his strong urgings that the government should purchase the mines. But Goddard replied that the $ares had been offered to him in 1 9 19 when the mines were under offer to Alex­ander Macdonald, and that Mangan had been his nominee only for propriety's sake. He told the commissioo that both Reid and McCor­mack had contributed to his interests in Mungana,32 but he offered no explanation of why Reid had given him the shares. He was adamant that he did not initially know of McCormack's partnership with Reid and even so did not think McCormack's being interested had anything to do with me".33 McGill persisted in trying to get Goddard

60 The Mungana AJ]'air

to admit conspiracy by questioning the honesty of the negotiations with Reid, whereby Goddard answered that "it was wrong" for him to be involved in Mungana, but at the same time he had conscientiously endeavoured to make the enterprise viable and to implement govern­ment policy.34

Goddard firmly believed that the smelters might have realized a profit had the 1 9 1 9 prices for metal steadied. Instead, falling prices, high costs of mining development, and low-grade ore supplies had an adverse effect on the smelters, and, for this reason, he had become single-minded in obtaining the Mungana group with its reputedly high­grade ore bodies. Goddard repeatedly attempted to justify his role in the Mungana negotiations by referring to outside influence, insisting that the interest shown in Mungana by Alexander Macdonald neces­sitated the payment of £40,000 to purchase the mines. Poole's report, moreover, and the threat of a smelter at Mung ana left the government with only one choice-to purchase. When closely questioned about his business connections with Theodore, Goddard insisted that he had bought shares in Argentum for himself and Theodore at fifty pounds a parcel, at a time when Theodore was abroad, and without his knowledge. In addition Goddard persisted in denying any impropriety or conspiracy, although he admitted that by 1 927 he and Theodore controlled the Fluorspar Mining Company and had concealed their holdings through two nominees, McDiarmid and Henderson. It was, Goddard maintained, legitimate speculation in the hope of "a tariff being placed on imported fluorspar, and a better price being secured for the commodity through the imposition of that taritr'.35 The balance sheets of the smelters were examined in detail. Goddard con­ceded the inaccuracies and over-estimated stocks, but he was not prepared to admit that the fault was entirely his. External factors, such as metal prices ; underestimated mining and smelting costs ; and government policy ; had contributed to the position. He implied that by refusing a royal commission and narrowing the brief of the auditor­general, McCormack "wanted to throw the blame of the enterprise on to my shoulders".36 He defended the transactions with Reid, arguing that he had to give Reid preferential treatment because the smelters depended upon Reid's ores, but Goddard denied that he had ever ac­cepted any financial consideration for these concessions.

Saint-Smith was questioned about the text of the report he had made as a government geologist in January 1 92 1 . Admitting that he had relied heavily on Rodda's report, given to him by Reid, for es­timates and the future prospects of the mines, Saint-Smith argued that he "_was only asked to consider whether the property was worth purchasing".37 Under Fahey's cross-examination, Saint-Smith ex­pressed confidence that, judging from Rodda's report and his own

The Mungana Commission 6 1

observations, Mungana could have been worked at a profit.38 Unshaken by McGill's questions, Saint-Smith persisted in defending the purchase, and went further by adamantly defending the Tarzali sawmill contract on the grounds that Mount Mulligan needed retimbering for the safety of the workers. 39

Reid repeated in evidence much of what had been disclosed at the bankruptcy hearing, reaffirming his stand that McCormack who was supposed to finance the venture had put little money into their partnership. Asked why he had approached McCormack, Reid admit­ted that the fact that McCormack was a member of parliament had some influence, apart from his own need for capital. He told the com­mission that McCormack had arranged a declaration of trust in 1 9 1 8 but at no time did he have any business connection with Theodore in Mungana : the government advances were endorsed by Theodore simply because he was the member for Chillagoe. Reid claimed he did not have any prior knowledge that the state was considering taking over the smelters, an assertion that seemed absurd because the Chil­lagoe Bill was before parliament nine months in advance of Reid's original application for the leases. Yet, he then admitted that he had considered selling the leases to the government at a very early stage, despite his front that he was anxious to obtain government loans to develop the mines. Reid also disclosed, for the frrst time, the full extent of McCormack's holdings and the names of his nominees. In addition to the 388 shares registered in his own name, McCormack's three sisters held among them 2,688 shares on his behalf, and Reid another 900. Reid had made over another parcel of 400 shares to McCormack in 1922, after he had deducted Goddard's 625 in February 1 92 1 , but held 900 as a security that he, himself would still have control of the mines.40 McGill pressed Reid to admit that Theodore was part of their syndicate, since McCormack had stated in parliament in 1 926 that there were others. Reid denied this, for McCormack "never told me that anyone was in with him".41 However, McGill was successful in es­tablishing that Reid's association with the management of the smelters was more than suspect, as Reid admitted blending low-grade ores from abandoned dumps with high-grade ores, then selling the blend to the smelters at excessive prices. Smelting charges, rail costs and deduc­tions had also been overlooked by the management. As a fitting climax to these disclosures, Reid stated that talk of building a smelter at Mung ana was a bluff intended to increase pressure on the government to buy mines, which, considering Poole's report, was a most suc­cessful one. He admitted that it was far more lucrative for him to sup­ply ore to the smelters.42

McDiarmid, the Chillagoe solicitor and director of Mungana Mines Limited, revealed that in March 1 922 Reid and McCormack had dis-

6 2 Tile MullgGIIQ AJTair

agreed over the managing of the Mungana syndicate, because McCor­mack had decided to shift control of the company to Brisbane in order to have more say in supervising it. The evidence leads to the conclu­sion that it was Reid's reaction to the quarrel which began the rumours about the involvement of Labour politicians in Chillagoe, a well-kept secret over the previous four years. However .. McDiarmid was ada­mant that McCormack and Reid were the only two in the syndicate at the outset. Cross-examined by McCormack's counsel. he agreed that besides the government, Alexander Macdonald was anxious to obtain the mines. Macdonald, representing Henry Allan.. and Buchanan of Buchanan's Whisky Distilleries, Glasgow, had obtained an option but was required to present before December 1 9 1 9 proof of Allan's sincerity. This option had expired, so Reid immediately commenced negotiations with the government to sell the mines.43

Alfred Jones was subject to intensive questioning by McGill, but firmly defended the Chillagoe undertaking. He said that he was strong­ly opposed to the restrictions of the Chillagoe Act, for .. if Reid had contemplated withdrawing his ores, Chillagoe would have been forced to close down, depriving 550 men of employment and denying a min­ing industry to north Queensland. These reasons, plus the fact that Macdonald's company ran smelters at Cardross, made the govern­ment determined to secure necessary ore reserves which, judged by the potential of Mungana, could be secured from these mines. McGill s tamped the mines department decision to purchase as speculative, having been based on unreal estimates and v alues, but Jones argued that Mungana was in no way responsible for the losses at Chillagoe. Although the figures proved this argument false, there was some justice in Jones' observations that metal prices, outmoded methods of smelting and inadequate ore supplies had been major factors. When questioned about Theodore's relationship to the enterprise, Jones held that Theodore's interest in the venture was merely in the line of duty as member for the district ; that he was not financially interested in the Mungana leases : nor had he pressured the mines department to obtain favours for Reid or any other supplier. The commissioner asked Jones if he was at all concerned that Goddard had been secretly dealing in shares in mining companies supplying the smelters. Jones replied determinedly that he thought "a man could accept shares in a mine and give faithful report and administration"'.•• In fact , Jones stuck by Goddard throughout the royal commission.. claiming that Goddard had been placed in an unfavourable light and had to bear the brunt of responsibility, regardless of high cost factors and other reasons that had collectively created the present state of affairs.

Peter McCaffrey , government audit inspector, alleged that in con­versation with McCormack in April l 926, the premier, having been in-

The Mungana Commission 63

formed that Goddard had expressed concern over the increased losses at Chillagoe and the amount of capital being poured into Mungana, had told liim that Goddard "has nothing to worry about with Mungana; Mungana is my pidgeon and Theodore's, and not his".4.5 Despite this allegation, McCaffrey agreed that Chillagoe would have had to close down without regular supplies from Mungana.46

James Stones claimed responsibility for handing over to Moore, the then leader of the Opposition, the information on Reid's transactions with the smelters. Stones was a former smelters employee who had been sacked and had then broken into the manager's office.47 McGill called other witnesses in order to establish the extent of preferential treatment given to Reid, and then recalled Goddard, whom he questioned about his policy of extending preference. Goddard main­tained that his instructions, given verbally by Theodore, were to keep the smelters going and to assist the promotion of mining among private miners and companies. He attributed much of the annual losses to the commitment to mining at Mungana, and to subsidizing the efforts of independent suppliers, among whom Reid ·was the most im­portant. Reid had purchased dumps from small miners and bankrupt companies to supply low-grade ore at a flat rate. Because Mungana alone could not fulfill the requirements of both lead and copper fur­naces, Reid had managed to establish a virtual monopoly on ad­ditional ores supplied to the smelters, for he "had the key to the situa­tion, and he could shut the Chillagoe smelters any time he liked".48 Goddard also claimed that he had offered "to resign my engagement with Mr. Jones" after the accumulated losses to 1 925 indicated that the State enterprise had failed in its objective, but "Mr. Theodore pressed me to remain on".49

Campbell adjourned the commission until further evidence could be taken at Chillagoe. To this date, 22 May 1930, newspapers had covered the proceedings with detailed reports, even though much of the evidence taken had already been disclosed in parliament in previous years. As with court hearings, no editorial

-comment or

headline speculation was made. At the same time, however, there had been considerable activity behind the scenes, which was to be dis­closed in a sensational manner in the weeks to come.

Correspondence between McCormack and his legal advisers reflected McCormack's anxiety about the outcome of the royal com­mission. As early as 5 May 1 930, he wrote that he was suffering from "strain" and "sleeplessness" and "will probably finish up in hospital and then may not care who wins the boat race" . .so By 1 7 May, McCor­mack's solicitor had no hope of a finding favourable to his client whom he advised that no purpose would be served by attendance in person which could also lead to the extraction of additional and more

64 The Mungana A/fair

damaging evidence. He was particularly hostile towards the royal commissioner whose attitude 'as occasionally displayed appears to me to indicate that you already stand condemned and possibly did so before he entered the inquiry . . . Your attendance before the Commis­sioner would give your political opponents an opportunity they probably desire of putting you in the pillory and subjecting you to un­fair cross examination as Campbell is unlikely to protect you."5 1 The form of Macrossan's comments which hinted broadly at prejudice on Campbell's part, should not divert attention from their substance. With a full knowledge of McCormack's story and the related docu­ments, Macros san knew that his client could produce no evidence that would efface the damage done by the evidence already before the Commission. He was superficially placating McCormack by reference to his "political opponents", as McCormack had made known his an­tipathy to McGill in earlier correspondence, likening his opening ad­dress to "a critic in a political campaign";52 while the proposed ad­journment to Chillagoe had provoked the comment: "McGill requires a winter holiday".53

On 1 9 May 1930, three days before the commission adjourned for its visit to Chillagoe, McCormack's solicitors sought an injunction in the Queensland Supreme Court, to prevent the Bank of New South Wales producing records relating to McCormack's bank account in accordance with a summons sent by Campbell to the bank manager.54 In the application, Fahey (who appeared for McCormack) claimed that the bank was under an "implied contractual obligation . . . not to disclose to any third person the account of the plaintiff except under law", and under the Bankers Book Evidence Act of 1 879, the commis­sion was not empowered to call for them. Moreover, it was submitted that McCormack objected to their production on the ground that "ir­reparable harm" would be done to him if the bank disclosed them to "Campbell or any other person".55 This restraining action was a desperate move. If it succeeded, McCormack could not escape the im­putation that, on his own showing, the accounts would not merely con­firm disclosures and allegations already before the commission, but would also furnish new evidence even more damaging to him. No al­legation about political bias in the hearing could do much to palliate this conclusion, for it was not the action of an innocent man to place restraint on a source of evidence that might have absolved him. The move succeeded only in imposing a slight delay. The court agreed that the summons issued by Campbell had no power to compel the produc­tion of the accounts, but it held that Campbell could compel their production by use of a subpoena. However, the commissioner was re­quired to personally examine all documents thus obtained, and make public only those which had a direct bearing on the subject of his in-

quiry in his report.

'11ae Mungana Commission 65

The evidence that McCormack had tried to withhold concerned payments made by him to Theodore after dividends had been received from Mungana Mines Limited, each payment having amounted to almost exactly half the monies received by McCormack. The existence of some of this evidence had become known to McCormack's solicitors a week before the injunction hearing. On 1 3 May 1 930, towards the end of a letter on the progress of the inquiry, Macrossan hinted that he knew of these payments to Theodore. "During the day I heard privately the disquieting news that four or five cheques on the account of the Bank of N.S.W. amounting in all to about £3,000 were, shortly after receipt of dividends, drawn in favour of a third party whose name appears on the actual cheques."56 Four days later, Macrossan again broached the subject of the payments to Theodore, when he advised that Fahey had had discussions with "Mr. D.J. O'Mara, wh� has been taking an interest in the proceedings on behalf of an undisclosed principal", and who" suggested application to the High Court, should the decision on the injunction allow Campbell authority to call for the production of McCormack's accounts.57 Cor­respondence reveals no reasons why this course of action was not further considered. Campbell immediately subpoenaed the Bank of New South Wales, and within a week copies of McCormack's ac­counts were in Campbell's possession, and with McCormack's solicitors.

On 29 May 1 930, Macrossan informed McCormack that he had examined the detailed accounts produced by the bank, and asked Mc­Cormack to clarify the particulars of all cheques "that you think will be of assistance, particularly in regard to any cheques given to politi­cians, and where any considerable sum has been drawn in cash". He went on to point out deficiencies "in the receipts and payments from Reid and Mungana Mines Limited respectively . . . You do not appear to have paid away to Mr. Theodore half of your receipts from the Company (£ 10,2 1 5 . 10.4) and Reid (£3,660.9.8). He appears to have received £6,4 1 8. 1 8. 10 whereas his half would be £6,938. Perhaps the cash items in the account make up some part of the deficiency and ex­change may account for a small amount. 58 McCormack replied within the week, detailing the particulars of his accounts, and instructing that either all details must be explained or none at all. He added that hecould not offer any directions until he had consulted with Theodore.

It would be useless to explain evry [sic] detail outside the cheques [to] Theodore and then refuse to explain the only ones that are ap­parendy revelant [sic] to the inquiry. You may consider it advisable to explain all other matters and say that you have no information as to why this amount was paid to Theodore. I am in a difficult position in

66 The Mungana AJ!air

regard to this question . . . You will understand my difficulty until I know exactly what he is going to do.59 Cheques drawn and paid to E.G. Theodore October 1 6, 1920 £760. 0. 0 Cashed April 5, 1 922 1 ,600. 0. 0 Bank Credit . May 14, 1 923 100. 0. 0 Cashed July 1 9, 1923 633. 14. 10 B a n k Credit , E . G .

October 1 5, 1 923

July 7, 1 924 March 9, 1925 April 7, 1925 July 30, 1 925

Theodore 325. 4. 0 B a n k Credit , E . G .

1 ,200. 0. 0 900. 0. 0 140. 0. 0

1 ,CK)O. 0. 0

£6,658. 18. 10

Theodore Credit Theodore only Credit Theodore only Cashed Bank Credit, Theodore only

52. 10. 0 (exchange on £ 1 3,875 would be about £ 105)

£6,7 1 1 . 00. 10 [sic]

(The balance of over £200 was paid in 1 926 when the fmal balance sheet had been sent by McDiarmid).

McCormack continued by pointing out that the total dividends received from Mungana Mines Limited amounted to £ 10,587.6.0, and Reid had paid him £3,660.9.8, of which £2, 1 60.9.8, was from divi­dends on his 900 shares held by Reid. He complained that in fact Reid had underpaid him by £580. 1 5 .4. Furthermore, two cheques for £236.8.0 and £270.0.0, received from dividends, were paid directly to Reid as an investment in the Marvel Tin Mines in the Emuford dis­trict.60

In reply, Macrossan made no attempt to conceal his conclusion that Theodore would not be able to offer any satisfactory explanation but under cross-examination would be obliged to make more damaging al­lusions. He therefore advised against Theodore's appearance.

If Theodore can satisfactorily explain the matter his attendance would meet your purposes and his own without the necessity of your atten­dance. If he can do this we shall be pleased to see him in attendance but if not it would appear wiser to remain away. His failure to attend will not make the position worse and he will be spared some uncomfort­able hours in the box. If facts relating to the transactions are disclosed by means of cross examination the result would be more sensational than if Campbell merely comes to certain rather obvious conclusions by putting two and two together. In addition to the Mungana transactions explanations by Theodore are required in regard to some rather undesirable aspects of the dealings with the Argentum and Fluorspar Companies . . . However, it seems that no explanation by yourself or Theodore can

The Mungana Commission 6 7

put the matter in a satisfactory light and any attempt to do the impos­sible will probably only result in further undesirable consequences. I think we must make up our minds that what can't be cured must be en­dured. It would seem, therefore, that if Theodore's political engage­ments should eventually prevent his being in attendance there should be no reason to regret the fact. 61

Undoubtedly, McCormack had previously hoped to keep the extent of his own and Theodore's interests in Mungana a well-guarded secret. While his reputation was being blackened by McGill's leading ques­tions and inferences, McCormack continued to protect Theodore, even by concealing from his own solicitors, the fact that Theodore was in­volved. He had preferred to play down the importance of the royal commission, evidently hoping that the report would not appear too damaging, in which case he would be able to counter-allege that the purpose of the inquiry was a political character assassination aimed ul­timately at the Labour party. But, as it then stood, both Theodore and himself were open to accusations of conspiracy and political graft, although at that stage only McCormack's solicitors and Campbell had access to McCormack's accounts. The only recourse for Theodore and McCormack was to remain silent, and then if necessary to regain any lost reputation by denouncing Campbell's findings, whatever they might contain.

In the interim, the royal commission had returned to Brisbane fol­lowing a brief sitting at Chillagoe. Little new evidence came to light during the Chillagoe hearing and much of what did was hearsay which again revealed antagonism to Reid and Goddard in their capacities as the major ore supplier and the smelter's manager, positions through which both had derived financial benefits. Several witnesses testified to the participation of Theodore and McCormack in mining speculation in the district. Frank Jones, miner and smelter employee, stated that Theodore had denied allegations that he was involved in Mungana when Jones had told him "that it was rumoured all over the place that he and McCormack were getting a chop out of the Mungana deal".62 This denial was supported by Henry Nichols, a smelter employee, who claimed that Theodore was never inculpated with Reid and McCor­mack.63 However, David Hughes, a miner at Fluorspar, stated that he had given Theodore shares in the Fluorspar Mining Company, quite in contradiction to normal business practices, "as a consideration and as a favour in finding a market and going to the bother of sending up a geologist".64 Another local miner, Tim Toomey, said he had sold his interest in Argentum to Goddard, knowing full well that Theodore also had dealings in that particular company.65

The commission reconvened in Brisbane on 9 June 1 930, on which date copies of McCormack's accounts were officially tendered in

68 The Mungana Affair

response to Campbell's earlier subpoena. Two days later Campbell created a sensation by issuing a subpoena on the Bank of New South Wales to produce copies of Theodore's bank accounts. Although the contents of McCormack's accounts had not been made public, the im­plication was clear that McCormack's accounts had provided some solid evidence that Theodore was personally involved, as had been in­dicated by the rumours gathered in Chillagoe. On the following day, the Brisbane Courier reported that Theodore had asked Campbell for an opportunity of appearing before the commission, and had been in­formed by the Crown solicitor that any date after 1 7 June would be convenient.66 Four days later, on 1 6 June, the auditor-general (Beal) strongly denied the assertion of an earlier witness, McCaffrey, that the treasurer's financial statements and the auditor-general's report for 1 923 -24 were deliberate falsehoods. He argued that the auditor­general's department had been deceived by Goddard's figures for a number of years, and in taking them at face value had been acting in accordance with established practice, and had not been joining in a conscious falsification.67

Dr H.I . Jensen, who had reported on the Mungana mines in 1 9 1 9, confirmed that he had urged the purchase of the mines at that date, but at the same time had mentioned to Jones a conversation with Reid in which it had been disclosed "that Mr. McCormack and Mr. Theodore were shareholders" in the Mungana mines.68 Recalled to the box, Reid denied having told Jensen or any other person that Theodore was in­volved in Mungana. He was adamant that Theodore had no interest, because Reid himself, had never offered him shares.69 Goddard was also recalled, and was questioned about the smelter's policy toward the smaller ore suppliers. This provided a dreary anti-climax after the al­legations levelled over the recent weeks of McCormack's and Theodore's involvement in Mungana. Campbell then announced that, apart from Theodore's evidence, the royal commission was near com­pletion. He directed that Theodore be given only until 24 June to ap­pear, for "beyond that I do not think any assurance can be given him of the reception of his evidence".70 On 1 9 June, Theodore's secretary notified that Theodore would not be available until after the budget had been submitted in July, and he further gave no indication of when he would be available thereafter. Campbell reiterated that it was "im­possible to keep the Commission open indefinitely",71 and instructed the Crown solicitor to communicate his decision to Theodore. He then directed counsel to address the commission before he adjourned to consider his report.

Fahey, as counsel for McCormack, concerned himself primarily with the question of the propriety of McCormack's involvement in the Mungana leases. He argued that there was no prior connection

The MungtuUI Commission 69

between Reid and McCormack, until Reid approached McCormack to be his financier at a time when he was Speaker of the House, and not in cabinet. Fahey submitted that it was "not a question of a Member of Parliament knowing from the secret policy of his party or the policy not made public, and taking advantage of some secret information which he got as a member of a party".72 He contended, moreover, that at the date of McCormack's agreeing to go in with Reid, "there was no intention on the part of the Government to purchase Mungana . . . the possibility that Mungana might be useful, or even necessary to Chil­lagoe was not recognized at that date or until very much later on" when low copper prices had made Einasleigh, the then chief source of ore, a non-profitable proposition.73 On the question of McCormack's interests not being fully registered, Fahey argued that the declaration of trust in the Warden's Court at Chillagoe, and the list of shareholders, showed "that McCormack was substantially interested in Mungana mines", and because both of these documents were open to public inspection, there clearly had been no intention of concealing his interests.7• Finally, Fahey tackled the allegation of improper con­duct in influencing the government to purchase the mines. Saint-Smith, Poole, Jones and Goddard had all urged the purchase of the mines but, according to Jones, it was McCormack who had "insisted and desired that an independent report should be obtained".75 The fact that Reid was granted only £2,800 of the £ 10,000 advance for which he had ap­plied showed that McCormack "was not exercising or attempting to exercise from his place in Parliament any influence whatever in regard to these matters".76 In spite of his efforts to put McCormack in a favourable light, Fahey was unable to satisfactorily substantiate that there had been no prior connection between Reid and McCormack, or to explain how McCormack could obtain large dividends from so small an outlay in an honest business enterprise. That the government had no intention to purchase the mines is beside the point, because Theodore, in endorsing Reid's application for an advance, indicated that Mungana was essential to Chillagoe, and only the Act of 1 9 1 8 had temporarily prevented the government from becoming involved in mining at Mungana. Fahey dodged the very significant issue of why McC ormack had concealed the extent of his interest, and why he had repeatedly misled both parliament and the public.

Real entered a plea to exonerate both the mining warden (Dunlop) and the company's solicitor (McDiarmid) and accordingly con­centrated on Reid and Goddard. His submissions attempted to answer many of the questions raised in the terms of reference. First, he as­serted that "so far as the appointment [of Goddard] was concerned, there was nothing sinister". The government was unable to obtain the services of the former smelter's manager of the Chillagoe Company,

70 The Mungana A/fair

James Horsburgh, and had, notwithstanding the favourable references from Cor�ould, appointed Goddard only temporarily.77 As for God­dard's management, Real maintained that his instructions to keep the smelters in operation justified the advances and preferential treatment given to Reid as the major supplier in the district. He also submitted that Reid's association with Goddard was quite legitimate and business­like, 78 as in the agreement between Goddard and Reid that the latter should deliver ores to the sidings to overcome transport difficulties, and to ensure adequate stockpiling before each campaign, even though Reid was paid on delivery to the railhead and not to the smelters. There was no risk in advancing payments for ores to Reid because he was known to have had adequate security. Real even attempted to justify the Tarzali sawmill contract on the grounds that the timber had been necessary to the reopening of Mount Mulligan, and that the state had not lost financially on the deal, but Campbell immediately ob­jected by pointing out that it was not necessary to have sawn timber, and that no tenders were ever called�79 Additionally, on the question of management, Real submitted that over-valuation of stocks had occurred only because the treasury and the mines department had con­doned the practices of stocktaking and valuation up to 1 9 26 ; and even then, Goddard had readily admitted over-valuation had occurred when it was pointed out to him by Beal and McCafTrey.80 In conclusion, Real turned to the question of improper conduct in relation to Argentum, Fluorspar and Mungana. He argued that the original intention of Fluor­spar Company was to supply Broken Hill, but a complimentary assign­ment of fluorspar tried at Chillagoe proved that it was a good flux, and justified further use of ores from both the Fluorspar and Argentum mines. Real submitted that Goddard made no secret of his involvement in the companies, and even in the case of Mungana, he had disposed of his shares very early to avoid a conflict of interest. Finally, the various reports of Mungaita exonerated Goddard from accusations of con­spiracy to defraud by accepting shares and then urging the purchase of the mines, for it was widely recognized that the mines were essential to Chillagoe. 8 1

Real had also ignored several questions that still required satisfac­tory explanation, and at times his defence of other issues seemed quite perverse. There was no explanation why Reid was entitled to preferen­tial treatment that gave him fmancial benefits not available to other suppliers, and at the same time enabled him to create a virtual monopoly in the supply of local ore by cutting smaller miners out of the market. Nor was Real able to justify the extent of the financial in­centive offered to Reid, in particular when he was at the same time ob­taining huge payments for Mungana ore that had been worked un­profitably since the purchase was completed. The assertion that the

The Mungana Commission 7 1

treasury and mines department condoned Goddard's figures and es­timates until 1 926 was without foundation because it was the treasury's detection of the falsified balance sheets that led to God­dard's resignation in February 1 927. It might have been reasonable to say that Reid had not acted improperly in entering into business agree­ments and shareholdings with Goddard, but on Goddard's part there had been a breach of the conditions governing his appointment, which should have automatically ended his tenure as general manager, and which had contributed to the general doubts about Goddard's motives in extending preferences to Reid.

McGill was as unaware-- as was the public that Campbell had defmite evidence from the respective bank accounts, which showed that Theodore and McCormack were heavily involved in Mungana. He argued that a connection between Theodore and McCormack was the only possible explanation for the facts revealed in the inquiry, and he pointed out that neither Theodore nor McCormack had given evidence, and described Reid as "not a reliable or truthful witness". 82 McGill submitted that McCormack's half interest which had cost him very little, was given to him by Reid to "exert his influence in some direction" ; and in fact, it was not McCormack who was Reid's finan­cier, but the government which had made substantial advances to allow him to commence the unwatering of the mines. To add to the conspiracy, Theodore had recommended these advances, fully aware that McCormack held a half interest in the mines.83 McGill suggested that Goddard did not expect to make a profit at Chillagoe, but had continued operations, and had falsified his reports so that his own in­terests in Mungana, Fluorspar and Argentum would net him personal profits. He maintained that Goddard's connection with Mungana was corrupt. "He was offered that interest as a bribe, and accepted it as a bribe" to expedite the government's purchase of the mines ;84 and, he said, his interests in Fluorspar and Argentum in partnership with Theodore had been held in contravention of the conditions of his of­fice. The management of the smelters and Goddard's policy of preference to Reid was nothing short of fraud. Goddard, so McGill argued, had an inducement to extend Reid preference by way of their business association, and throughout the years both special treatment and protection had been afforded by Goddard "for the profit of the friend Reid ; all at considerable expense to the State".85 In conclusion, McGill emphasized that both the honesty and integrity of Theodore and McCormack were in grave doubt, as McCormack's past use of the word "syndicate" indicated that Theodore had definitely profited from the sale of the mines.86

C ampbell adjourned the commission sine die on 2 1 June 1 930, stipulating that Theodore still had a week in which to give evidence on

72 The Mungana A/fair

his own behalf before Campbell commenced compiling his report. Campbell's task was not an easy one. Almost all the witnesses had some personal axe to grind when giving evidence. On the one hand, there were those witnesses whose actions, competence or integrity were at issue-Jones, Goddard, Reid, Saint-Smith, Beal and other minor witnesses. Their motives for defending the Chillagoe enterprise and the Mungana purchase were obvious. On the other hand, it could be shown that witnesses who gave evidence opposed to that of the persons defending Chillagoe had a personal grudge to satisfy, or that there was reason to regard them as unreliable. McCaffrey was ill dis­posed towards his superiors in the auditor-general's department;87 Stones, a convicted tin thief who had been dismissed from the smelters, had a personal dislike for Goddard and Reid ;88 Jensen had been at log­gerheads with the A.L.P. between 1 925 and 1 926 and was eventually expelled from the party for " anti-Labour activities" ;89 and many of the miners who gave evidence at Chillagoe personally resented both God­dard and Reid. Yet, in addition to the transcript of evidence, there was more reliable testimony in over a hundred documentary exhibits, as well as in the all-important Theodore and McCormack bank accounts available to Campbell. It was on these documents, more than on the evasive, contradictory, confusing and partial evidence of the witnesses, and inference of legal counsel, that the report would have to be based.

While the royal commission was taking evidence, full daily reports of the verbal evidence gave ample indication of widespread public in­terest in the proceedings. the reports ceased with the end of the hear­ings and, no further comment was possible until the commissioner's findings were available. Theodore did not appear, despite the extension of time granted him, nor did he offer any written statement to C amp bell. The commissioner accordingly closed the proceedings to deliberate on his report. Although press editorials were silent on the matter, there can be no doubt of the keen interest and tense uncer­tainty with which Campbell's fmdings were awaited.

Dr H. I. Jensen

W. Cormack

E. G. Theodore

C H A PT E R 5

Can1pbell , s Report and Theodore, s Resignat ion

In only thirteen days Campbell submitted his report to cabinet-on 4 July 1 930. Even if he had commenced recording his findings im­mediately after the royal commission adjourned on 2 1 June, and before the nine days allowed for Theodore's evidence, Campbell had a very short time indeed, considering the mass of documentary evidence to study the voluminous transcript of proceedings. For the crusty sep­tuagenarian, the task of compiling the report in so short a time must have been exhausting, although he would have had some advantage from his background in the Queensland mining industry before he began practice as a solicitor in New South Wales. This experience may -have been taken into account when C ampbell's appointment as com­missioner was made. Campbell's report was compelling, although only twenty-four pages long. It was not tabled in parliament until 1 5 July 1 930, when it was ordered that it be printed and made available as a government publication. Meanwhile, however, details had been released to the press, and the findings made public. The urgency with which cabinet disclosed C ampbell's findings before parliament met in­creased suspicions of political opportunism.

Central to the report of the royal commission was the conclusion that "Theodore, McCormack, Goddard and Reid were guilty of fraud and dishonesty in procuring the State to purchase the Mungana mines for £40,000"; and that the "moneys shared between them as proceeds of that transaction were fraudulently obtained".1 C ampbell believed that they had "betrayed, for personal gain, the trust reposed in them, and [had ] . . . acted corruptly and dishonestly . . . " .

The long concealment by Mr. Theodore of his interest in the Mungana leases, and the failure to obtain direct evidence of his complicity in the design to bring about the purchase-strong as the inferences might be-invested the known history of the whole matter with an ap­pearance of indefiniteness compared with what it has now assumed in the light of the revelations of Mr. Theodore's banking account. When it was established on that evidence unimpeachable as it is, that Mr. Theodore received, promptly and regularly from time to time, one half of Mr. McCormack's share of the fruits of the Mungana transac­tion, the whole of the antecedent facts acquired a new significance. On

Campbell's Report and Theodore's Resignation 7 5

proof of that cogent fact, which explains most of the earlier ambiguous features of the evidence, there is, in my opinion only one reasonable conclusion of this part of the inquiry, and that is that Mr. Theodore was a party from the beginning to the design to bring about the sale to the State of a mine that everyone concerned knew, or ought to have known, had no absolute, and probably no relative value remotely ap­proaching the price which it was intended the State should be inducedto pay for it . . .

Campbell outlined the results of operations during 1 92 1 -22 to show that the mines were over-valued and could not be worked profitably at the time of the purchase. He then censured Goddard for "urging upon the Government the purchase of the mine, and saying nothing about the economic aspect of the matter" ; his actions were clearly motivated by the fact that "he was to be given some interest in Mungana", which exposed him to the charge of "impropriety". Jones was also inculpated by Campbell for his part in the purchase negotiations as "a willing in­strument who is not free from moral responsibility for the intended fraud upon the State" having subordinated "his plain duty to the State to a misconceived and spurious loyalty to his colleagues". Theodore's integrity suffered more damage when Campbell in his report focused attention on the Fluorspar and Argentum companies . He concluded that Theodore "was guilty of the grossest impropriety in becoming secretly associated" with Goddard, whose connection "constituted, not only a serious breach of . . . duty . . . , but also a breach of the statute . . . " Both companies "were promoted and practically control­led" by Goddard : the Fluorspar company was almost entirely owned by Theodore and Goddard; and at the same time, they had held significant interests in Argentum. In both cases, the companies had ob­tained government advances in aid of operations, and had then sup­plied the state smelters with ore purchased on Goddard's instructions, a position "undeniably vicious in its possibilities". Campbell con­sidered Theodore's connection with the companies "improper and in­excusable", in which "that very secrecy show[ed] that they themselves were conscious of it".

Considerable attention was given in the report to the matter of the Mungana leases, and the subsequent formation of the Mungana Mines Limited. Campbell stated that there was "nothing wrong or irregular about the forfeiture of the mineral leases", for the rent had not been remitted for 1 9 1 7. However, before Reid's application was lodged Dunlop had told him that the leases were available, and Dunlop's recommendation of Reid's application was supported by the under­secretary for mines, despite the former lessees' offer to submit to penalties. Campbell suggested that Dunlop's action may have been "free from corrupt influences", but "in view of Frederick Reid's proved relations with Mr. McCormack, and, through him with Mr.

7 6 The Mungana Affair

Theodore . . . and the subsequent financial benefit received by the Warden in the same connection, one cannot avoid feeling a certain amount of suspicion with regard to the whole matter."

All the facts pointed to the involvement of Theodore, McCormack and Goddard in the M ungana leases. There were the government ad­vances to Reid in aid of mining-on Theodore's recommendation; Mc­Cormack's known interest dating from 1 9 1 7 ; Goddard's persistence that Mungana was essential to Chillagoe; and the 1 9 19 cabinet reshuf­fle (including Theodore's election to the premiership, McCormack's elevation to home secretary and Jones' retention of the mines port­folio), which provided a nucleus of ministers favourably disposed towards increased commitments at Chillagoe. Accordingly, C ampbell concluded that the formation of the Mungana Mines Limited "was part of a design already conceived" to facilitate the state purchase of the leases. It was shown that Reid did not have sufficient capital to restart the mines, and had not commenced production at the time they were sold to the government. The only ores he had sent into the smelters were from the abandoned dumps on which he made a profit only because of the exceptionally high metal prices then ruling. When the company was formed, Reid and McCormack had divided the 10,000 shares, and 1 ,250 of these were given to Goddard, both prin­cipals contributing an equal number. To Campbell, these facts together constituted clear evidence of a conspiracy to defraud.

Turning to the Chillagoe enterprise, Campbell held that Goddard's appointment "was not made honestly in the true interests of the State . . . " He admitted that there was "no conclusive evidence . . . no satisfactory direct evidence" of the determining consideration in God­dard's appointment. Yet no reason was advanced "sufficient to out­weigh the apparently higher general qualifications of some of the other competing candidates" ; Goddard "had no experience in the ad­ministrative or economic management of an enterprise which com­bined mining, smelting and marketing of products on a large scale." Campbell found it "impossible to accept" Jones' refusal to disclose cabinet discussions of the appointment, and was "forced to the conclu­sion that Mr. Goddard was chosen principally because it was thought by Mr. Theodore and Mr. McCormack that he would be useful in ways and directions not contemplated by the Statute."

Goddard's management and conduct were censured by Campbell in the most severe terms. He claimed that Goddard had displayed "indif­ference to both moral and legal obligations, recklessness in expend­iture, unscrupulousness in administration, dishonesty in advice and action in connection with the sale of the M ungana Mines to the State, and systematic concealment and misrepresentation of facts material to be disclosed in the public interest in the course of his duties, all of

Campbell's Report and TModore's Resignation 77

which conduct was actuated by consideration of his pecuniary or other personal advantage." He also recognized that the tariff systems and preferences meted out to Reid were "a serious aspect . . . based on a community of personal interest". Goddard's balance sheets had systematically suppressed and misrepresented the yearly results of operations of Chillagoe and his management in general contributed to the financial disaster that cost the state over a million pounds sterling. Campbell acknowledged that it would have been difficult for any manager not to have lost money on the smelters, "but an honest and otherwise efficient management and an intelligent supervision and proper control of such management could undoubtedly have minimized the annual loss". Recognizing that the purpose of restarting the smelters in 1 9 1 8 was "primarily a politico-il)dustrial" one "in · which economic laws may be said to possess no necessary sanction",Campbell nevertheless thought that the manner in which Goddard,and ultimately the state, conducted the Chillagoe enterprise showed a"deplorable laxity of control" in a state undertaking. In censuring boththe treasury and the mines department for this laxity, Campbell ex­pressed the conviction that the improper business relations ofTheodore, McCormack, Goddard and Reid had in part influenced theeventual outcome of the state's financially disastrous commitment tomining and smelting at Chillagoe.

The report reflected Campbell's meticulous and methodical review of all the evidence presented, including his assessment of the reliability of witnesses. Undoubtedly the banking accounts of Theodore and Mc­Cormack strongly influenced his findings, for he said that the accounts added "a new significance" to the facts presented. The strong wording of the report clearly indicates that Campbell viewed with utter con­tempt Theodore's association, and McCormack's secret involvement and deliberate misrepresentations to parliament and the public. There was no direct evidence that a fraud had been committed. It was a mat­ter of inference, Campbell proposed, but the "only one reasonable conclusion".

The fmdings of the royal commission had immediate repercussions. Goddard and Reid were portrayed as rogues who had unscrupulously profited by their relationship and positions, and McCormack's credibility and integrity were completely destroyed. Most importantly, the honesty and integrity of Theodore, the federal treasurer and at that time the most influential politician in Australia, were questioned. The focus of attention shifted automatically to Theodore, recently named as acting prime minister for the period of Prime Minister J.H. Scullin's proposed absence in England. Warren Denning, a Canberra political correspondent, later wrote that at first the royal commission "had never quite been taken seriously in C an-

7 8 The Mungana A/fair

berra . . . at worst it might provide a nine days' sensation, and then be forgotten; but that was not to be the case." The fmdings "staggered everybody, because Mr. Theodore rapidly was gaining the ascendant in the party and the Cabinet.''2 Labour was suddenly confronted with its most pressing leadership crisis since taking office. No sooner had details of the report been made public, than on 6 July 1 920, Theodore announced his intention to resign, and issued a strong denunciation of Campbell's fmdings.

The report of the Commission is the most dastardly piece of par­tisanship it is possible to imagine. The Commissioner condemns me without having heard me. He probed into my private affairs and my bank accounts without first calling on me to give evidence . . . The findings are very unjust. So far as they concern me, they are based on ex parte statements which are flagrantly untrue and malicious. The whole thing reeks of politics. For years my political enemies in Queensland have spread rumours of scandal. They have relied on false allegations of corruption as their chief weapons against Labour, and have persisted in the calumnies against me personally with peculiar malignancy. The Mungana inquiry is just another phase of that same campaign. My enemies are determined to assassinate me politically . . . 3

Moore told the Brisbane press that Theodore's allegations had no foundation. He defended Campbell's ability and integrity as a judge and royal commissioner, and emphasized that the Queensland govern­ment, quite contrary to Theodore's assertions, had done everything in its power to keep the inquiry free from political interference.4

Press reaction to the findings and to Theodore's statement com­manded editorials in nearly all Australian newspapers. On 7 July, headlines reflected the sensationalism of the findings, in phrases such as, "Dramatic Findings", "Guilty of Fraud" and "Theodore Resigns". The Brisbane Courier assured that "every care was taken by the Queensland Government to · keep [the inquiry] . . . free from the least shade of political partisanship" ; and urged that proceedings for fraud should be instituted, for "nothing short of that will end it or will be adequate to the requirements of justice".s The Sydney Morning Herald expressed "no desire to comment" on the findings. It did make the point that the cabinet crisis then created would prove troublesome to the federal Labour government, especially because Theodore's resignation-which was the only course-had come on the eve of the handing down of the all-important federal budget. ·And with Scullin scheduled to go overseas, the government was now left without strong, experienced Ieadership.6 Indeed, the crisis caused by the release of the findings was reflected in urgent telegrams despatched by both Scullin and John Latham 7 to request copies of the transcript of evidence and Campbell's report, so serio.us were the inferences which forced Theodore's resignation.8 The Melbourne Argus not only defended the

Campbell's Report and Theodore's Resignation 79

integrity of the royal commtsston, but also took Theodore to task severely for his bitter denunciation of the findings.

[There] can be in it no question of party politics. The paramount con­sideration in a matter of this kind is the credit of the country and the integrity of its public men. It is at once improper and deplorable . . .that Mr. Theodore should have introduced a party political note into his rejoinder to the report . . . [The] impression was that he had at least made his exit with manliness and dignity and with a praiseworthy readiness to spare his chief a painful task. But the desire to be generous is sorely tried when Mr. Theodore in an outburst of ill temper, impugns the fairness of the tribunal which has found so damagingly against him.

The Argus editorial asked why Theodore had relinquished office if the findings were false, particularly when he had placed so much emphasis on the· importance of the budget. It concluded that a vote of confidence within the Labour party would not restore his reputation ; only a court of law could determine whether or not he was innocent of the charges.9

On the same day (7 July 1 930) the Queensland Crown Law Office confirmed that it was considering the report and the evidence in view of a prosecution, but that it would be some time before a decision would be reached. This development provoked a biting editorial in the evening edition of the pro-Labour Daily Standard. "Moore Govern­ment's Political Inquisition" headlined the editorial which pointed out that "as a political bombshell it is unprecedented", and argued that the timing of the report had definite political implications. It complained of the "indecent haste in issuing the report and the slowing up in the mat­ter of a prosecution", after suggesting that any prosecution was "likely to be upheld pending a politically opportune moment when maximum party advantage can be gained for the Tories."10

Attention centred on Canberra and the House of Representatives. On Tuesday, 8 July, the "warm, quiet terrain suddenly seemed · charged with drama."1 1 Prime Minister Scullin, clearly troubled and suffering great strain from the devastating blow of the royal commis­sion report, immediately announced to members that Theodore had resigned his portfolio following the disclosure of Campbell's findings ; ·

and that he had in the meantime personally assumed responsibility for the treasury. In a subdued voice Scullin paid tribute to Theodore's capacity and ability as treasurer, and to the manner in which he had discharged his duties. Theodore had displayed "loyalty, courage and ability", carried out "most valuable work in the interests of the Com­monwealth" and tackled "difficult and complicated tasks" with "im­mense industry and great intellectual capacity"12• Theodore then ad­dressed the House.

The recent report of a Royal Commission in Queensland has reflected

80 The Mungana AJ!air

so seriously upon my character and has impugned my honesty so definitely, that I had no alternative but to hand in my resignation as Minister of the Crown and await an opportunity to vindicate my character . . . A grave injustice has been done to me and an opportunity must be afforded me to clear my character . . . [T]wo or three matters at this juncture should be made clear. The impression has been created by the press that I failed to present myself as a witness before the Royal Commission, and am, therefore in some sense to blame if the report is unjust to me . . . I was engaged in the preparation of the budget, and felt that I would not be free to visit Queensland until the budget has been presented to Parliament . . . I suggested that the Com­mission should adjourn its inquiry in order to give me an opportunity ·

to present myself for examination later. I added that I was surely en­titled to be heard, as my name had been so frequently mentioned, and as the Commission had . . . required the Bank of N.S.W. to produce particulars of my private and personal banking account. In view of these communications, the only conclusion I could come to was that the Commissioner considered that my evidence would not be of impor­tance. In view of the fact that he refused to concede the time necessary to present myself, it certainly did not occur to me that he was con­templating the bringing of a damning indictment against me.

Theodore denounced Campbell as "merely a pensioner in retirement, whose time should not have been so enormously important as to pre­vent him from postponing his inquiry and .continuing his investigations later". He had "not been given ordinary fair play", nor "received that measure of British Justice", Theodore complained, attacking Campbell's conduct of the inquiry. "If his mind was being directed in such a way as to inculpate me, is it not reasonable to assume that he ought, as a concession to justice, to have done something to meeting my convenience? . . . I have been the victim of a hired assassin."1 3

In concluding his speech, Theodore referred to the charges made against him : "all of them are dkmnably false, and that where they are founded on evidence, that evidence is tainted and malicious." Again, he did not state specifically what the charges were. Instead he read out a statement attributed to Real and Fahey, the defence counsel, to sup­port his contention. "The Commissioner's finding was absolutely un­justified and biased. There was no oral evidence connecting Mr. Theodore in any way with the charges. The Commission's fmding was based upon assumption and inference only. We regard it as a scan­dalous decision."14 Theodore once more demanded a hearing, if as a last recourse, "before a judge and jury" to clear his name, and reas­sured the House that "in the administration of any office that I have held I have kept my hands clean . . . I demand that the Queensland Government formulate without delay an indictment against me or in some way enable me to appear before an unimpeachable tribunal to be heard in my defence against these calumnies and damnable charges

Campbell's Report and Theodore's Resignation 8 1

that have been levelled against me."15 Despite the obvious artifice of the statement attributed to Real and

Fahey, which ignores the fact that Campbell had at his disposal documentary evidence including Theodore's bank accounts, Theodore devised to justify his denunciation of the findings on the content of this letter. Furthermore, Theodore's plea of injustice, by its very emotional nature, probably gained him in the ensuing days a deal of sympathy in -his predicament. It was, nevertheless, unjustified and misleading, to say the least. Correspondence between Theodore's office and the Crown solicitor showed that Campbell had indeed afforded him every opportunity to give evidence, but had apparently been frustrated by Theodore's refusal to give even the most general indication of when he would appear. Campbell kept the commission open for nine days after communicating, "it is impossible to keep the Commission open in­definitely". Theodore still failed to confirm a date.1 6 Theodore's speech was regarded as one of the finest pieces of emotionally charged oratory delivered in the House of Representatives. Warren Denning wrote in 1937 that Theodore's "expressed determination to clear his name, uttered in a voice that remained firm but charged with emotion, left few of those present with any feeling but one of sincere regret that a great man should be stricken at the height of his career". 1 7 Similarly, W.F. Whyte, biographer of William Morris Hughes, recorded in 1 95 7 ; "Hughes regarded the impassioned speech . . . as one of the most powerful utterances ever heard in Federal Parliament."18 Clearly, the speech made a dramatic impact not only on parliament but also on political observers. Newspapers throughout Australia highlighted the speech and reported it in detail . The Brisbane Courier again defended C ampbell's findings, and accused the Labour party of introducing the cry of political partisanship. It felt that Campbell's findings should be tested in court without delay.19 The Sydney Morning Herald and Argus offered little editorial comment. Perhaps the most penetrating and concise opinion was expressed by Henry Boote,20 the doyen of Labour editors, who declared in the A ustralian Worker that the most important task was to clear up the entire matter. "Whether we accept the findings of the Commission or believe, as many do, in Mr. _

Theodore's allegations of a campaign of calumny, the public life of the country is besmirched. It is therefore, the bounden duty of our public representatives to clear up the scandal and fix the stigma of infamy where it rightly belongs. "21

Boote's editorial corresponded with a statement released by McCor­mack, on the findings of the royal commission. This was McCor­mack's first public comment on the report, even though Theodore had been denouncing it for a number of days. He expressed astonishment at the charges, and similarly demanded that they be tested in a court of law.

8 2 The Mungana Affair

I was very much astonished at the report of the Commissioner on Mungana. The report reeks of political malice, and in my opinion is based entirely on hearsay and inference . . . The extraordinary charge made in the report that I was guilty of fraud and dishonesty must now be decided in a Court of Justice, and not left to the mere say-so of an individual.

McCormack pointed out that his interests had been well known in the past, and that they had been used against him in the 1926 election campaign. He also criticized the report for discrediting treasury of­ficials, expert mining opinion and the recommendations of William Poole, by its statement that the Mungana purchase was not a wise move.22

Public opinion was much divided, with Theodore's supporters confi­dent that his criticisms of the report were well founded. However, on 10 July, his supporters received a severe blow to their confidence, when doubts about Theodore's credibility were highlighted in a joint statement by Real and Fahey, emphatically denying the opinions Theodore had attributed to them in his parliamentary resignation speech. Theodore himself was obliged to acknowledge both mis­representation and that his information had been incorrect.23 This partly destroyed the effect of his impressive address to the House of Representatives and the sympathy it had earned.

Theodore and McCormack had acted in accordance with Macros­san's advice to the latter, by making no appearance before the com­mission and then attacking its findings as biased. It would be surpris­ing if this advice was not passed on to Theodore-although there is nodirect evidence-for the wording leaves little doubt that it was intended to be.24 Further correspondence following the commissioner's report shows that neither McCormack nor his solicitor shared Theodore's eagerness for the Queensland government to institute proceedings in order to test the charges in a court of law. Macrossan considered "that a prosecution would not take place" because the evidence before the royal commission could not be used. For example, "Reid could not be made to repeat his evidence that you concurred in the gift of shares to Goddard's nominee, Mangan."25 Macrossan also consistently emphasized the distinction between prosecution under criminal law and civil proceedings. The requirement that the Crown prove its case beyond reasonable doubt would make a criminal prosecution "a hopeless task". The less onerous requirements of proof in civil proceedings would "lighten the difficulties of the Crown and cor­respondingly increase Mr. Theodore's burden".26 Consequently, Macrossan advised that "the best course is to press for a prosecution and have prayers said that this request is refused".27 McCormack agreed, adding that a prosecution would be unlikely for political reasons. "I agree with you that the matter has now ended, and the

Campbelfr Report and Theodore's Resignation 83

Crown will not risk the advantage gained politically by prosecuting unless they are sure of a win. It is most unsatisfactory but it is politics. "28

Public attention was still focused on Theodore, awaiting develop­ments that might silence the rumour and private speculation about what action the Queensland government would take against the persons named in Campbell's report. Confusion prevailed, for the C rown Law Office was non-committal and the attorney-general, Neil Macgroarty, confirmed that the situation was receiving consideration although no positive decision had been reached,29 much to the chagrin of the federal Labour caucus whose meetings became scenes of bitter recrimination. 30

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CHAPTER 6

The Civil Proceedings

Moore's initial reaction to the royal commission report was to divorce his government from any further action. He immediately handed the report and evidence to the Crown Law Office, claiming that he had fulftlled his election promise in setting up the commission, and that the report had vindicated his own publicly expressed misgivings about the Chillagoe-Mungana transactions. There were, moreover, strong argu­ments against legal action. It was doubtful whether legal action could succeed, and failure even for narrowly technical reasons would cer­tainly be acclaimed by the defendants as cancelling the commissioner's findings. What apparently changed Moore's mind was a stormy meeting he and Macgroarty had with Theodore (who had travelled to Brisbane especially to demand a prosecution), on 1 5 July 1 930.1 Cabinet was divided on the matter of legal action, and the Crown solicitor, Henchman, was not keen. McGill and Macgroarty, however, pressed hard for legal action, with support from within the party hierarchy. Forty years later, Hubert Sizer, the minister for labour who had been party to C ampbell's appointment, claimed to have argued in cabinet against a prosecution, because "a 'not guilty' verdict would be interpreted as a whitewash and thus cause loss of the whole exercise". It seems there was concern that Prime Minister Scullin might set up some sort of independent inquiry to scrutinize the fmdings.2

Theodore was constantly demanding an opportunity to clear his name in a court of law, and had confided to Macrossan that he was determined to press "for civil proceedings to be instituted in the event of the Crown deciding not to prosecute, and not acceding to his alter­native request to refer the matter to the local Full Court".3 The situa­tion was most confusing. McCormack related from Sydney that he had heard that it was Moore's intention to prosecute Theodore alone, as only he had demanded action.4 If that report was accurate, it can have reflected only a passing phase, for legal advice would have satisfied Moore that it was impracticable to take action against only one of a group alleged to have conspired to defraud the state. Private speculation on the outcome of the Crown Law officers' deliberations

The Civil Proceedings 8 7

waned, after Moore had on 30 July publicly announced that there would be no criminal prosecution, but that it was almost certain that civil proceedings would be taken collectively against Theodore, Mc­Cormack, Goddard and Reid.� Legal advice had shown that criminal proceedings could not.be sustained, for the Official Inquiries Evidence Act provided that evidence brought before a royal commission could not be used civilly or criminally in any subsequent proceedings. No in­formation was given how the charges in civil proceedings would be framed. In fact, it was not until late August that the nature of the ac­tion became clear.

On 26 August 1 930 Macgroarty introduced a bill in parliament to amend certain particulars in the Crown Remedies Act of 1 874. He an­nounced that civil proceedings were being instituted for two reasons. First, the government considered it was "their duty to recover . . . the £40,000 . . . expended on the purchase" of the Mungana mines ; and, to afford the four principals the opportunity to go into the witness box to answer the charges made against them.6 The government proposed to make it clear that the Crown would have the right to take civil proceedings in spite of the fact that no criminal proceedings had previously been taken. Legal authority, including the opinion of H.V. Evatt, maintained that in this case it was imperative that criminal proceedings were instituted before civil proceedings could be con­templated.' Second, the legislation proposed to compel a defendant to answer any interrogatory, with the provision that the answer given could not be used in subsequent criminal proceedings.8

No sooner had Macgroarty outlined the proposed amendments to the Crown Remedies Act than the Assembly broke into an uproar. Labour members interjected, "This is special legislation to suit the Government ;" " . . . this is really a Bill to try to get Theodore . . . Fram­ing a Bill and 'framing' the man at the same time."9 Macgroarty, un­derstandably disconcerted by the personal hostility of Labour members, stated that civil proceedings had been decided upon because "the Government could not sustain a criminal prosecution". He im­mediately reworded his statement. "The criminal offence surrounding that [Campbell's] finding is the offence of conspiracy. The civil proceedings will be based on those lines."10 Abruptly Macgroarty resumed his seat. The leader of the Opposition (Forgan Smith) argued that the government was encroaching on the authority of the courts, and violating principles of jurisprudence by introducing legislation aimed specifically at the principals in the Mungana case. He argued that the proposed legislation would enable the government to repudiate the contract between the Labour government and Mungana Mines Limited, and that "all Government contracts, according to the prece­dents of the Moore Government, become variable at will, and subject

88 The Mungana A/fair

to variation or repudiation by any of their successors. That is the inex­orable logic of this action by the present Government"1 1 From this point the debate degenerated into mud-flinging, accusations and counter-charges, reflecting the then controversial nature of the Mungana issue in politics, over which the chairman of committees had no control. The Assembly was the scene of complete disorder. The conduct of the commissioner; his findings; Theodore's resignation; the motives of the Moore government in pressing for a prosecution-were all questioned and debated in impromptu harangues, amid loud inter­jections. In a state where politics has always had "a touch of the raw", the parliamentary scenes over this amending bill have had few equals in Queensland history.

The government probably erred in deciding to institute legal proceedings at all. It certainly made a grave error in deciding to amend the law to facilitate legal proceedings. Inevitably it offended against the deep-seated tradition that laws should not be changed retrospectively in ways detrimental to defendants, and was bound to outrage legal opi­nion and some conservatively-minded citizens not otherwise predisposed to sympathize with Theodore and McCormack. It is true that one could argue for Theodore and McCormack that the proposed amendments infringed the letter only of such a tradition and not its spirit. The tradition arose out of the different procedures and purposes of criminal prosecutions and royal commissions. It is a principle of common law that a person cannot be obliged to give evidence against himself, and can choose to remain silent; and a witness may decline to answer a question on the ground that in so doing he might incriminate himself. A royal commission is not a trial, and a witness is obliged to answer questions put to him. To reconcile the different requirements, laws-including the Official Inquiries Evidence A ct, had provided that evidence given before a royal commission could not be used in subse­quent legal proceedings. Neither Theodore nor McCormack had given evidence and, consequently, neither was morally entitled to the protec­tion afforded by law for those appearing before a royal commission. It is very doubtful whether this argument would have had much effect had it been presented, and it was not. The government would surely have been wiser to follow Moore's original impulse, and to announce its intention to take no legal action at all . The severe limitations im­posed by the Official Inquiries Evidence act and the Crown Remedies Act would have provided ample justification. The government could then have left it to Theodore to nominate some method of inquiry to which he could present the explanations which he claimed exonerated him of the charges levelled against him. Even if Scullin had set up an independent inquiry, which it is doubtful he would have attempted in the face of charges of political patronage, the initiative was on

The Civil Proceedings 8 9

Theodore to establish his innocence. As it was, the Moore government put itself irretrievably in the wrong, and almost certainly for reasons of political vengeance. It was confronted with the charge of altering the law "to get Theodore", for which it had no answer. It could gain little if anything from a verdict against Theodore ; and it stood to lose much credit if the verdict favoured him.

In Queensland, newspaper reaction to the bill was divided. Southern journals made no significant comment. The Brisbane Courier openly supported the amendments. "It opens wide the door for truth to be told, and if Mr. Theodore has a full and complete explanation, he cer­tainly should not complain."12 The Daily Standard brought into prominence Forgan Smith's contention that the bill created an offence where, under present law, no offence existed that could be successfully prosecuted. 13 Finally, the Daily Mail highlighted the comments of an anonymous Brisbane barrister, which pointed to the fact that the bill was far from being acclaimed as sensible legislation, and "would affect . . . all cases in the future in which the Crown was a party . . . From the legal point of view, the Bill was monstrous. An age old immunity at­taching to Executive Acts would be swept away. The Bill would eat deeply into the principles of British justice and British public life."14

The second reading of the bill was set down for 2 September 1 930. In a debate on strictly party lines, government members defended the amendments by claiming that they provided the opportunity Theodore had demanded, and that if, as he claimed, Theodore had evidence of his innocence, he would be cleared. Labour speakers denounced the measures as further proof of the government's enmity of Theodore. It was noticeable, however, that no one ventured a serious defence of McCormack, and no one even mentioned the roles played by Reid and Goddard in the Mungana transactions. Despite constant interruption by Opposition members, Macgroarty reiterated the government's reasons for proposing admendments to the Crown Remedies A ct.

The Official Inquiries Evidence Act made criminal proceedings impos­sible. When I say "impossible", I mean that you could not establish a prima facie case, and so criminal proceedings were out of the question . . . [Theodore's] desire was to get an opportunity to go into the wimess box because he had an answer. He will get that opportunity by reasonof the proposed civil action . . . If we do fail to establish a case, then, as in criminal proceedings the man will not be called upon to answer thecase. 1�

Macgroarty referred to correspondence between the Crown solicitor and Theodore's private secretary, which revealed "that every oppor­tunity was given, and, no matter which way anyone looks at it, the fact remains that Mr. Theodore got an opportunity" to appear but "deliberately refused" to name a date.16 The measures were defended

90 The MungtuUJ A/fair

by Macgroarty as making only two changes in the Act, changes desirable in themselves, and leaving the rest of it intact. A good deal might have been said for this argument had the amendments not been introduced with retrospective effect. The attorney-general subsequent­ly, and probably unwittingly, destroyed whatever impact this passage of his speech might otherwise have had by resorting to ill-judged per­sonal attacks on Theodore and McCormack.

Mr. Theodore refrained from coming because he was afraid. Then he says, "Prosecute me! I call upon you to prosecute me criminally . . . !" Mr. Theodore knew that a criminal prosecution would not be success­ful and could not be sustained-that is the reason for the suggestion . . .There was every opportunity for Mr. Theodore and for Mr McCor­mack-who undoubtedly ran away-to come along and answer before the Royal Commission any suggestion against them. They remained away and they did not do so, because-I consider-they were afraid to d 17 0 so . . .

Forgan Smith (Leader of the Opposition) made effective use of this opening that Macgroarty left him, underlining what the government could not deny-that it was altering the law in the hope of obtaining a verdict that it knew could not be otherwise secured. "Certain in­dividuals are found guilty by a Royal Commission appointed by the Government, with the terms of reference arranged by the Government, with an Act of Parliament framed for the purpose of this Commission, in which the law relating to evidence was altered, and in which certain other things were introduced to enable them to achieve a certain objec­tive." He argued that the government had assumed the guilt of those involved in the affair, whereas the Crown's duty was to vindicate the law, not to be concerned whether a verdict of guilty could be obtained. The Crown should have proceeded within the framework of existing law the wily and shrewd Forgan Smith contended, for the "charges made against the individuals are charges of fraud, corruption and dis­honesty . . . . " "If anything is criminal, those three words embrace criminality . . . Those people should have been proceeded against by the ordinary law of this State, and it should have been left to the court to deal with the matter according to law and according to the princi­ples of justice."18

The debate was characterized by many hostile exchanges between government and Opposition members. It was obvious that the pre­judices and antagonisms of several members towards others in the op­posite party came to the surface all at once. Apart from Macgroarty, the member for Logan, Reginald King, was the only minister to speak in the · debate, and replied to some of the criticisms levelled at the attorney-general. His efforts were in vain, for he finally resorted also to attacking the party opposite. The government's majority ensured the

71tt Civil Proceedi�tgS 9 1

passage of the bill through all its stages, but the effectiveness of the Opposition's attack, the weakness of the government's argument, and the widespread public opposition to the bill were indicated by the fact that the two Independents, 19 who had previously supported the governrnent in al l divisions during the session, voted with the Opposi­tion on this measure. The bill received royal assent on 2S September 1 930.

None of the principals in the Mungana affair made any public state­nlents during the three weeks of debate on the Crown Remedies Act Amendment Bill, although McCormack did convey his thoughts on the rneasure in correspondence with Macrossan. He wrote on 30 August 1 930 that the government was determined to ruin both Theodore and himself, and for political purposes, by removing "any disabilities that may preclude it from having its revenge. I fully realize that the Crown can persist in its purpose until it ruins the individual no rnatter what the final results of the Courts may be."20

Much of the publicity that had surrounded Campbell's findings and Theodore's resignation in early July had abated. The Austr alian press, where it was not overshadowed by the impending legal proceedings, reflected the political leanings of the newspaper rather than informed nnd serious consideration of the implications of the Amendment Act. The fact that Theodore had been the most influential Labour politi­cian, and whose advocacy of Keynesian economic policies in the Depression hnd alienated most financial interests in the country,21 un­doubtedly contributed to this dearth of newspaper comment. What is more. the conservative press openly supported the Nationalist party which saw Theodore as the greatest obstacle in the party's bid to regain office. He was, in Warren Denning's assessment, a "penetrating thinker with an original mind not dominated by orthodox beliefs'\ and had an .. invaluable background of administrative experience" as premier of Queensland. Theodore's "qualities of leadership had been asserted and tested in many difficult situations" and just as their counterparts in Queensland had experienced his "ruthlessness in ac­tion " for over a decade, the Nationalist party in the Federal Parlia­ment s aw that under his guidance " Labor might completely establish its position. "22 Probably the most balanced comment was made by The Ro1111d Table in the issue of October 1 930. It noted shrewdly that for all his demands for an opportunity to state his cas� Theodore had not resorted to legal remedies that lay wholly within his own hands.

Criminal proceedinas are unlikely in view of the restrictions on the ad­mission of evidence in a prosecution, and even civil proceedinas presented difficulties which the Government has now souaht to remove by amendments to the Crown Remedies Act. Mr. Theodore expressed impatience at the postponement of the opportunity to vindicate himself

92 The Mungana A/fair

before a jury. On the other hand, he has not availed himself of the in­itiative that lies with him for instituting proceedings for defamation against journals which make no secret of their desire to afford him the opportunity he claims . . . There is among responsible persons also the consciousness that restraint in comment is proper so long as it appears probable that judicial proceedings are pending. 23

Theodore had instead been presenting a defence of his conduct over the Mungana purchase to a series of public meetings in Sydney. Delivered with all his oratorical skill to audiences predisposed to sym­pathy and knowing little of the intricacies of the Mungana case, Theodore's addresses must have been effective in gaining support for his cause. He did, however, confine himself to certain aspects of the af­fair, entirely ignoring those most damaging to him, and even then he presented a highly misleading picture by making selective use of statistics. He claimed that the mines had not been fraudulently resold to the government, and that they were worth the price paid. Although geologists' reports had urged purchase of the mines, cabinet had deliberated until Poole's report demonstrated that the purchase would prove a sound investment. A typical illustration of Theodore's public defence is contained in the following passage from a Sydney rally.

[The price was] fully covered by the value of the machinery and the profits which could be made by the mining and treatment of the ore . . . After the Government took over the mines, between March, 1921 and December, 1925 , altogether 99,000 tons of ore was taken out of them for a value assayed by the smelters at £ 345,000 . . . In 1926 . . . a further 16,000 tons were taken out valued at £86,000.24

The annual reports of the under-secretary for mines substantiate Theodore's estimates of the tonnage of ore mined ; however the values Theodore cites were deceiving, to say the least. He had quoted es­timates on the gross metal contents, and ignored deductions and the anomalies revealed by the special report of the auditor-general in 1 927. Far from making any profit, the state incurred very heavy losses in operating the mines. Moreover, Theodore had failed to take into ac­count the huge capital expenditure, some £220,000, which the state had committed to developmental work and mining plant at Mungana.

As in his speech of 8 July 1 930 to the House of Representatives, Theodore's defence overlooked the charges of impropriety and corrup­tion. He first failed to explain how Reid was able to secure the Mungana leases from the Crown when it was decided that the govern­ment was to create a state enterprise at C hillagoe, in particular as the Mungana ore was recognized as essential to operations at Chillagoe. Second, Theodore ignored the fact that the modest sums actually ex­pended by the Reid syndicate in developing the mines had been ad­vanced by the government, which was then in the position of having to

The Civil Proceedings 9 3

pay for value added to the mines by use of its own money. Third, the purchase money subsequently went into the pockets of the shareholders, and one half of it had been divided secretly between Mc­Cormack and Theodore who were both at that time members of the government that had authorized the purchase. Fourth, no explanation was offered in response to the charge that Theodore had been an ac­complice of Goddard in the two mining companies. These charges and many others were completely ignored in Theodore's addresses to various public meetings. His format might have been intentional. Theodore was an experienced politician, with a wide knowledge of law, and if he had not seen the possibilities himself, legal advice would no doubt have drawn his attention to the weakness in the Crown's an­nounced charge. In an action in which fraud has been alleged, the plaintiff is required first of all to prove that damages have been suf­fered through the intent to defraud. In this case, the focal point in the Crown's charges would have to be that the Mungana mines were not worth the amount which the government had paid. Accordingly, Theodore's public speeches seemed to concentrate on the value of the mines-that they were in fact worth £40,000. Theodore had devised a strategy for his defence: aside from public remarks, he had arranged for Dr Evatt to accept the brief. It was not as though Evatt was un­familiar with the Mungana case because during the royal commission he had offered private advice to both Theodore and McCormack, which had in turn been passed on to McCormack's solicitor. On 1 2 November 1 930, Evatt applied for leave from parliamentary duties in New South Wales to defend Theodore in the impending civil prosecu­tion ; but his application was to prove unnecessary as within a month he had been elevated by the Scullin government to a High Court vacancy. J. T. Lang later suggested that the High Court appointments had been manipulated by John Wren and approved by Theodore who "was also anxious to see that the High Court was not anti-Labor . . . [as he] still had Mungana hanging over his head".25 While it may have suited Theodore to have Labour appointees on the High Court bench should he be required to appeal against an unfavourable verdict, there is no evidence to support Lang's contention that either Wren or Theodore had influenced Evatt's appointment.

During these months Scullin had been overseas and the government had been left in the keeping of J.A. Lyons and J.H. Fenton,26 who were not well disposed either towards Theodore personally or towards his economic philosophy and proposals to offset the effect of the Depres­sion. However, immediately following his return in January 1 93 1 , Scullin announced his intention to move for Theodore's reappointment as treasurer, even though the Queensland government's action against the principals in the Mungana case had not been heard. Scullin's

94 The Mungana AJ!alr

reasoning was based on the need for Theodore's experience and leadership in face of the economic crisis, and the need to strengthen Scullin's own position with the dissident New South Wales faction in caucus. But, as J.T. Lang27 recorded in 1 962, there were strong doubts about such a move, for several federal Labour politicans "argued that it would be taking too much risk if they re-admitted Theodore to the cabinet before he cleared himself of M ungana. They were afraid that the Nationalists might use their majority in the Senate to precipitate a double dissolution. To fight an election on Mungana would be asking for trouble."28 Instead of achieving the desired effect, Theodore's restoration to cabinet provoked a split within caucus, reflected in the 24 - 1 9 vote favouring his return. On 4 February 193 1 , Lyons and Fenton resigned from cabinet in protest over Theodore's reappoint­ment. They considered it improper for Theodore to rejoin the govern­ment before his character had been cleared, although the objection went much deeper, and the real issue at stake was in fact a conflict of economic views because Theodore "had played an influential role in guiding the party's radical section in opposition to the orthodox policies of Fenton and Lyons while Scullin was in England".29 This precipitated a cabinet reconstruction, during which a ministerial spill occurred, resulting in the caucus' dismissal of J .A. Beasley, J.J. Daly and Frank Anstey.30 The New South Wales faction, supporters of the "radical" Lang, withdrew from caucus, amputating the left wing of the party. John Robertson's biography of Scullin has summed up the ef­fects of the decision to reinstate Theodore.

Apart from alienating the right wing, the recall of Theodore an­tagonised the Lang party machine. Since he had forsaken Queensland and entered Federal Parliament through a Sydney seat, Theodore had been regarded by Lang as a rival for dominance in New South Wales Labor. Lang wanted to destroy Theodore, any body which embraced him risked the wrath of Lang. Hence, by reinstating Theodore, Scullin put his Government f1rmly in the vortex of the New South Wales fac­tion fight. 3 1

The disintegration of Scullin's government was completed within a month when, in March 1 93 1 , Lyons and Fenton voted for an Opposi­tion motion of no confidence on the reinstatement of Theodore; and they left the party. The vote on this motion revealed that the govern­ment's majority had been reduced to five: those members of the New South Wales faction who had withdrawn from caucus, and had sup­ported Labour in the division, affording that group a balance of power. Few observers were confident that Labour could survive in such a precarious position. Amid the chaos, the Queensland government then announced that the long-awaited civil action had been set down for July 193 1 , the writs having gone out some months earlier.

The Civil Proceedlngs 9 S

The civil case- The King vs Goddard, McCormack, Reid andTheodore-commenced on 22 July 1 93 1 , before the Queensland ChiefJ ustice, J.W. Blair,32 and a jury of four.33 This format had been provided for under the Jury A ct of 1 929, and was quite normalprocedure. The Crown was represented by the attorney-general, Macgroarty, and McGill. Counsel for the defendants were B.H. Matthews34 (for Goddard), N.W. Macrossan35 (for McCormack), A.J. M ansfield36 (for Reid) and R.F. Philp37 (for Theodore)-all of whom had been instructed by the one legal firm, Biggs and Biggs. During preliminaries, including the selection of a jury from a panel of nineteen, full advantage was taken of the right to challenge in this procedure, and only two members of the jury were selected. The additional two jurymen were installed after a second round of selections. Mansfield immediately sought to have Reid dismissed, because he was bankrupt and the Crown would be unable to recover anything from him. Chief Justice Blair, however, ruled that he would wait until evidence had been completed, although at the time, he was "disinclined to allow it".

The Crown sought to recover £ 30,000 in damages from all fourdefendants, as the difference between a fair price for the mines and the price actually paid : £ 3,807 from Goddard and £ 1 3 .328 from McCor­mack and Theodore, being the proceeds they received from the sale of the mines to the government. The Crown advanced alternative lines of argument for this additional claim : either these sums had been received by the defendants as agents of the Crown, and misappropriated; or, they had been received in breach of their duty as agents of the Crown.31 The Crown's case was set out in a statement of claim inwhich it endeavoured to prove conspiracy and damage to the King. The defence was obliged to submit a similar claim in the interests of the four defendants. The weight of evidence would decide the outcome in the end, after interrogatories had been filed and witnesses examined.

The Crown claimed that Theodore and McCormack had conspired with Reid as lessee of the mines, and with Goddard as manager of the smelters, to bring about the purchase of the mines by the state, andthat they had used their public positions to influence other cabinet members to achieve the purchase for their own personal advantage. The statement of claim, consistina of fifty-one statements, coveredmany areas : the Chillagoe Bill ; Reid's leases; the alleged interest of Theodore and McCormack in those leases; the appointment of God­dard as Manqer of the smelters, and the bribe of a one-eighth interestto expedite the purchase; the loans granted to Reid on Theodore's recommendations; the negotiations for the purchase of the mines; theformation of the Muqana Company to facilitate the purchase: andthe distribution of dividends to the defendants-all of which werecalculated to reconstruct the schedule of conspiracy that resulted inthe fraud. 39

96 The Mungana A/fair

The defence submitted, "there was never any combination con­spiracy or agreement between them or any of them, as [was] alleged . . . [The] leases, mines, machinery and plant were purchased from Mungana Mines Limited, by the Government upon the advice and recommendations of certain Government mining experts . . . and one, Poole, an independent mining expert." The machinery alone had been valued at £20,000, and the expert reports valued the mines in excess of £40,000, and recommended their purchase. The defendants denied all allegations made in the Crown's statement of claim.40

In his opening address for the Crown, McGill stated that documen­tary evidence would be called for, to reinforce the evidence fundamen­tal to the Crown establishing its case. He then outlined in a nutshell

-- what he considered was the case. "No man should be allowed to have any interest against his duties."41 In British law the principle enforced was that any agent or servant of the Crown who received money by way of misappropriation or a bribe was liable to account for that sum and repay with interest the amount accrued in departure from his duty. McGill described Mungana as "the story of the conduct of men, which though regrettable was equally obnoxious".42 He sketched the history of the Chillagoe Bill, the Reid leases, the government advances, God­dard's appointment, the negotiations and mining reports prior to the purchase, and the role of each of the defendants over the period from 1 9 1 6 to 1 925 . His approach to the subject was the same as that adopted in the royal commission, but he had at this time the advantage of knowing from Campbell's report that Theodore, McCormack and Goddard had received dividends from the Mungana purchase. McGill, then, emphasized the methods of secrecy adopted by the defendants in order to prevent disclosure of their interest and to manipulate the purchase. He stated that neither Reid nor McCormack had put any significant sum into the mines, and that this had been done by the government after Theodore had used his influence to arrang·e the ad­vances. McGill was particularly severe on Goddard who, he nlain­tained, was "corrupted and bribed", but who had willingly been partner to the conspiracy after 1 920. After detailing the dividend transfers between Reid and McCormack and Theodore, he com­mented that the facts spoke for themselves. "They tell their own story ; they tell a story that condemns the defendants Theodore and McCor­mack."43 In concluding a very strongly worded address McGill said :

This is a case that bristles with details, and which is to some extent in­volved and difficult to grasp. It is your task, as jurymen, to follow thefacts and make reasonable and fair inferences from them. The Crown puts to you that these mines were not worth anything like £40,000. There was a loss incurred on the treatment of ore obtained from them,and from that fact. vou will be able to form an opinion of their value.

The Civil Proceedings 9 7

So I complete the sorry tale of a swindle worked upon the Crown.44

At this point Mansfield announced that he was appearing for Goddard and Reid together and would be assisted by Matthews. This showed that the tactics of the defence in using separate counsel for each defen­dant had been a legal manoeuvre to maximize the right of challenge of the jury.

As his first witness, McGill called T.H. Smith, records officer of the mines department, who produced in evidence Reid's mineral lease files ; correspondence between Goddard and the mines department; reports on operations at Chillagoe ; files on the government advances to Reid ; and documents concerning the negotiations and Mungana purchase. On the following day, Smith produced further documentary evidence, including monthly payment cheques for royalties owing to Reid; telegrams and correspondence between Reid, Goddard and Theodore; and correspondence between Goddard and Jones-all of which were read and tendered as exhibits. Mansfield asked Smith to produce copies of reports by Horsley, Saint-Smith and Poole ; the auditor-general's report for 1920-2 1 ; and a document relating to the schedules on grants-in-aid and subsidies. When cross-examined by Macrossan, Smith said that the mining warden had recommended Reid's application for the leases, and in the case of mining advances it was normal practice to make application through the member for the district. He admitted also that McCormack had forced Goddard's resignation and had contemplated the possibilities of criminal proceedings.4�

Jensen, then a consulting geologist after resigning from the mines department in 1 922, was called to the witness box. He repeated evidence he had given before the royal commission, which implied that Theodore and McCormack were both in partnership with Reid in the Mungana Mines. Under Mansfield's cross-examination, Jensen admit­ted that the Mungana mines were essential to operations at Chillagoe, and that to replace the machinery at Mungana would have involved considerable expense. He denied that he had recommended the govern­ment purchase of the mines, because factors such as mining costs, metal prices, labour costs and smelting processes had to be considered thoroughly before a proper value could be placed on the mines.46

A former smelter employee, E.A. Kingsbury, told the court that he had on 3 May 192 1 acquired three hundred shares in Mungana Mines Limited-at 35 shillings per share for which he had paid Goddard over £500. The cheque form was submitted in evidence, as were a number of dividend forms signed by Reid representing payments on his scrip.47 The registrar of the Supreme Court and joint stock companies (J .S. Kennedy) produced the articles of association, certificate of incorpora­tion and a summary of capital and shares of the Mungana Mines

98 The Mungana A/fair

Limited, dated 1 1 April 1 92 1 . Kennedy stated that no other return showing a summary of capital and shares had been made between April 192 1 and January 1 928 when the company was struck off the register. Macrossan established in cross-examination that it was per­missible to have nominees registered, but that they were liable to pay for their shares.48

The registrar in bankruptcy (J.D. Keenan) produced exhibits tendered in the bankruptcy proceedings against Reid, including a receipt for £ 1 ,500, dated 12 October 1 920, being McCormack's share as owner of a half interest in the Mungana Mines syndicate. Minutes of Executive Council ; cheques drawn on the smelters accounts payable to Mungana Mines Limited; the ledger accounts of the Mungana Mines Limited and Mungana syndicate; were all tendered as exhibits.49 The former manager of the Chillagoe branch of the Bank of Australasia, L.A. Collins, who had . been a registered shareholder with a hundred shares in Mungana Mines Limited, stated that he knew "nothing about them". He did claim that Reid had given him scrip for forty-four shares which later yielded him dividends, but that he hadnever been paid dividends on the registered one hundred shares. The Bank of New South Wales tendered deposit slips and cheques from McCormack's account, showing payments made by Reid and cheques drawn in favour of Theodore. Counsel for each defendant immediately objected, but Blair admitted the exhibits subject to his reserved decision. 50

McGill had the transcript of evidence of the bankruptcy case, in which Reid had disclosed McCormack's half interest in Mungana Mines Limited, confirmed by reporters from the State Reporting Bureau, and admitted in evidence. McGill also on 4 August 1 93 1 tendered as evidence Reid's answers to interrogatories. These were the records of questions put to Reid before the trial, that would serve as his testimony when the jury considered its verdict. In the inter­rogatory, Reid admitted that he had applied for leases 556, 557, 558 and 559, in which McCormack had acquired a half interest under the consideration that each of them "should share equally in the expenses or losses in connection with working those leases". Reid stated that he had obtained government advances to work the mines, and had used the advances to purchase machinery. More answers from Reid in­dicated that McCormack held 4,497 shares, and Goddard 1 ,250, but until "the scrip was issued in March, 1 922, Goddard did not know the extent of his interest in the Company". Finally, Reid maintained that he was aware of Goddard's appointment "but he did not know }Vhether McCormack or Theodore had approved of the appoint­ment".5 1

Goddard's answers were made known the following day. He stated

The Civil Proceedings 9 9

the facts concerning his appointment, as revealed in Executive Council minutes, and also maintained that he did not know who was responsi­ble for his appointment. On the subject of his shares in Mungana Mines Limited, Goddard said that he had collected dividends and pay­ments on his allotted interests but did not know until March 1 922 that his actual holding consisted of a one-eighth interest. However, he in­sisted that he had acted in his official capacity in recommending the Mungana purchase, and not because he held an unknown interest in the mines. 52

McCormack's replies were tendered immediately after Goddard's interrogatories were dispensed with. He claimed to have acquired his interest in M ungana in December 1 9 1 7, under an agreement to bear the cost of operations. In answer to a question about his parliamentary statement of 4 November 1 926 ("there was quite a number of people in that syndicate"), McCormack replied "he believed that other persons, whose names he did not know, were financially interested in backing Frederick Reid in this mining venture". He added that on the formation of Mungana Mines Limited he did not become entitled to issue any shares to himself or anybody else, but only to "the beneficial interest on a moiety of shares to which Reid was entitled". McCor­mack also confirmed the payments made to him over the period of his connection with the Mungana mines, as revealed in his banking ac­counts.53 Finally, Theodore in his statement confrrmed that payments had been made to his accounts, although he could not recollect whether he gave receipts for the cheques. Blair ruled that the answers to all interrogatories should be made available to the jury, and accord­ingly the Crown tendered the accounts without publicly announcing the details to the court. 54

McGill called EJ. Laun, a former inspector of mines at Chillagoe from 1 9 1 3 to 19 1 7, who said the value of machinery had been over­estimated and the cost of mining at Mungana under-estimated. Laun claimed that quality of the ore in the lower levels was not of as high quality as that which had been extracted when Rodda was mine manager before the original company had closed down.55

Following the admission of several minor exhibits, the attorney­general announced that the case for the Crown was concluded. He then asked that all evidence tendered, with few exceptions relating to the bankruptcy hearings, be admitted against all four defendants. Counsel for the defendants objected to this request, and following Blair's ruling that evidence not relevant to the charge of conspiracy would not be admitted, Mansfi�ld immediately moved a motion for non suit on behalf of Goddard and Reid. He said that there was no evidence to substantiate the Crown's claim of conspiracy and intent to defraud. The mines were worth £40,000; Theodore had no proven in-

1 00 The Mungana Affair

terest in the leases ; and no evidence could be produced to show that McCormack's interest had been obtained for any improper purposes. None of these factors could be construed on the evidence in favour of the Crown's claim. Macrossan similarly moved a motion for non suit on behalf of McCormack, submitting that there was no evidence that McCormack's interest was a gift, or that Theodore was involved. The Crown could not prove that the gift of shares to Goddard was a bribe; further, the price for the mines was fair, despite the losses made by in­efficient government control. McCormack's counsel concluded that there was no evidence of damage to warrant continuing the action. "The foundation for any civil action for conspiracy must be damage, and as there was no damage shown in this instance, conspiracy could not be proved."56 Finally, Theodore's counsel argued that there was no evidence to show that Theodore was interested in the mines, and his only association with Reid was as the member for Chillagoe, through whom Reid had applied for government assistance. This was standard procedure, as was the negotiation for the purcJtase of Mungana which, on Poole's estimates, was obtained at a fair price. He submitted that the payments made by McCormack to Theodore were "innocent payments-moneys owing to Theodore quite apart from Mungana". Although counsel had used different grounds on which to base their submissions, each in turn had stated that the evidence did not show conspiracy or common design, thus the Crown allegations could not be proved. 57 .

In opposing the motion, Macgroarty said, "conspiracy was a matter of inference . . . The present circumstances showed a set of circum­stances that must go to a jury with a reasonable inference that there had been a conspiracy between the defendants." There were a number of factors which collectively showed common design and conspiracy : McCormack was a member of parliament, holding a half interest in Mungana; Goddard, as a Crown officer, accepted 1 ,250 shares from McCormack and Reid before the state purchase was made; Goddard was the negotiator in this purchase; Theodore had guaranteed Reid's "bona fides" on his application for advances ; McCormack had made gift payments to Theodore; and, finally, absolute secrecy had sur­rounded the history of Mungana. Macgroarty submitted that it was reasonable to infer that McCormack's half interest was a considera­tion for the use of his position &nd influence ; that Theodore had been part of the conspiracy, by virtue of his actions in promoting Reid's proposals ; and that Goddard had been bribed to use his authority to effect the purchase of the mines. As for damages, Macgroarty claimed that the value of the machinery and the net value of Mungana ores combined, proved that the £40,000 purchase price was highly excess­ive. 58 Blair had little option but to rule that the case should continue,

The Civil Proceedings 10 1

pointing out that if the Crown were to a}lpeal against a decision favourable to the defence's motion, the cost of further legal action would be a burden on all parties. 59

Counsel for the defendants indicated that there would be no evidence called for the defence, whereupon Blair intimated that the nature of the case and the charges "induced him to exercise his discre­tion in favour of allowing each counsel to address the jury. Mr. Mans­field would address first, and· then the counsel for the Crown would follow."60 Contrary to first impressions, this procedure was normal, as Mansfield had submitted an item of evidence on the value of the mines, while Macrossan and Philp had declined to table any documentary evidence or call witnesses. Their tactic, to rely solely on the Crown's inability to present a case which conclusively showed intent to defraud, was a standard legal manoeuvre in such circumstances, and had the effect of "sandwiching" Crown counsel in the address to the .

JUry. On 1 3 August 1 93 1 , Mansfield addressed the jury, pointing out that

the Crown had failed to prove that there "had been fraudulent con­duct, bribery and conspiracy on the part of the defendants". Reminding the jury that a person "was presumed innocent until he was proved to be guilty", Mansfield claimed that on counsel for the Crown's admission "the question of guilt of the defendants was a mat­ter of inference" ,6 1 and the jury must be careful that the facts were not open to other hypotheses before they arrived at any conclusion. He suggested that the conspiracy charge "was a ridiculous one", and if a conspiracy had been designed, it would have required the collusion of Jones, Poole, Saint-Smith, Rodda, Corbould, the auditor-general and others. He stated that Goddard had urged the purchase of the mines because of the shortage of ore supplies, a fact recognized by Jones who visited Chillagoe personally just after Goddard had acquired the authority, under the Amendment Act to negotiate for Mungana ore. Mansfield's concluding statement to the jury was that all the documen­tary evidence had to be considered, not merely those pieces relevant to the Crown's case. He expressed confidence that the evidence would ex­onerate the defendants.62

Blair then adjourned until Monday, 1 7 August, to give the parties in the case time to prepare questions central to the issue. He announced that by agreement a series of questions would be directed to the jury upon which they were to arrive at their decision. When the court resumed, Blair confirmed that the questions had been disclosed, and ruled that Mansfield should be allowed to comment on the specific questions.63 A list of twenty-five questions upon which the outcome of the case rested entailed the issues raised by the Crown's statement of claim. The jury was required to decide the following : (i) whether the

102 The Mungana AJfair

gift of shares to McCormack was corrupt, and accepted corruptly to use his position and influence in obtaining advances and expediting the purchase; (ii) whether it was the defendants' intention to conspire or to use unlawful means to attain that end ; (iii) if the defendants had fraudulently concealed their interests in bref .ch of their duty ; (iv) was Goddard's interest a bribe to promote the government purchase? (v) whether Mungana Mines Limited was an instrument of conspiracy ; (vi) if £40,000 was an excessive price for the mines ; (vii) did either Theodore or McCormack authorize the purchase to further the con­spiracy or in consideration of their interests? (viii) was a fraud com­mitted by officers of the Crown accepting dividends in breach of their duty? Mansfield immediately contended that there was no evidence of corruption or abuse of ministerial office in the gift of shares to any party. He claimed the mines were worth at least £40,000, and that no fraud had ever been conceived or performed.64

In his closing address, McGill argued that conspiracy was by its nature rarely susceptible to direct proof; it was normally a matter of inference from the known facts. He claimed that in this case, the in­ference was irresistible, and stressed that such an inference was drawn both from the failure of the defence to submit evidence in support of any other explanation of the undisputed facts, and from the refusal of all the defendants to enter the witness box. He pleaded that the jury should use common sense to work out why the interests of Theodore and McCormack were kept secret. McGill re-examined in detail the evidence submitted by the Crown and that gained from the cross­examination of witnesses. That systematic conspiracy and abuse of public office had characterized the Mungana transactions was per­sistently emphasized by McGill. He pointed out that the leases had reverted to the Crown even though the government knew that it was essential to have ore supplies for the smelters when the Chillagoe Bill was passed; yet the leases were handed back to Reid. Theodore had supported Reid's application for advances and then, in breach of agreement, Reid and McCormack had appropriated the first profits, from which Theodore in· turn benefited. McGill asked, "Is this the con­duct that leads you to place any confidence in the rectitude and con­duct of these men in other respects?" Moreover, he argued that God­dard "commenced well and was afterwards corrupted" once he became associated with Reid and the Mungana company. The secrecy which had been so widespread indicated conspiracy.

"Secrecy is a method adopted by people who conspire to do wrong; by people who work corruptions . . . " [The] only business the Mungana Mining Company did was to sell the leases, collect the money and distribute it. The company was formed for the purpose of effecting the purchase of the mines and leases by the

The CivU Proceedings 1 03

Government, in such a way that the two men would not lose their Parliamentary seats.65

The Crown's address ended with McGill emphasizing that after the purchase had been effected the conspiracy had cost the state nearly £ 1 85,000 for the extraction of the Mungana ores-that in itself con­stituted a fraud. The climax of McGill's speech was a serious indict­ment of the defendants. "The purchase was the culmination of a nefarious and fraudulent design perpetrated and carried into execution by these four defendants, not one of whom has gone into the witness box."66

Macrossan addressed the jury on behalf of McCormack, and at once attacked McGill for "clamour", "vituperation", and "abuse". He submitted that the government was not justified in alleging "con­spiracy and corruption for the purpose of throwing this atmosphere of suspicion about a perfectly honest and business-like transaction".67 It was "ridiculous" to suggest that there was any conspiracy or sinister motive in Goddard's appointment. He was appointed under an Act designed to promote mining in north Queensland, and, under verbal in­structions to keep the smelters open, he had foreseen the necessity of purchasing Mungana. Had the Girofla and Lady Jane ores not been tapped, then "gougers" and independent mining concerns would have had no market for their ores once the smelters had been forced to close. What Macrossan did not say was that Reid himself was supply­ing most of the outside ores from dumps and abandoned workings. Macrossan denied that McCormack was part of any secret associa­tion, as it "was common knowledge in Chillagoe that Mr. McCormack was a shareholder and a very big shareholder". He maintained that Goddard's shares were a gift, not a corrupt inducement-as it was Mc­Cormack himself who had forced Goddard's resignation in 1 927. In addition, it was a cabinet decision based on Poole's report, and not the influence of any single member, that had made way for the purchase of the Mungana mines. Macrossan concluded that there was no relationship between the payments from McCormack to Theodore and the Mungana dividends. McCormack's interests constituted a "perfectly legitimate mining speculation, entered into in good faith without any suggestion of a gift or corruption".68

Philp's final address to the jury, on behalf of Theodore, submitted that the only evidence against his client were a number of cheques representing an alleged half interest in McCormack's holdings in Mungana Mines Limited. He noted that certain cheques did not repre­sent exactly half the dividends paid to McCormack, and "the deposit slips for each cheque were made out in Theodore's own hand writing and all were crossed. Did the jury think that Theodore, entering into a guilty conspiracy would manufacture evidence against himself like

104 The Mungana A/fair

that?" Philp maintained that the case was "purely a political case as far as Theodore is concerned . . . an attempt to stab him in the back with a legal action, a new departure from political methods . . . political prejudice alone could convict Theodore as there was no evidence in­culpating him in any of the allegations."69

In summing up, Blair commented that this was "an important case . . . certainly unique . . . in Australia." He instructed the jury that their decision must be based on the evidence alone, which to his mind was circumstantial because of the emphasis on inference. "From the nature of the evidence, it was of a class known as circumstantial. The jury must not for one moment forget that circumstantial evidence was not as strong as direct evidence . . . The Crown must show that the con­spiracy was to defraud, to cheat the Crown by selling for £40,000 property worth only £ 10,000. Two things must be established, con­spiracy and fraud".70

Blair then defined conspiracy under the Criminal Code, and emphasised that if the jury could establish intent as alleged, then the Crown had a strong case. He outlined the history of the Mungana leases and the legislative enactments leading up to their acquisition by the state, and pointed out several issues that the jury would have to consider. It was well established that McCormack and Reid were partners, but the question, to Blair's mind was whether or not McCor­mack's interest was speculative or a corrupt gift, and if so, the pay­ments to Theodore and the parcel of shares held by Goddard would have to be considered. He instructed that the question whether Mungana Mines Limited was part of an alleged conspiracy was equal­ly fundamental in establishing the Crown's case. Blair also referred tothe non-appearance of the defendants in the witness box, commenting that interrogatories under oath seemed conclusive and sufficient, although the defendants were not bound to submit to cross­examination in the witness box to test the answers given. 7 1 Blair fmally instructed the jury that its first task was to answer three questions on which he believed the case turned : " 'What was the value of these mines at the time they were purchased by the Government? Was £40,000 a fair and reasonable price? Were the mines good considera­tion for that £40,000 at the time, or were they selling them at a price so far in excess of their true value at the time that it was unfair-in other words, a fraud?"72

On 24 August 1 93 1 , the Brisbane Courier remarked on the widespread interest in the outcome of the trial, and described the ten­sion in the overcrowded courtroom before the jury announced its ver­dict. "There was a moment of some intensity as the four jurors filed into the Court . . . The silence during that moment was so great that one could have heard the pro1erbial pin drop." The jury returned a

The Civil Proceedings 105

verdict favourable to the defendants on all counts. Asked by Blair if he had any comment before the defendants were dismissed, Macgroarty replied, "I have nothing to say".73

For the defendants, the verdict marked the culmination of a lengthy but tense ordeal lasting over twelve months, which no doubt imposed severe strain on the lives of those involved in the case. Seemingly un­important at the moment was the immense fmancial cost to all parties, yet to be met. The defence counsel had been engaged in preparation of the briefs for nearly a year, while the Cr(,wn solicitor's office had been continually engaged for an even longer period. The legal fees for McGill and Macgroarty amounted to £30,000, and although the per­sonal cost to the defendants cannot be ascertained, it might suffice to contrast the cost of only McCormack's legal representation at the royal commission, which amounted to some £ 1 , 1 70. In the circum­stances, it was understandable that the defendants and their coun­sel saw fit to celebrate the verdict with champagne at - 10.30 that morning.74

0 ....

!

Chillagoe Smelter Ruins circa 1971

C HAPTE R 7

Political Ramifications

Theodore, as was to be expected, immediately hailed the verdict as a complete vindication of his character. He denounced the Crown's ac­tion as an attempt by influential Nationalist party members to under­mine "my political influence [and to] humiliate and destroy me . . . They have failed miserably", gloated Theodore. "They have only suc­ceeded in dishonouring themselves. "1 However, Theodore omitted to acknowledge that the findings of commissioner Campbell had inspired the Crown action, that he himself had repeatedly demanded legal proceedings in order to clear his name, and that both in the royal com­mission and the civil trial, he had refrained from entering the witness box in his own defence. Labour supporters readily voiced their ap­proval of the verdict. Among the more prominent was Prime Minister Scullin who, referring to Theodore, announced that his "confidence in his integrity has never wavered".2 Moore, however, disclaimed any political or personal motive and asserted that on the seriousness of Campbell's indictment, "it was incumbent upon the Crown to sue for the recovery of the amount which it was considered wrongfully paid for the Mungana Mines".3 Macgroarty, McGill and other prominent Nationalists chose initially not to offer any comment.

Most Australian newspapers had contained an extensive coverage of the trial (because of Theodore's prominence as federal treasurer) and each in turn released editorial comment on the verdict. The Brisbane Courier strongly defended the Moore government's action in undertaking a prosecution, pointing out that the trial might have been avoided had Theodore complied with Campbell's request to hear his evidence. It regretted that Labour's refusal to appoint an inquiry in 1 926 had resulted in expensive litigation, emphasizing that the Moore government had justifiably done its duty "and to suggest that duty was prompted by political animosity is to ignore the very definite and severe findings of Mr. Ex-Justice Campbell."4 The Sydney Morning Herald concerned itself with the effect of the verdict on federal politics, expressing the hope that it would have favourable repercussions overseas, for "people abroad will know that the integrity of the Federal Minister of the Commonwealth is no longer challenged."5 The

Political Ramifications 1 09

Melbourne A rgus (and later The Round Table) recognized that the outcome of the Crown action did not completely vindicate Theodore, and warned that cabinet ministers would be wise to avoid any personal conflict of interest. "The history of the case affords no such warrant for Mr. Theodore's presentation of himself as the victim of ill con­ditioned enemies," the Argus commented. "There was an overlapping of activities in this case which will create the strongest misgivings about men who in the future form associations in which their private and public activities are ambiguous."6 Similarly, The Round Table judged the result "a happy one so far as the purity of Australian political life and the public reputation of the country are concerned," but cautioned, "Members of Parliament will haye to consider more carefully with what industries they can with propriety allow themselves to be associated." It predicted that the outcome of the trial would have electoral repercussions.

It is natural, but regrettable that Mr. Theodore and the Labour Party should treat the jury's verdict as the triumphant exposure of what he himself denounced all along as a campaign of political calumny and persecution on the part of the Nationalists. This aspect of the case will doubtless embitter the State elections in Queensland next year.7

The focus of attention shifted quickly from Theodore to Moore and the Nationalist party when the Queensland parliament discussed the Mungana trial. Labour members returned the attacks once made against McCormack and Theodore, with Macgroarty and McGill as their targets. S.J. Brassington, member for Balonne,8 accused the government of political persecution aimed ultimately at damaging the Labour party. In the Mungana case, the Nationalist party had resorted to "vile attacks" on the principals, solely for party gain.9 H.A. Bruce, 10

the member for Kennedy, supported Brassington's accusations, adding that the Crown action "was all actuated by a desire to destroy theprestige of two ex-leaders of the Labour Party who had kept them out of office for so long. "1 1

No doubt the fact that Macgroarty and McGill, with their known political connection and interests, had appeared for the Crown in all actions, and had received huge legal fees of some £30,000, added weight to the suggestion that the Mungana case was a political frame­up. The manner in which McGill had conducted the prosecution also gave Labour members ground for denouncing the government's deci­sion to prosecute in the first place. Such remarkable bitterness had McGill displayed towards the defendants that his tone and actions suggested a political vendetta,12 "while the prosecution had relied heavi­ly on inference and harsh verbal barrages to support the documentary evidence.

Moore capably defended the government's action, and in doing so

1 10 The Mungana A/fair

virtually silenced debate on the Mungana Affair. He dealt at length with the basic principles of political morality and ministerial respon­sibility, rather than maintaining the level of charge and counter-charge adopted by many members of both parties. Moore insisted that ministers should not have any private interests that conflicted with their public duty, nor indulge in share transactions while holding office in cabinet. The crux of his argument was that Asquith's "rules of positive obligation for the conduct of Ministers of the Crown"13 in relation to their business interests, should be applicable in every parlia­ment in the British Commonwealth. He also quoted Lloyd George's reference to the interests held by Joseph and Arthur Chamberlain in Kynoch's Limited, a manufacturer of explosives and contractor to the British government during the Boer War. "It is not merely enough . . . that an officer of the State should be incorruptible, but he must have no association with companies, either past or present associations, which would make him open to suspicion."14 This statement, Moore claimed, was the foundation of Asquith's "rules of positive obligation" which were handed down in June 1 9 1 2, after Sir Rufus Isaacs, Lord Murray and Lloyd George himself had been absolved by a select com­mittee of inquiry, of trafficking in shares in the Marconi Company.15 The premier then quoted Asquith's code.

"A Minister ought not to enter into any transaction, involving, even conceivably, a conflict of private interest and public duty; or to use of­ficial information for his own or his friend's private profit; or to put himself under temptation to use his official influence in support of schemes or contracts in which he had an undisclosed private interest; or to accept any kind of favour from persons in negotiation with, or seeking to enter into contractual or pecuniary relations with the Government; and Ministers should scrupulously avoid speculative in­vestments as to which they have an advantage over others in an­ticipating market changes. "16

Turning to M ungana, Moore said that the same principle of "positive obligation" must be applied. The jury found that McCormack had received over £ 1 2,000 in dividends on his Mungana interests, and the "not guilty" verdict, in his opinion, could not excuse the fact that a member had profited at the public expense through business transac­tions. In summarizing his attitude to the scandal, Moore deplored �'members trying to defend this sort of thing when there is no defence. I do not care whether McCormack, Theodore or anyone else has been proved innocent; the whole thing is that a man should not have used his public position for his own private gain."17

There is no doubt that Moore spoke with absolute sincerity. His complete personal integrity was widely acknowledged. C .A. Bernays,18 then clerk of the Legislative Assembly, remarked in 1 93 1 , "Everyone

Political Ramifications 1 1 1

trusts A.E. Moore because he is so transparently honest."19 Sizer, who knew Moore well and had served in his cabinet, recently confirmed this estimate, and recalled Moore's rigid adherence to the principle that politicians should be scrupulously honest and dedicated in their responsibilities.20 Notwithstanding his high standard of political morality when it came to pursuing Theodore's connection with Mungana, Moore had willingly co-operated with Nationalists in the federal Opposition in mid- 1 929 following the timber strike in which Theodore played a principal role. Moore had sent a telegram to John Latham to the effect that Theodore held 304 7 shares of one pound in Brett and Company Limited ; 4877 shares of one pound in Brisbane Sawmills Limited, and 885 shares of one pound in Manumbar Timber Company · Limited. Needless to say, this information was on several occasions used publicly against Theodore.21

This was the last important exchange on Mungana in state parlia­ment, although reverberations were still to be experienced in the 1 932 Queensland elections. Events unforeseen by The Round Table's assess­ment of the Mungana trial precipitated a federal election several months before the state elections in Queensland. In November 1 93 1 , the Scullin government was defeated by thirty-seven votes to thirty­two on a motion alleging favouritism in allocating relief work grants,22 when the Lang Labour bloc crossed the floor.23 Treating the vote as one of confidence, Scullin obtained an immediate dissolution. The sub­sequent federal election resulted in the complete rout of the Labour government.24 In New South Wales, the A.L.P. won only three seats ; Lang Labour retained four seats ; and the non-Labour parties were returned in twenty-one electorates, reversing the 1 929 results when the A.L.P. had captured twenty seats, and the non-Labour parties only eight. A similar pattern emerged in all states, with the exception of Queensland, where the A.L.P. gained the additional seats of Oxley and Brisbane, both of which reflected the increasing unpopularity of the Moore government in the metropolitan area. In New South Wales, no fewer than four ministers were defeated25 including Theodore in Dal­ley . Theodore had been opposed by 'Sol' Rosevear,26 his former cam­paign director, then a supporter of Lang. Rosevear was a tough and determined fighter who had made a reputation for himself in the late twenties during the timber strikes. It was a bitter and hard-fought cam­paign in Dalley, with the odds strongly against Theodore from the out­set. He was soundly defeated at the polls, gaining fewer votes than Rosevear and his United Australia party rival.27 For Theodore, it was to prove the end of an outstanding career in politics.

It is certain that the Mungana Affair was very damaging to Theodore, but it would be a grave oversimplification to imply that it alone had cut short his political career. Theodore suffered, like other

1 1 2 The Muezgana AJTair

members of his party, from the electoral swing against the Scullin government for its indecisive handling of the Depression. And like most Labour politicians from New South Wales, he became embroiled in the feuding that occurred within the New South Wales branch of the A.L.P. Lang supporters concentrated on defeating Theodore, fearing that, should he be re-elected, he might gain control of the New South Wales branch in concerted opposition to Lang. It is impossible to dis­entangle the effects of these factors from those resulting from Mungana. Even the direct effect of Mungana upon Theodore's per­sonal reputation cannot be divorced from that of other scandals in his past. Far from being an isolated assault upon a public figure of otherwise spotless integrity, the Mungana Affair followed two earlier scandals that had shown Theodore in an unsavoury light, and preceded another that had actually occasioned the fall of the Scullin ministry. The one effect of the Mungana Affair on Theodore's career that can be stated with precision is that, in causing his resignation, it removed him from cabinet for six months and weakened his position and influence within the Labour party at a crucial period.

The Dalley electorate scandal of 1 927 in which a royal commis­sioner declared that the sitting member had been enticed with a bribe of several thousand pounds to resign the seat in Theodore's favour,28 did not enhance Theodore's reputation within the federal parliamen­tary Labour party. Although this revelation of political patronage did not particularly disturb his supporters in New South Wales at the time, it provided ammunition with which to discredit Theodore after he had come into open conflict with Lang. And the Mount Isa share allega­tions on the eve of the 1 929 federal election, although widely recognized as a political manoeuvre, reinforced growing suspicion of Theodore's credibility. Even though the charges were dismissed when Bedford explained to the Queensland parliament that the parcels of shares were gifts, they had given rise to serious doubts about Theodore's financial integrity.

Mungana therefore came as the climax of a series of personal con­troversies. Once he had announced his resignation from the cabi�et, Theodore's position within the Labour party had been jeopardized. With Scullin overseas, and the Queensland government's long delay in levelling civil proceedings, Theodore had been prevented from re­establishing his authority as deputy leader. By the time he was able to claim the Court's verdict as vindication, his influence had waned and his economic proposals had been discarded. Warren Denning viewed the effects of M ungana in terms of an intense personal struggle. "The Mungana episode threw Mr. Theodore into the necessity of fighting solely to maintain his own position through six trying months, while the Government was drifting towards obvious and fatal disaster . . .

Political Ramifications 1 1 3

[He] was necessarily pre-occupied in a great personal struggle.29" It was M ungana, then, which provided the catalyst leading Theodore towards defeat in 1 93 1 .

The final episode in the Mungana Affair occurred six months later, in the campaign preceeding the general election in Queensland. Contrary to The Round Table's prediction, Mungana did not embitter the state elections, except in the South Brisbane electorate, then held by the attorney-general, Neil Macgroarty. The A.L.P. had produced a pamphlet accusing Macgroarty of political malice for his part in the Mungana Affair, pointing out that he had also accepted huge legal fees for conducting the Crown case. Speaking about the A.L.P. pamphlet, Macgroarty shocked many Nationalist supporters when he tactlessly claimed that the "Mungana case smashed the Labour Party in Australia almost beyond mending. Thousands of persons throughout the Commonwealth consider that I was worth what I was paid in that case."30 This disclosure was given prominence in the Daily Standard as evidence of the alleged vendetta pursued by the Moore Govern­ment. "This was an admission that the action was undertaken to smash the Labour Party, and not from the virtuous motives which Moore and Co. mouthed about at the time. Macgroarty earned his pay as a Tory politician, and not as a lawyer."3 1 Predictably, the anti­Labour press ignored Macgroarty's speech and the Daily Standard's subsequent outburst.

On 1 1 June 1932, Labour obtained a majority of four seats in the Legislative Assembly. There had been a large swing against the Moore government that resulted in the defeat of two ministers and several long-serving non-Labour members. Both Macgroarty and Atherton, who had been elected only three years before, lost their seats. Just as the Scullin Labour government had been rejected for its failure to meet the economic crisis and the unemployment problem, the Moore government was ousted for the same reasons. At the same time, many sitting non-Labour members had been disadvantaged by the 193 1 redistribution in which the number of electorates was reduced by ten, to sixty-two,2 for it required only a slight swing to Labour in some seats to displace the sitting non-Labour member. However, one fact is certain : Mungana was a dead issue electorally. Certainly, the Labour campaign against Macgroarty had a telling effect on his defeat, but it was only an isolated experience in South Brisbane. After being inter­mittently before the public for some years, following allegations in parliament, an inquiry by the auditor-general, a royal commission and a civil suit, the Mungana Affair had faded in the same atmosphere of confusion over the facts and the principles involved, and in the same garrulity of political charge and counter-charge as it had begun, well before the state elections. With Theodore no longer on the political

1 14 The Mungana A/fair

stage, the M ungana Affair was publicly shelved. Strangely, there was a sequel to the Mungana Affair in that the

political careers of nearly all the principals involved were set back within a year of the civil trial. It would be erroneous to suggest that Mungana was solely responsible. In some cases, the scandal led direct­ly to their withdrawal from public life ; in others, factors such as the 1 93 1 redistribution, and the electoral swing against the Moore govern­ment, were mainly instrumental in their political defeat. Yet, it seems hardly coincidental that of all those closely involved in the Mungana Affair, the only ones to survive politically were Moore and Sizer, both of whom had assailed Mungana in terms of political principles above party and personal considerations. 33 Moore continued as leader of the Opposition until 1 936, whereupon he stepped down from the leadership, remaining as a backbencher until his retirement in 1 94 1 . Sizer had retained his Sandgate seat in 1 932, but fell out with his party in 1935 and declined to recontest his seat at the elections in that year.

For Macgroarty and Atherton, there was no return to political life. Both had served only one term of office in parliament, but during that time, the demands of their portfolios and their political inexperience had severely disillusioned each in tum. Macgroarty failed to realize the importance of the large catholic vote in his electorate,34 and it was only to be expected that having fallen out with prominent catholic ele­ments during his term as attorney-general, he would be disadvantaged in face of the opposition in the 1932 elections of the youthful V.C . Gair,35 who represented all virtues for the working-class Irish-catholic voter. Macgroarty devoted his energies to his law practice until retire­ment. He died in 197 1 , still embittered over the outcome of the Mungana trial, reluctant to discuss his role and connection with McGill. On the other hand, Atherton, who was soundly defeated by Bruce (the former member for Kennedy) in the Tablelands electorate, marked time until the 1 935 elections when he made an abortive at­tempt to capture the seat of Cook. Thereafter, he severed his political connections to pursue his interests in primary industry. Kelso, who in 1 926 had disclosed that McCormack held shares in Mungana Mines Limited, was defeated in Nundah in 1 932 ; at the same time, J.S. Kerr, who had been responsible for much of the muck-raking over Mungana and Mount Isa was similarly unseated in Enoggera. Neither of them re-entered public life.

Of the three foremost Labour politicians inculpated in Mungana­Jones, McCormack and Theodore-only Jones remained in politics. He had been defeated in Hamilton in 1 93 2, and again in a by-election for Kelvin Grove soon after; but in 1 934, he was successful in the Brisbane municipal elections, thereafter holding office as lord mayor until 1 940. McCormack, although only fifty-one years of age when he

Political Ramifications 1 1 5

resigned his seat in 1 930, had placed himself outside politics through his past actions. He had been exposed as lying to parliament, the press and his own party. His conduct during his years as premier had alienated rank-and-file support, and had in fact inflicted considerable damage on the party's electoral standing. A return to active politics in any form, at least within the Labour party, was out of the question. He later became a relatively successful businessman until his sudden death in 1 947.

Theodore never completely lived down the Mungana scandal. Fol­lowing his defeat in Dalley, he withdrew from active politics. Notwithstanding, Lang and his supporters still feared Theodore's political influence, and secured his expulsion from the A.L.P. Even as late as 1935 , the Metropolitan Conference carried a resolution by one hundred to two that Theodore not be readmitted to the party.36 By this time, however, Theodore had channelled his energies into building up a large newspaper and mining empire. With Frank Packer, he laid the foundations for Consolidated Press,37 and with John Wren he developed extensive gold mining interests in Fiji.38 Yet Theodore was still sensitive over the Mungana scandal. In 1 937, in reply to a letter from Alexander Macdonald seeking permission to give a journalist from the Brisbane Telegraph information on the old Mungana case, Theodore expressed his wish to let the matter rest. "I was the subject of much malice and villainy in the Mungana case, and naturally do not wish to have old wounds reopened. I agree with you that nothing more be said, and I appreciate your kindness.39" In 1 93 9, at the end of his prime ministership, Lyons approached his former antagonist in cabinet asking him to consider a position as co-ordinator of the national defence effort.40 Theodore cabled his desire to remain out of politics, and following the sudden death of Lyons soon after, the matter was forgotten. However, in 1 942, in response to a request by Prime Minister John Curtin,41 Theodore assumed the position of director of the Allied Works Council, a job which he handled with characteristic energy and capabilities until 1 945 when he returned to private business life. He died five years later, on 9 February 1950.

The four other most significant men involved in the Mungana Affair were Campbell, McGill, Goddard and Reid. C ampbell returned to his retirement after the royal commission and no more was heard of him until his death some years later. McGill became one of Queensland's most eminent barristers, and later deputy chancellor of Queensland University. However, any political ambitions he might have held had been destroyed, first by the public reaction to the bitterness. with which he had pursued Theodore and McCormack, and second, by the reper­cussions of the Labour party allegations that McGill's role was solely a political vendetta, thinly disguised by legal technicalities. McGill

1 1 6 The Mungana AJ!air

stepped down as chairman of the Country-National organization in 1 935 , his political influence having waned since the Mugana case. Goddard had returned to his hotel business in C airns following the trial. The pressures of the years in Chillagoe had left him physically and mentally exhausted. Within fifteen months, he was dead, aged only fifty-one. During Frederick Reid's lifetime, a small fortune had passed through his hands. As Margaret Byrne, whose family had es­tablished itself in Chillagoe in 1 90 1 , recalled recently, "When Fred Reid had money, everybody in Chillagoe shared in it. He was a most generous man, if somewhat extravagant."42 This estimate of Reid was well borne out by the fact that during the nineteen-twenties, he had become one of the foremost mining magnates in north Queensland, but by 1 929 he had been declared bankrupt, and thereafter remained insol­vent until his death at Mareeba on Christmas Eve, 1 948.

CONC LUSION

M ungana Re-assessed

Moore in his speech to parliament following the verdict in the Mungana case made it clear that, notwithstanding the outcome, he ob­jected to Theodore's and McCormack's abuse of public office for private financial gain. 1 Several newspaper editorials and a considerable body o( public opinion supported his stand. It seemed on the surface anomalous that the former premiers could be exonerated of any charge when evidence showed that they had benefited from the trans­action by over £ 1 3,000. The Crown had been unable to prove damages, the prerequisite to proving a fraud in common law, but to many observers this did not alter the fact that standards of public morality, parliamentary conduct and ministerial responsibility had been infringed. Paul Appleby has written of public morality :

While public morality thus in part reflects, incorporates, and is in­fluenced by private moralities, in another aspect it is sharply dis­tinguished from and in slight or great conflict with private values . . . In many respects, if not all, it should be plain that public morality is of a higher order than private morality . . . probably attributable in part to the fact that citizens are somewhat freer to be moral with respect to public matters. 2

The public in both Great Britain and the United States have demanded that their elected representatives observe standards of behaviour over and above those of the private citizen. Sir lvor Jennings has remarked that these standards should be reflected particularly in the conduct of individual ministers. "The most elementary qualification demanded of a minister is honesty and incorruptibility . It is however necessary not only that he should possess this qualification, but also that he should appear to possess it."3

It would be gratifying to record that the Australian attitude to public morality and ministerial responsibility is as sensitive as it has been in Great Britain and the United States, but this is not the case. The use of ministerial position to advance the material interest of its in­cumbent is rarely subject to effective sanction in Australia, probably because of easy-going standards in this range of political attitudes. Furthermore, it is significant that the term "conflict of interest" is ab-

1 1 8 The Mungana A/fair

sent from the Australian political vocabulary, and that no equivalent has general usage.

In the United States, in particular since the Second World War, there has been increasing concern with the problem of conflict of in­terest, and with its more blatant form-corruption. This is reflected in the volumes of writing on the subject, and the legislation and regula­tions governing conflict of interest, adopted by federal and state authorities.4 The American public have resolved that politicians and administrators have consistent responsibilities for the pursuit of primarily public ends. There have resulted preventative measures in­cluding criminal sanctions, and informal sanctions such as the in­vestigatory processes of the House of Representatives and Senate, and newspaper censure. The problem of corruption in politics, so often ex­posed by a muck-raking press in the past, is now less apparent although aspects of the Watergate C .I.A., and Lockheed scandals have impinged on American public life. No New York politician today who is conscious of the Tammany Hall tradition of corrupt practices, would dare to defend behaviour which George Washington Plunkitt proudly defined as "honest graft".

There's an honest graft, and I'm example of how it works. I might sum up the whole thing by sayin' : "I seen my opportunities and I took 'em." Just let me explain by examples. My party's in power in the city and it's goin' to undertake a lot of public improvements. Well, l'm tip­ped ofT, say, that they're going to lay out a new park at a certain place. I see my opportunity and I take it. I go to that place and I buy up all the land I can in the neighbourhood. Then the board of this or that makes its plan public and there is a rush to get that land which nobody cared particular for before. Ain't it perfectly honest to charge a good profit and make a profit on my investment and foresight? Of course it is. Well, that's honest graft. 5

There has, however, been some criticism of the rigidity of official sanc­tions, by those who prefer the code of ethics approach to the problem as adopted by British political representatives. In contrast, this ap­proach relies heavily on the observance of informal and unwritten codes of conduct, bolstered by parliamentary rulings when an issue is at variance with the standards of public morality. The history of British politics is marked by a succession of rulings dating back to Palmerston on the responsibilities and standards of conduct of politi­cians in relation to their outside interests.6 Justification for this ap­proach lies in the fact that British politics has throughout the twentieth century remained relatively free of the problems of conflict of interest.

Unfortunately, Australian political history has been marked by repeated evasions of the problem of ministers and elected represent­atives profiting from their official position, partly because of the stand-

Conclusion: Mungallll Re-assessed 1 1 9

ard of public morality in Australian political life. A bibliography of the inquiries held by royal commissions, select committees, govern­ment departments and courts of law into alleged cases of corruption il­lustrates not only the prevalence of the problem, but also the relaxed standards of public behaviour. Considering that many instances in which politicians have gained financial advantage from public office have not been disclosed or have escaped inquiry, there are strong grounds for concluding that the public conscience in Australia is very insensitive. Conflict of interest and corruption have always been pre­sent in local government, probably because the lines of demarcation between private interests and public interests are less clearly defined in this realm. Cyril Pearl commented on public insensitivity, in his Wild Men of Sydney.

Corruption happens in every Country. The disquieting thing about it in Australia . . . is that people do not feel very much about it when it is happening-and forget all about it soon after. In England, the faintest breath of suspicion will end a man's public life forever. In Australia, time and again, men in high places, exposed as scoundrels, have con­tinued to enjoy public office and esteem; there seems to be some sort of perverse hero worship of the fellow who has flouted the law, ex­ploited the community and defiantly "got away with it".7

Pearl was writing of the Sydney scene at the turn of the century, but his words apply equally to the present day. One of the more recent publicized scandals in Australian political life was the Comalco Affair in 1 970. In June 1 970, it was disclosed that prominent politicians through Australia, including six Queensland cabinet ministers- Chalk, Hewitt, C ampbell, Rae, Tooth and Hodges, were allotted partly paid shares in Comalco.8 These men stood to make an immediate "paper profit" as soon as the issue was listed for public exchange. The at­titudes of the Queensland ministers were somewhat disconcerting. Hodges, in reply to public criticism of his actions said ; " If they are of­fered why shouldn't they be bought? And if any benefit is derived from them, well and good. It is my privilege, you know."9 Similarly, Hewitt reacted by claiming that he regarded "the acceptance or rejection of any shares by me as purely a private matter". 1° Chalk initially offered no comment, although he later stated, "it has always been the practice of any Minister to declare his interest in a Company should some mat­ter arise at the C abinet table in which he has a shareholding."1 1

Queensland's largest newspaper, the Courier-Mail, which as the Brisbane Courier, had strongly supported Moore's stand on Mungana (that it was wrong for men to resolve a conflict of interest to their private advantage),12 tamely pointed out in an editorial that these ministers had erred in their political judgment, since they were ministers of the Crown in a government having dealings with

1 20 The Mungana A/fair

Comalco, and it was to be regretted that they had "exposed themselves and their Government to criticism". Although the editorial assumed that these ministers would "suffer some inhibitions when matters con­cerning the Government and Comalco are under discussion", it was adamant that their "integrity is not in question" .13

The annual convention of the Liberal party, held within a week of the disclosures, resolved that ministers' shareholdings should be passed on to trustees for the duration of their offices, to which the Queensland premier, Johannes Bjelke-Petersen retorted ; "What will that achieve . . . [ It] will only drive responsible men from Government."14 Despite the denunciation of the business by A.L.P. parliamentarians whose motives were no doubt inspired by the hope of political gain rather than by public morality, and a heated debate in parliament on the propriety of the ministers' actions, 1 5 the Comalco Affair faded away. Public indignation and sensitivity on this issue did not assert itself, but tended to reflect the widespread acceptance of the ministers' action as a fact of life. Public criticism was also partly iden­tified with political motivation for party gain. Just as the principles un­derlying the Mungana scandal were shrouded by the ftlibustering of party politics, so the Comalco Affair was interpreted in terms of politics, not principles . The absence of a public conscience explains, to a large degree, the problems of conflict of interest and corruption in Australian political life. This was demonstrated by Moore's criticisms of the Chillagoe state smelters and the Mungana transactions over some four years in which public opinion remained largely unmoved. Political implications forced Moore to mark time until defmite proof-in the form of the Reid bankruptcy disclosures, had been ob­tained to justify establishing a royal commission. Even so, when Moore announced the government's intention, the immediate reaction of his political opponents was to denounce it as a political manoeuvre, which polarized public opinion according to political sympathies, and veiled the moral issue.

Even today, writers have attempted to vindicate Theodore and the Mungana transactions. Correspondence with Alexander Macdonald in 1 937 supposedly reinforces .the fmdings of the jury. However, there is nothing in this file16 to prove that Theodore was not financially in­volved in Mungana. In fact, this evidence adds more weight to the Crown's case than to that of the defendants. In 1 9 1 9 Macdonald had proposed an amalgamation between Mammoth Copper Mine Limited and the Mungana interests, having first obtained an option to purchase the leases from Reid. With the financial backing of Henry Allan, the Scottish shipping magnate, Macdonald proposed to float a new company-Mammoth-Mungana N.L., with a subscribed capital of £200,000 made up of 400,000 shares of 10 shillings each, while Allan

Conclusion: Mungana Re-assessed 1 2 1

had agreed to underwrite £25 ,000 of the £50,000 working capital of the project. Part of the agreement between Allan and Macdonald was that the new company would "acquire the property recently owned by Mungana Mines Ltd., including in particular the 'Lady Jane' and 'Girofla' Mines, with all machinery and plant, at a price not exceeding £50,000 payable by allotment of fully paid shares to that amount." 17 The proposal came to nothing when Reid declined to renew the option on its expiry.

At first sight, the Macdonald offer seems to indicate that an ex­perienced mining expert, backed by overseas capital, valued the M ungana Mines at a figure 25 per cent higher than the price paid by the government. This view was put by the Sydney Morning Herald in 1 945, and by Theodore's biographer, Irwin Young in 1 97 1 , but it does not bear close scrutiny.18 The government paid £40,000 in cash, £ 1 0,000 of it immediately and the balance in royalties at a ftxed rate per ton of ore. Macdonald offered fully paid shares with a nominal value of £50,000, but the real value depended upon the movement of metal prices and the profitability of the mines. Had the offer been ac­cepted, the value of the shares would have fallen sharply before the company could resume mining because in 1 922 world prices for silver­lead had fallen to 40 per cent below the 1 9 1 9 quotations. 1 9 Giv_en the cost incurred by the government in developing the mines-£ 1 80,000 -and its subsequent operating losses, it is certain that the Macdonald venture would have abandoned operations very quickly, rendering the shares virtually worthless. Indeed, it is questionable whether any soundly managed private company would have reopened the mines at all in view of the post-war collapse in metal prices and the heavy costs involved in getting the mines back into production.

Some aspects of the Mungana Affair are likely never to be fully ex­plained-such as who was the leading spirit in the venture; exactly when each of the four defendants entered the scheme; and on what terms their relationship was based. Nevertheless, there is no doubt that Campbell's findings were in all essential aspects correct, even though Labour supporters had claimed that the jury's verdict negated it.

Reid had acquired the Mungana leases when he lacked the machinery and capital to work them, at a time when the bill to take over the railway and smelters was before the House. After the bill received royal assent, Reid acquired extended leases, with the express­ed purpose of selling the mines to the government through the full connivance of McCormack and Theodore. In return for an outlay of £ 1 00, McCormack received some £ 1 3,330 from the transac�on, of which half was paid to Theodore.20 Similarly, Goddard received some £3 ,800, after he had been initially induced by the gift of 1 ,250 shares to enter the syndicate. The only assets the syndicate sold in return for

1 22 The Mungana Affair

£40,000 were the leases which they acquired for nothing, machinery which they had purchased for £2,780 borrowed from the government, and a few hundred pounds' worth of improvements to the flooded mines, again financed by the government. The only ore delivered before the government took over operations on tribute had been mined by the previous lessees and left on the grass and in the dumps.

That the Crown failed to obtain a verdict in a civil suit, and would almost certainly have failed in a criminal prosecution, in no way alters the fact that the defendants had acted in collusion to profit dishonestly at the Crown's expense, three of them in flagrant disregard of their public duty. Further, after 1 926, McCormack persistently lied to parliament, the press and the public to protect the interests of the syn­dicate and in particular those of Theodore and himself. Similarly, God­dard unscrupulously used his position as general manager of the state smelters to advance not only his interests in the Mungana syndicate, but also his interests in Argentum and Fluorspar, and his relationship with Reid. Moreover, the inculpation of Theodore and McCormack in Mungana represented a cynical betrayal of the state enterprise policy to which their party was committed.

It is interesting to speculate on the possible outcome of the Mungana Affair had the government pursued alternative legal measures. Probably the best course for the Queensland government to take after the royal commission would have been to insist that it was the only proper legal tribunal for such matters, that legal technicalities made it impossible to follow the commission with proceedings in any other court, and that public exposure was an appropriate and a fully adequate penalty. This would, however, have required exceptional force and clarity of mind on the part of the government. As it was, the government allowed itself to be pushed into unwise proceedings, partly by pressure from within the party, partly by Theodore's goadings from outside it. However, as Moore and his cabinet had decided that "in view of the findings of that Commission it was incumbent upon the Crown" to prosecute, the government had three effective choices. (Criminal proceedings in Queensland were bound to fail for the reasons outlined by Macrossan to McCormack, and Macgroarty to the parliament.)21 First, civil proceedings would have required a less onerous burden of proof, but would have been feasible only if the legal restraints on evidence were removed by amending the law retrospec­tively . Even then, the only possibility of conviction would be to demonstrate that the Crown had suffered loss through the over-pricing of the Mungana mines. This would be difficult to establish in the face of a volume of contemporary expert evidence recommending that the purchase was warranted. Consequently, as soon as the nature of the Crown's case was known, counsel for the defence became more confi-

dent of victory.22

Conclusion: MungaM Re-assessed 1 23

Second, under Section 75(IV) of the Commonwealth Constitution, Theodore, as a resident of New South Wales, could have been prosecuted by the Queensland government in the High Court, and might well have been convicted on the Boston precedent of which Evatt had advised McCormack.23 The most likely basis for such an ac­tion would have been for the Crown to claim that the moneys paid by McCormack to Theodore were in the nature of a bribe or secret com­mission or profit, received by him in breach of his duties as a member of the government and its agent for the purpose of the Mungana purchase.24 From the Queensland government's point of view, such an action would leave it open to the charge of singling out Theodore for political motives.

Third, the government could have proceeded in equity for the recovery of the moneys received by Theodore, McCormack and God­dard in breach of an implied trust. Once the government had declared them trustees of the amounts they had received, it seems reasonable that such an action would have been more likely to succeed than the civil action. Halsbury's Laws of England point out, " [A] breach of trust does not give a remedy in damages, but a remedy by making the trustee restore the property with which he is chargeable, and account for the profits which he has made, or which he is to be taken to have made."25 Apart from the fact that the Crown lawyers were not ex­perienced in equity law,26 there is nothing to show that this course was seriously considered. The only conclusion to be drawn is that any legislation to allow the government to proceed in equity would have been politically unpalatable.

From another position Theodore, who publicly demanded an op­portunity to clear his name, had several legal recourses at his disposal. First, he might have prevailed on Scullin to set up an inquiry to test the findings of the royal commission. In fact there were supposedly strong rumours that this manoeuvre might eventuate and, according to Sizer, these partly influenced cabinet's decision to initiate a civil prosecution of Theodore.27 Second, Theodore had ample opportunity to enter the witness box had he instituted proceedings against Smith 's Weekly for defamation. If he was not guilty of profiting from the Mungana trans­actions, it is a puzzle why he did not choose such an action in which to put his case. Third, Theodore could have pressed Moore to have the evidence of the royal commission reviewed by the Full Court. There is no legal provision for such action, and amending legislation would have had to be introduced, had Moore granted his request. It appears that Theodore had considered such a request, but had, on legal advice, avoided pressing the matter because "if granted, all the evidence, in­cluding that which is inadmissable in a Court of Law would be made

1 24 The Mungtulll A/fair

available and the very best that could . . . be hoped for would be a finding that certain persons were guilty of grave impropriety, at least."28 Finally, Theodore could have requested Moore to institute proceedings in the High Court. Certainly, he would have had a wide choice of ex­perienced counsel in that court, but there is no evidence to suggest that he even considered making such a request, obviously because his chances of obtaining a favourable verdict in the High Court were very remote.

It would be reasonable to assume that the repercussions of Campbell's report had led to such widespread disruption in Queensland and Australian politics that the Moore government was probably content to play down the issue by instituting civil proceedings. If this was the case, then it was undoubtedly the political consideration, and not the legal process that decided the outcome of the Mungana Affair.

Year

1908 1909 1910 191 1 1912 1913 1914 1915 1916 1917 1918 1919 1920 1921 1922 1923 1924 1925 1926 1927 1928

APPE NDIX I

Metal Prices 1908- 1928

Copper (£ per ton)

61 .05 58.13 51.05 55 .91 72. 94 68 .35 61 .52 72.53

1 16.06 124 .89 1 15 .53 90.80 97 .48 69.36 62.12 65 .84 63 .15 6 1 .92 57 .97 55 .65 63.70

Lead (£ per ton)

14 .09 13.10 12.84 13.95 17 .96 19.58 19.85 22.54 32.02 55 .58 54 .50 45 .21 28.06 22.74 23.78 26.81 33.67 35 .85 31 . 1 1 23 .96 21 .45

Silver (d. per ounce)

24.5 1 23.89 24.12 24.60 28.08 27.64 25 .73 23.70

. 3 1 .38 40.79 47. 5 1 51 .08 61 .60 36.89 34.41 3 1 .93 33.97 32.05 28.69 26.05 26.74

1 . Compiled from data in the Queenslllnd Government Mining Jounuzl based on London quotations of November prices for each year.

1 26 The Mungana Affair

4 ... $# WL at AJl!SS -r-- S!W

Cause ;; ' a a

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Political Settsation. l l?t l t- t�� 't 'U\It: U l't.!'>( t '.

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THEODOR E·s

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Page from Courier-Mail, 7 July 1930

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A PP E N DIX I I

Synopsis of Reports on t he Mungana Mines

Five reports were filed between 19 1 7 and 1922. Goddard's reports show that the actual quantity of ore extracted in the six years to 1 926 was far short of the estimated reserves. Had the mines department per­mitted access to their ftles, exact figures could be given. The state lost some £ 1 80,000 in extracting the ore, and an even greater sum on smelting it. All of the reports, with the exception of Horsley's valuation of the machinery, fell short of the mark, and all were over-ambitious in the estimates of the ore reserves.

RODDA, 19 1 7. Relying on the surveys of the Mungana Mining Company, Rodda estimated that there were 50,000 tons in the Lady Jane of an average assay value of 3 per cent copper, 25 per cent lead and 12 oz silver, with a gross metal value ( 19 1 7 prices) of £ 1 3. 10.0 per ton, or £675,000. In the Girofla Rodda estimated there were 100,000 tons of an average assay value of 5 per cent copper, 10 per cent lead and 6 oz silver, with a gross metal value of £4. 18.0 per ton or £498,000. He also predicted that other reserves might be found, and estimated at £ 10,000 the cost to unwater the Girofla, which in turn would lower the water in the Lady Jan e. He gave no estimate of the cost of reopening the mines for production.1

HORSLEY, 19 19. Horsley did not venture to estimate the ore reserves, although he conceded that Rodda's figure appeared to be correct, from the reports and underground surveys of the Mungana Mining Company. He warned, however, that the rise in labour costs, and fall in metal prices had rendered his gross metal values excessive. Horsley disagreed about the cost of unwatering the mines, estimating that £ 10,000 for the Lady Jane and £ 1 5,000 for the Girofla was more realistic. He reported that to reopen the mines an additional £ 10,000 for the Lady Jane and £ 14,000 for the Girofla would be necessary to replace machinery, stores and shafts. 2

1 . Mungana File, History Department, James Cook University of North Queensland.

2. "Transcript of Evidence: Royal Commission into Cbillagoe-Mungana etc.", Q.S.A.., ROY/I S, pp. 21 -22.

1 28 The Mu.ngiUUl AJ!air

JENSEN, 1 920. Jensen agreed with Rodda's estimates of reserves, although the water problem prevented him from inspecting the mines. He pointed out that Rodda's values needed revision, frrst, because of the fall in metal prices, ·

and second, because of the losses in smelting from both the zinc content and the roasting deductions However Jensen mentioned that some 20,000 tons of low-grade ore were available on the grass and in the dumps at the time which might have yielded a small profit. He made no estimates of the costs of un­watering, nor of placing the mines on a production basis.3

SAINT-SMITH, 192 1 . Saint-Smith was unable to inspect the mines, because unwatering had not yet begun in earnest He agreed with Rodda's estimates of ore reserves, but reduced the gross metal value by £3 . 10.0 per ton to £ 10 per ton in the Lady Jane. A corresponding reduction was required on the Girofla values. He gave no estimate of the unwatering costs, but recognized that it would be a heavy pumping proposition. However, Saint-Smith to a less­er extent agreed with Horsley that the developmental costs and cost of replacing machinery and stores would amount to some £20,000, and even that was a conservative estimate. He recommended that the government purchase of Mungana was essential to operations at Chillagoe and should Reid so desire he could erect a smelter at Mungana "for an insignificant sum". He was confident that the ore bodies could be worked profitably.4

POOLE, 1922. As with previous reports, Poole stated that he was unable to inspect the mines below the 300 feet level to which the state had unwatered under the tribute agreement, but was confident that Rodda's estimates were correct. He claimed that the mines should show a profit of 18 shillings per ton on the ore, sufficient to cover the purchase price. Poole did not report on the water problem, nor estimate the cost of unwatering to the 8 10 feet level in the Girofla or to the 440 feet level in the Lady Jane mine. However, he claimed that the machinery installed since the tribute agreement was valued at £20,000. Although his valuation appeared far from moderate he argued that it would cost more to install new machinery, and that the valuation should be regarded as a capital asset. Like Saint-Smith, he urged the purchase as Mungana ore was essential to operations at Chillagoe.5

3. Queensland Government Mining Journal 21 (April 1920), pp. lS0-53. 4. "Transcript of Evidence: Royal Commission into Cbillagoe-Mungana etc.",

Q.S.A ., ROY/IS, pp.3 1 -32. S. Queensland Government Mining Journal 23 (July 1922), pp.260-6 1 .

APPE N DIX I I I

Terms of the State Acquisit ion of the Leases from Mungana Mines Limited 1

Terms of Agreement for Purchase of Mungana Mines Limited (a) Purchase price £40,000; £ 10,000 of which was payable immediately;

balance of purchase price in royalties. (b) Royalty payable, 4 per cent of gross metal contents of ore up to £5 per

ton, 5 per cent of gross metal contents of ore exceeding £5 per ton. (c) By agreement dated 4 June 1 92 1 , royalties paid during option period

became part of deposit. Purchase Account To Mines Department in liquidation of debt, 6 March 1922 £2,754. 1 . 9 To Mungana Mines Limited

RoyaltY payments to 3 1 January 1 922 Purchase deposit balance, 24 March 1 922

To Mungana Mines Limited Royalty payments to 30 April 1 922 Royalty payments to 30 April 1 923 Royalty payments to 30 April 1 924 Balance of purchase price, 29 June 1 925 Royalty payments adjusted to 30 June 1 925

1 ,368. 2. 2 5,877. 16. 1

£ 10,000. 0. 0

538. 18 . 9 3,378. 3. 4

1 1 ,440. 15 . 5 9,724. 7. 6 4,9 1 7. 15. 0

£40,000. 0. 0

1 . Compiled from annual reports of tbe auditor-aeneral. See Q.P .P. l922, I, p.202; 1923, I, p.203; 1924, I, p. 182; 1925, I, p.192.

APPENDIX IV

Capital E xpenditure on the Mungana Mines by the State Smelters 1

Annual Expenditures for the Girofla and Lady Jane mines from 1 920-2 1 to 1925 -26

Girofla Lady Jane 1 920-2 1 £ 12,224 192 1 -22 27,484 £ 14, 1 54 1922-23 20,874 37, 1 34 1923 -24 1 7,370 2 1 ,694 1 924-25 9,692 4,956 1925 -262 8,870 8,293 The total expenditure at the abandonment of the mines in July 1926 was £ 1 82,646 of which £96,5 1 5 was for the Girotla mine, and £86, 13 1 was on the Lady Jane mine. The valuation placed on the Mungana mines in the smelters records amounted to £222,646 which the auditor-general con­sidered "undoubtedly excessive".

1 . Compiled from the "Special Report of the Auditor-General on State Smelters, Ore Reduction and Treatment Works and Mines, Chillagoe", in Q.P.P. 1927, I, pp. 1399- 1433, and Annual Reports 1 9 19-20 to 1925 -26.

2. The exact figures cannot be confirmed in the auditor-general's reports, although the general manager's report for the year 1925-26 indicates that a considerable amount of development was carried out before the mines were abandoned. Expend­iture on mines for 1925-26 was £ 18,741 . The only other mine working was Red­cap, valued at £2,216, hence the figures given are reasonably accurate estimates.

APPE N DIX V

Financial year Allocation to Value of Operating loss Accumulated loss ending fixed assets itxed for year on operation 30 June assets

19202 £62 ,001 £104 ,475 £ 1 ,375 3

192 1 46,126 150,601 49 ,45 1 £48 ,076 1922 84 ,272 234,873 7 1 ,7 86 1 19 ,862 1923 98,-s93 333,766 5 8,794 178 ,65 6 1924 1 14 ,05 2 447 ,8 1 8 103,166 281 ,822 1925 57 ,689 505 ,507 29 ,929 3 1 1 ,75 1 1926 3 1 ,742 537,249 155 ,893 467 ,644

£A94,775 fA67 ,644

Treasury Liabilities

Financial year Amount Increase Interest ending 30 June

19202 £243 ,88 1 £ 4 ,639 1 92 1 292 ,2 1 3 £ 48 ,332 1 2 ,079 1922 5 25 ,160 234 ,947 21 ,700 1923 7 10,61 8 185 ,458 4 32,456 1924 947 ,83 1 264 ,21 3 46,2685 1925 790,545 1 84 ,286 1926 961 ,73 1 1 7 1 ,286

£ 1 1 7 ,142

The special report of the auditor-general for 1 927 showed that the imanical position had been mistated in certain areas in the past. New accounting procedures were adopted from which the following f�gures have been extracted. "The profit and loss account for the year ended 30 June 1 927 , showed a loss of£156,126. 2. 11 but of this amount, a sum of £94 ,055. 5 . 0, is attributable to theprevious year . . . Cost to the Treasury of the undertaking for seven and a half years to 30 June 1 927 , was 1 ,1 64 .882 . . . of which 541 ,308 has been treated as capital expenditure (fixed assets)." Accumulated losses on operations to 30 June 1927 amounted to 623,770.

Notes to Appendix V1 . Compiled from the auditor-general's annual reports for the years

1920-27. 2 . The purchase price in 1 920 was £42,474 which included £3,474 for machinery

left by the Chillagoe Company. 3. Profit for the year 191 9-20.4. An amount of £281 ,8 22 equal to the accumulated loss at 30 June 1924 was

written off on 26 September 1924 . 5 . All interest charges were suspended from 2 6 September 1 924 .

A PPE N D IX 'T I

Terms <lf Reference for t ·he R<>\�al •

Commission , 1930

"WHEREAS it is expedient in the public interest that full and careful inquiry should be made into : ( 1 ) The circumstances surrounding and leading up to the appointment of

Peter Louis Goddard as Chillagoe Mines Manager under the provisions of 'The Chillagoe and Etheridge Railways Act of 19 18' ;

(2) The management of the works and property subject to the management of Peter Louis Goddard as such Chillagoe Mines Manager aforesaid ;

(3) The conduct of the said Peter Louis Goddard generally in the perform­ance of his duties as such Manager and more particularly his conduct as the Manager of the Smelters and Ore Reduction and Treatment Works and other property subject to his control, and management as such Chil­lagoe Mines Manager aforesaid;

(4) The interest or interests if any of the said Peter Louis Goddard in any firm, company, or business, having dealings or any business relationship with the said Peter Louis Goddard as such Chillagoe Mines Manager aforesaid ;

(5) The circumstances surrounding and leading up to-(a) The forfeiture of certain Mineral Leases in the Area now known as the Chillagoe Gold and Mineral Field held by or in the name of The Chillagoe Railway and Mines Limited or by or on behalf of the Mungana Mining Com­pany Limited, and forfeited on or about the First day of April, 1 9 1 7 ; (b) The acquisition of any Mineral Leases in the said Area in the name of one Frederick Reid after the said forfeiture ; (c) The formation and registration of a company called 'Mungana Mines Limited' ; (d) The acquisition by the said 'Mungana Mines Limited' of certain Mineral Leases acquired as aforesaid in the name of the said Frederick Reid or any interest therein ; (e) The sale by the said Frederick Reid and/or 'Mungana Mines Limited' to the Government of Queensland of any Mineral Leases in the said Area; (f) The purchase by the management of the smelters and ore reduction and treatment works acquired under 'The Chillagoe and Etheridge Railways Act of 1 9 1 8' of ores supplied from any Mineral Leases sold as aforesaid to the Government of Queensland before or after such sale;

1. Q.P.P. 1930 (1), pp. l347-48.

Appendixes 1 3 3

(6) The circumstances surrounding and leading up to the formation and registration :-

(a) of a company called 'Fluorspar Mining Company Limited' ; (b) a company called 'Argentum Mining Company Limited';

(7) The dealings by and between the said Peter Louis Goddard as such Chil­lagoe Mines Manager as aforesaid or any other person for or on behalf of the management of the said smelters ore reduction and treatment works and the said Fluorspar Mining Company Limited and the said Argentum Mining Company Limited, the frrm of 'Dunlop & Reid' carry­ing on business as Sawyers and Timber Merchants at Tarzali, and thefirm of 'Goddard & Reid' carrying on business as Landowners and/or Hotelkeepers at Cairns;

(8) (a) The conduct and (b) the interest of any Minister of the Crown or any person having any public or official position under the Crown in relation to or in all or any of the abovementioned matters, transactions, or things, or any matter, transactions, or thing arising out of or incidental to such matters, transactions, or things or any of them ;

AND THAT such full and careful inquiry should be made into all the abovementioned matters to the intent that the whole truth as to such matters should be determined and reported as hereinafter required and that it should be determined and reported as hereinafter required whether and if so in what respect and to what degree any and what Minister of the Crown or any and what person having any public or official position under the Crown or any and what person having any duty to the Government of Queensland was guilty of any conduct in relation to any of the abovementioned matters, trans­actions, or things, or any matter, transaction, or thing, arising out of or in­cidental to such transactions, matters, or things, or any of them, which was improper, having regard to the position and duty of such Minister of the Crown or person the public interest and the whole of the circumstances, and that it should be determined and reported as hereinafter required whether and if so in what respect and to what degree any and if so what transaction here­inbefore mentioned was inexpedient in the public interest or improper. :"

APPE N DIX VII

W. McCormack to V. Macrossan,4 J une 1930 1

This eight page letter provides solid evidence that Theodore received exactly half the amounts paid to McCormack. Page numbers have been inserted by the author.

Dear Mr. Macrossan,

Hotel Windsor, June 4th. 1930.

I have to acknowledge your letter together with the bank material giving particulars of my transactions for a period of eight years ending December 1925. I knew that some crossed cheques had been paid but I was surprised to see that all had been crossed except the £ 1600 one and the three that had been cashed. The £ 1600 passed through his bank account and the three amounts of £ 760, £ 100, and £ 140, were cashed.

The two cheques of £236.8.0, and £270, which appear in the list of divi­dends paid by the Company did not pass through my Banking A/c. They were paid to Reid in Chillagoe and used by him on our behalf in the purchaseof a tin proposition known as the Marvel Tin Mine. I had forgotten this mat­ter but was reminded here by - - - - - - when going over the amounts. A separate memo is enclosed explaining this. I also an close [sic] a note re Reids under payment for dividends on the 900 shares held by him for me.

I am enclosing a detailed explanation of all my cheques and of CashDeposits. The other deposits explain themselves. It is impossible at this late date to give you particulars of all the small amounts but I have been able to do so with the larger amounts. However I am of opinion that the Commis­sioner will not be so interested in the amount I can explain as the cheques that I offer no explanation about except that I paid them to Theodore.

At the present time I have no intention of going up to give evidence. The other party has not yet informed me as to when he is going and if so what ex­planation he is going to give. If he does decide to go I will suggest that he may as well get the services of yourself and Counsel as you have all thedetails.

With regard to explaining my banking account to the Commissioner I am of opinion that you must either explain all the details or none of them. It would be useless to explain evry [sic] detail outside the cheques [to] Theodore and then refuse to explain the only ones that are apparently revelant [sic] to the inquiry.

1 . Mung ana File, History Department, James Cook University of North Queensland.

(page 2)

Appendixes 1 3 S

You may consider it advisable to exple all other matters and say that you have no information as to why these amount [sic] were paid to Theodore. I am in a difficult position in regard to this question and will try and have a yarn with you over the phone on Saturday night. You will under­stand my difficulty until I know exactly what he is going to do.

Usually Counsel is not allowed to be present to examine banking accounts but my absence complicates this attitude. You should objects [sic] most strongly to McGill being present and if necessary point out that he is the Head of the Nat. Pol. organisatiion.

Comment re turf agents is not quite correct. All their cheques appear but many of mine do not appear as payable to them but the cash may have reached them. However some of the cash deposits were from racing so if I squared the ledger I am satisfied. I cannot say that I lost a great deal to them and if I go insolvent I will not be able to blame the books.

One item £650 explained as being paid to Blocksidge and Ferguson for purchase of my house is not the full purchase price. My Savings Bank ale will show the balance as being paid by withdrawals from that source. One item in deposits (acheque [sic] from Beal I cannot recollect) He will give you the information when he looks it up.

Health is much better but lack of occupation after ten years of busy life is having a bad effect. Added to this is the strain inevitable under the circum­stances, so you will understand I am still far from being my old self.

Drop a line before Saturday on the all important question as to whether you and Counsel consider you should appear and explain my banking affairs.

Yours faithfully, W. McCormack.

P.S. I dont think it advisable to put in any statement by me. The position has altered and at this stage no good �urpose would be served.

(page 3) Oct.3 1 st. 1 923.

Sept.4th. 192S .

£200.0.0. 100.0.0. so.o.o. so.o.o.

Cash Deposits £900.0.0.

£420.0.0

This is a return to my current A/c of the amount deposited by cheque in Savings Bank on May. 10th. 1 922. Was withdrawn from Savings Bank and used during 1 923 election as loan and was returned to me in cash. Sav­ings Bank Book show transactions. Proceeds from sale of shares in Sydney and cash taken to Brisbane to save exchange. Can get full particulars from Broker here.

£400.0.0 Donations to Party Funds and passed on by me by cheque in 1 926 and used during elections in that year.

1 36 The Mungana AJ!air

I cannot possibly give particulars of the small amounts. Some would be the return of money after cheques had been cashed and not spent, some would represent cash banked from racing, some cash received from Departments to recoup out of pocket expenses paid by cheque when travelling. Other Deposits by cheque. Fihelly. J. Have no recollection but may be a refund of money

loaned at some time. Would be very temporary. Bedford. R. Refund of monies borrowed. Some money was loaned to

Bedford by cheque which was not made payable to him. He repaid me by Cheque banked by me.

Beal. G.L. Cannot remember but have asked him to look up amount and give [you] particulars.

All the general deposits are explained in the lists given by the Bank. None of the above are in any way relevant to Mungana.

(page 4)

Cashed cheques for amounts over £10. In 1 9 1 8. Amounted to 3 1 5 .0.0.

1 9 1 9. " 35 1 .0.0. 1920. " 376.0.0. 1 92 1 . " 55 1 .0.0. 1 922. " 3 1 7 .0.0. 1923. " 423 .0.0. 1 924. " 382.0.0. 1 925 . " 380.0.0. Total. £2995 ;0.0.

The above amounts represent largely the household expenditure in keeping my home. All amounts paid to my sister who controlled the House were in cheque (open) and cashed by her. No doubt other cheques were paid out and banked by the receiver and were used for household or personal expenses. They appear as coming back through some other bank. Two cheques for £ 100.0.0 and £ 140 were cashed by Theodore in addition to the £760.0.0.

Appendixes 1 3 7

(page 5)

Cheques drawn and paid to E. G. Theodore Date E. G. Theodore Remarks

Oct 1 6. 1920. April 8. 1922. May 14. 1923. July 19. 1923. Oct 15. 1923. July 7. 1924. March 9. 1925. April 7. 1925. July 30. 1925.

Exchange on £ 1 3 ,875 would be

760. 0. 0 1600. 0. 0

100. 0. 0 633 . 14. 10 325 . 4. 0

1200. 0. 0 900. 0. 0 140. 0. 0

1000. 0. 0

£6658 ; 18 ; 10

52 ; 10 ; 0

Cashed. Bank Credit. Cashed. Bank credit E.Theodore. Bank credit E.Theodore. Credit Theodore only.

do do cashed B ank credit Theodore only

about £ 105 . £67 1 1 :00: 10 [sic] The balance of over £200 was paid in 1 926 when the fmal balance sheet had been sent by MacDiarmid.

(page 6) Particulars of cheques drawn for large amounts during period under review.

Date when drawn. April.2. 1 9 1 9. July 2. 1 9 1 9. Jan. 16. 1920. Jan.20. 192 1 .

Mch. 3 . 1922. Apl. 7. 1922. May. 10. 1922. Jan.20. 1923. Oct.3 1 . 1923. Jan. 2. 1 924. J une.24. 1924. Jly. 24. 1924. Oct.3 1 . 1924. May. 13 . 1 925 . June. 1 . 1 925. June. 1 . 1 925.

" 1 8 . 1925. Aug.26. 1925. Oct. 7. 1925. Oct.29. 1 925 .

To whom paid. Savings Bank.

do do

Blocksidge & FERguson.

Treasury. do

Gov. Savings Bank. Charlton & Elliott.

Do. Holmes & Church.

do do

Bank N.S.W. Holmes & Church. Charlton & Elliot. Mt. Isa Mines.

do do

Bank, N:S:W: Mt. Isa Mines.

Purpose Deposit. Deposit.

do House payment.

Govt. Stock. do

Deposit. Shares. Com. Stock. Shares or stock

do do

Gov. STOCK. Shares. or stock. Com. Stock. First payment of

Amount 224. 0.0 100. 0.0 150. 0.0 650. 0.0

750. 0.0 250. 0.0 900. 0.0 386. 0.0

1027. 10.0 1400. 0.0

252. 10.0 202. 10.0 295 . 10.0 400. 0.0 700. 0.0

AI[ ottment] shares. 100. S .0 second do 300. 0.0 third. do 300. 0.0 War Loan 3000. 0.0 fourth payment 300. 0.0

1 38 The Mungana A/fair

The cheque made payable to G.L. Beal was really passed on to the Palm Beach Company in payment for shares alloted to me.

All smaller cheques appearing in list are explained by the Bank or are for personal expenditure that I now have no recollection of.

(page 7) Dividend cheques not deposited. The cheques mentioned by you as not being deposited are one for £236;8 ;0 and one for £270;0;0. It is true that these two cheques did not go through my account [but] were paid to Reid in Chillagoe. The facts are as follows ;- Reid purchased a tin mine known as the Marvel Tin Mines situated in the Emuford District and lte asked me if I would go in as a part owner. He said the property was very promising and I agreed. He took the £500 out of the money due to me and with my consent and this explains the shortage in the dividends banked to me. It is a wonder that Macdainnid [sic] did not explain the shortage but apparently he had overlooked the matter. I certainly did not remember the arrangement until reminded of it here by someone else who im­mediately remembered the arrangement to purchase. The show turned out a dud and nothing was returned except a few pounds. Reid should have the full particulars. Of course it had nothing to do with Chillagoe [or Mungana] but it explains the cheques that McGill has been looking for. You might remind them of the Marvel Tin Mines when they return.

(page 8) Dividends on 900 shares held by Reid for me. The amount due as per list of dividends should have been £274 1 .5.0. The amount received from Reid by cheques amounts to £21 60.9.8. This leaves a deficiency of £580. 15 .4. Reid apparently is quite wrong when he says that he under-payed me by £200.0.0 only. He persistantly wrangled with me over these shares and told me that he had a right to give Goddar4 what shares he liked as I had not paid for his machinery. His whole attitude bears out my statement that He gave Goddard the shares without consulting me. Goddard sold these shares as soon as I informed him that he had no right to take them under the circumstances.

APPE N DIX VI I I

J ury Questions and Answers , 1931

The following questions submitted to the jury and the answers given are reproduced from the Brisbane Courier of 25 August 1 93 1 .

1 . (a) Did the defendant Reid, in or about the month of December, 1 9 1 7, or in or about the month of January, 1 9 1 8, corruptly give to the defendant McCormack a one-half share or interest in leases numbered 502 and 503 ?-No.

(c) Did the defendants McCormack and Theodore (or either, and, if so, which of them) corruptly accept a one-half share or interest in the said leases from the defendant Reid?-No.

(e) Did the defendant Reid give the said one-half share or interest in the said leases to the defendant McCormack for himself and the defen­dant Theodore in consideration of the defendant Theodore using his office and influence as a Minister and agent of our Lord the King and a member of the executive Government-(i) To obtain loans from the Government of Queensland for the

purpose of working the Girofla and Lady Jane mines :-No. (ii) To bring about the purchase by the Government of Queensland

of the said mines at a price in excess of the fair and reasonable value thereofl-No.

2. Did the defendants Reid, McCormack, and Theodore (or any, and,which of them), in or about the month of December, 19 1 7, or the monthof January, 19 18, unlawfully combine and conspire together-(a) To obtain loans by unlawful means from the Government of

Queensland to work the Girofla and Lady Jane mines?-No. (b) To bring about by unlawful means the purchase by the Government

of Queensland of the said mines at a price in excess of the fair and reasonable value thereofl-No.

6. Did the defendant McCormack, in pursuance of the said unlawful com­bination and conspiracy, and for the purpose of attaining the objectsthereof, fraudulently conceal from all other Ministers and agents of ourLord the King and members of the Executive Government having anypower, authority, or duty with respect to the purchase of the said minesthe fact that he was entitled to a one-half share or interest in the saidleases.(a) Either for himself.-No.

Or (b) For himself and the defendant Theodore?-No.

1 40 The Mungana AJ!air

7. Did the defendant Theodore, in pursuance of the said unlawful combina­tion and conspiracy, and for the purpose of attaining the objects thereof, fraudulently conceal from all other Ministers and agents of our Lord the King and members of the Executive Government having any power, or authority, or duty with respect to the purchase of the said mines the fact that the defendant McCormack was entitled to a one-half share or in­terest in the said leases for himself and the defendant Theodore?-No.

8 . (a) Did the defendant Reid, prior to December 16, 1920, corruptly agree to give to the defendant Goddard 1 250 fully-paid-up £ 1 shares in Mungana Mines Limited?-No.

7. (c) Did the defendant Reid agree to give the said shai:es to the defendant Goddard in consideration of the defendant Goddard recommending to the Secretary for Mines the purchase for and on behalf of our Lord the King of the Girofla and Lady Jane mines for the sum of £40,000.-No.

(d) Did the defendants or any and which of them-(i) Fraudulently cause Mungana Mines Limited to issue and allot

1 250 shares to the defendant Goddard?-No. (ii) Fraudulently cause the said shares to be entered in the register

of shareholders kept by Mungana Mines Limited in order to conceal the said agreement between the defendants?-No.

(e) Was the sum of £40,000 a price in excess of the fair and reasonable value of the said mines?-No.

9. (a) Did the defendant Goddard recommend to the Secretary for Mines the purchase for and on behalf of our Lord the King of the Lady Jane and Girofla mines for the sum of £40,000?-Yes.

(b) If yes, did the defendant Goddard so recommend in pursuance of or by reason of the gift to him of 1250 fully-paid-up £ 1 shares in Mungana Mines Limited?-No.

1 1 . (a) Did the defendants or any and which of them, on or prior to December 16, 1 920, unlawfully combine and conspire together to bring about by unlawful means the purchase for and on behalf of our Lord the King of the Lady Jane and Girofla mines for the sum of £40,000?-No.

(b) Was the said sum of £40,000 a price in excess of the fair and reasonable value of the said mines?-No.

(c) Did the defendants, or any and which of them, then know the sum of £40,000 was a price in excess of the fair and reasonable value of the said mines?-No.

12. (a) Was Mungana Mines Limited on December 1 6, 1 920, a company consisting of more than 20 persons holding a beneficial interest in shares of the said company?-Yes.

1 3 . (a) Was Mungana Mines Limited on March 25, 1 922, a company con­sisting of more than 20 persons, who held a beneficial interest in shares of the said company?-Yes.

14. (a) Did the defendant McCormack, for and on behalf of our Lord the King, approve or authorise the purchase of the Lady Jane and Girolfa mines for and on behalf of our Lord the King?-No.

Appendixes 1 4 1

(c) Did the defendant McCormack so approve or authorise the said purchase in pursuance or furtherance of the said unlawful combina­tion or conspiracies or either of them?-No.

I S . Did the defendant McCormack use any, and, if any, what, unlawful means, to bring about the purchase for and on behalf of our Lord the King of the said mines?-No.

16. (a) Did the defendant Theodore, for and on behalf of our Lord the King, approve or authorise the purchase of the Lady Jane and Girolfa mines for and on behalf of our Lord the King?-Yes.

(b) Did the defendant Theodore so approve or authorise the said purchase in consideration of the gift of a one-half share or interest in the Lady Jane and Girofla mines for himself and the defendant Mc­Cormack?-No.

(c) Did the defendant Theodore so approve or authorise the said purchase in pursuance or furtherance of the said unlawful combina­tions or conspiracies or either of them?-No.

1 7. Did the defendant Theodore use any, and, if any, what, unlawful means to bring about the purchase for and on behalf of our Lord the King of the said mines?-No.

1 8. Were the defendants McCormack and Theodore, or either and which of them, entitled to the beneficial interest in 43 76 shares in Mungana Mines Limited? (a) On February 2, 1922?-Yes, McCormack, but not Theodore. (b) On March 2S, 1922?-Yes, McCormack, but not Theodore.

1 9. (a) Did the defendant McCormack, on and prior to February 2, 1922, conceal from all other the Ministers and agents of our Lord the King and members of the Executive Government having any power, authority, or duty with respect to the purchase of the Lady Jane and Girofla mines the fact that he was entitled to the beneficial interest in 4376 shares of Mungana Mines Limited, either for himself or for himself and the defendant Theodore?

(i) Fraudulently?-No. (ii) In breach of his duty as a Minister and agent of our Lord the

King and a member of the Executive Government?-No. 20. (a) Did the defendant McCormack, on and prior to March 2S, 1922,

conceal from all other Ministers and Agents of Our Lord the King, and members of the Executive Government having any power, authority, or duty with respect to the purchase of the Lady Jane and Girofla mines the fact that he was entitled to the beneficial interest in 4376 shares of Mungana Mines Limited, either for himself or for himself and the defendent Theodore;

(i) Fraudulendy?-No. (ii) In breach of his duty as a Minister and Agent of our Lord the

King and a member of the Executive Government?-No. 2 1 . (a) On and prior to February 2, 1922, was the defendant Theodore en­

titled to a share or interest in 43 76 shares of;' Mungana Mines Limited?-No.

22. (a) Did the defendant McCormack receive from Mungana Mines

1 42 The Mungana AJTair

Limited the sum of £ 12,737/1 9/- in respect of 4376 shares in the said company?-Yes.

(b) Was such sum of £ 1 2,737/19/- paid to the defendant McCormack by Mungana Mines Limited out of the moneys paid to Mungana Mines Limited for and on behalf of our Lord the King for the purchase of the Lady Jane and Girofla Mines?-Yes.

23 . (a) Did the defendant McCormack pay to the defendant Theodore sums amounting to £5658/5/10 between April 1 , 1 922, and July 3 1 , 1 925?-Yes.

(b) Were such sums paid by the defendant McCormack to the defen­dant Theodore on account of a share or interest held by the defen­dant Theodore in the shares in Mungana Mines Limited held for or in the name of the defendant McCormack?-No.

24. (a) Was the sum of £3807/5/10 paid by Mungana Mines Limited to the defendant Goddard or his transferees in respect of 1250 shares in the said company?-Yes.

(b) Was such sum of £3807/5/10 so paid by Mungana Mines Limited out of moneys paid to Mungana Mines Limited for and on behalf of our Lord the King for the purchase of the Lady Jane and Girofla Mines?-Yes.

25 . What damage$?-Nil.

Notes to Text

INTRODUCTION

1 . Edward Granville Theodore, 1 884 - 1 950. M.L.A. (A.L.P.) for Woothakata, 1 909- 12, and for Chillagoe, 19 1 2-25 ; Treasurer, Secretary for Public Works, 1 9 1 5 - 1 9 ; Premier Chief Secretary, 1 9 1 9 -25 ; Treasurer, 1 9 1 9 - 20, 1 922- 25 ; M.H.R. (A.L.P .) for Dalley, 1 927 - 3 1 ; Deputy Prime Minister 1 929 - 3 1 ; Treasurer 1 929-30, 1 93 1 . Organizer, A.W.A., 1 907 -09 ; President, A.W.A., 1 9 1 2- 1 3 ; President, A.W.U., 1 9 1 3 - 1 6.

2. William McCormack, 1 8 79 - 1 947. M.L.A. (A.L.P.) for Cairns, 1 9 1 2- 30 ;Speaker, 19 1 5 - 1 9 ; Home Secretary, 1 9 1 9 -23 ; Secretary for Public Lands, 1923 -25 ; Premier, Chief Secretary, Treasurer, 1925 -29. General Secretary, A.W.A., 1 908 - 1 2 ; Vice President, A.W.U., 1 9 1 3 - 14.

3 . Neil Francis Macgroarty, 1 888- 1 97 1 . M.L.A. (Nat.) for South Brisbane, 1929 -3 2 ; Attorney-General, 1929 -32. Admitted to the Bar, 1 9 1 1 .

4. Alec Douglas McGill, 1886 - 1 95 2. Admitted to the Bar, 1 9 1 1 ; K.C., 1 934.Chairman, C.N.P., 1 925 -35 .

5 . Arthur Edward Moore, 1 8 76- 1 963. M.L.A. (C.P.) for Aubigny, 1 9 1 5 -4 1 ;Premier, Chief Secretary, 1929-32; Leader of Opposition, 1 924-29, 1 932- 36.

6. E.G. Whitlam, Foreword to I. Young, Theodore.· His Life and Times (Sydney,197 1), p. xiv.

7. C. Hughes, "Theodore: The Politician Who Walked by Himselr', Mea'fiin 3 1 ,no.3 ( 1972), p. 367.

CHAPTER 1

1 . Anderson Dawson had formed Australia's first Labour ministry in 1 899, but with only twenty-one of the seventy-two seats in the House, it was defeated within a week. In 1 904, two Labour members, W.H. Browne and W. Kidston, represented the Labour party in a coalition with the Morganites. However, in 1907 Labour went separately to the polls, the Kidstonites by this time having broken with the Labour party.

2. Thomas Joseph Ryan, 1 876 - 1 92 1 . M.L.A. (A.L.P.) for Barcoo, 1 909- 1 9 ;Premier, Chief Secretary, Attorney General, 19 1 5 - 1 9 ; M.H.R. (A.L.P.) for West Sydney, 1 9 1 9 -2 1 ; deputy leader of F.P.L.P., 1 920- 2 1 .

3 . See T.J. Ryan, Socialism at Work (Brisbane, 1 9 1 8); C. Bemays, Queensland -Our Seventh Political Decade (Brisbane, 1 93 1), pp. 95 - 1 29 ; D.J. Murphy, "The Establishment of State Enterprises in Queensland 1 9 1 5 - 1 8", Labour History, 14 (May 1 968); H. Evatt, Australian Labour Leader (Sydney, 1 954), pp. 126-30, 228 - 29, 377 - 79 ; F. Eggleston, State Socialism in Victoria (London, 1 932), pp. 3 1 -36; J. Robertson, "The Foundations of State Socialism in Western Australia 1 9 1 1 - 1 6", H.S.A..N.Z., 10, no. 39 (November 1 962) pp. 309-26.

1 44 The Mungana A/fair

4. Murphy, "The Establishment of State Enterprises", p.22.5. E.G. Theodore, "The Labour Party in Queensland", Labour Magazine (London,

September 1923) p. 1 99.6. John Moffat, 184 1 - 1 9 1 8, was storekeeper at Stanthorpe from 1869-80 and at Ir­

vinebank from 1884 - 1 9 1 2. He was also director of the Chillagoe Company from1 897- 19 14 and held extensive mining interests in north Queensland.

7. G. Bolton, A Thousand Miles A way (Brisbane, 1963), p.279.8. Mareeba to Chillagoe Railway A ct of 1897, 6 1 Vic., No. 1 9.9. Q.P.P. 1 9 18, II, "Minutes of Evidence before Select Committee of Inquiry into

the Chillagoe and Etheridge Railway Bill", p. 1 544.10. John Smith Reid, 1 849 - 1 922, editor of the Silver Age, and director of Broken

Hill Prop.rietary Company, Silverton Tramway Company, Emu Bay Railway Company, and Chillagoe Railway and Mines Limited.

1 1 . J. Smith Reid to AJ. Thynne, 2 March 1904, Q.P.D., CXXV, p.24 14. 1 2. Andrew Joseph Thynne, 1847 - 1 927, M.L.C., 1 882 - 1922 ; Minister for Justice,

1 888 -90; Minister Without Portfolio, 1 893 -94; Postmaster-General, 1894-96; Postmaster-General and Secretary for Agriculture, 1 896-97; Secretary for Agriculture, 1897-98.

1 3. Digby Frank Denham, 1859- 1944, M.L.A. (Lib.) for Oxley, 1 902- 1 5 ; Secretary for Agriculture, Home Secretary, 1 903 -4; Secretary for Agriculture, Secretary for Public Works, 1904-6; Secretary for Agriculture, Secretary for Railways, 1 906-7 ; Home Secretary, 1 907 -8 ; Secretary for Public Lands, 1908- 1 1 ; Premier, Chief Secretary, 1 9 1 1 - 15 .

14. Minute on letter; A.J. Thynne to D. Denham, 1 August 1 9 1 3, Q.P.D., CXXV, p.24 1 5 .

15 . James Horsburgh, 1 874- 1 942, general manager of the Chillagoe Smelters from 1907 - 14, and afterwards assistant general manager at Mount Morgan. He was a member of the North Australia Commission, 1926-3 1 .

1 6. Q.P.P., 19 18, II, "Minutes of Evidence before Select Committee", pp. 1552-55. 1 7. Bolton, A Thousand Miles A way, pp.295 -96. 1 8. Walter Henry Barnes, 1858- 1933, M.L.A. (Lib.) for Bulimba, 190 1 - 1 5 ; M.L.A.

(Nat.) for Bulimba, 19 1 8 -23, and for Wynnum, 1923 -33 ; Secretary for Public Lands, 1 907-8 ; Secretary for Public Instruction, Secretary for Public Works, 1 908 - 1 1 ; Secretary for Public Works, Treasurer, 1 9 1 1 - 1 5, and Treasurer, 1929-32.

- 1 9. J. Smith Reid to Acting Premier, 1 May 19 14, Q.P.D., CXXV, p.2415. 20. Ibid.2 1 . The debenture holders had asked AJ. Thynne to make representations to the

government in May 19 1 3, but Denham was not favourable to the suggestion. (Q.P.D., CXXV, p.2660).

22. D. Denham to J. Smith Reid, 22 June 1 9 14, Q.P.D., CXXV, p.24 16.23 . Q.P.D., CXXV, p.24 14. 24. Q.P.P. 1 9 1 7, II, "Minutes of Evidence of Select Committee of Inquiry into Chil-

lagoe and Etheridge Railways Purchase Bill", p.403.25. Worker, 29 March 1 9 1 5 .26. Ryan : Q.P.D., CXXV, p.24 1 7; Theodore: Q.P.D., CXXV, p.2554.27. Q.P.D., CXXV, pp.2554-55.28. Q.P.P. 19 16- 1 7, Ill, "Report of the Select Committee on the Chillagoe and

Etheridge Railways Purchase Bill", p.396. Theodore persistently argued that ac­quisition of the Chillagoe Company's assets would be a paying proposition ifmetal prices remained high, but that the resurrection of mining in the district wasthe prime consideration.

29. Alexander Macdonald, 1878- 1 939, was manager of the Mammoth Copper Min­ing Company and Attorney for Henry Allan in Australia.

Notes to Text 1 45

30. For details see Q.P:P. 1 9 18 (II), "Minutes of Evidence before Select Committee".3 1 . Q.P.P. 19 18, II, "Report of Select Committee of Inquiry", pp. 1 37 1 -73. 32. Q.P.P. 19 18, II, "Minority Report", p. 1 374.33 . Edward John Johnstone Rodda, 1869- 1932, was mines manager of the Chillagoe

Company, 1902-8, and of the Mungana Mining Company, 1908- 14. 34. Q.P.P. 19 18 , II, "Minutes of Evidence", pp. 1 544-45 , 1552-56.35 . Q.P.P. 19 18, II, "Further Report of Select Committee of Inquiry", p. 1469. 36. The Chillagoe-Etheridge Railway Act of 1918, 9 Geo. V., No. 1 7.3 7. "Chillagoe Railways and Mines Limited" (Reports, forms of agreement,

memoranda and correspondence related to the Chillagoe Railway and Mines Limited 1898 - 1920), Q.S.A., JUS/54-57.

38. James Forsyth, 1852- 1927, M.L.A. (Lib.) for Carpentaria, 1899- 1907; forMoreton, 1909- 12; for Murumba, 19 12- 18.

39, Q.P.D., CXXIX, pp.3 1 1 - 12. 40. Queensland Journals of Parliament, 19 18, p.35 1. Chillagoe-Etheridge Railway

Act of 19 1 8, 9 Geo. V., No. 17., S. 7 .41 . Peter Louis Goddard, 188 1 - 1932, was smelters foreman at Mount Elliott, 19 10-

18 ; general manager of Chillagoe State Smelters, 19 19-27 and proprietor of thePacific Hotel, Cairns, 1927-32.

42. Harald lngeman Jensen, 1883- 1966, was Commonwealth Director of Mines,19 12 - 16 and Queensland Government Geologist, 1 9 1 7-22.

43. William Henry Corbould, 1866- 1949, assayer of Broken Hill, was mine managerat Kalgoorlie, general manager at Mount Elliott, 1907-22, and director of MountIsa Mines, 1924-27.

44. Frederick Reid, 1887- 1948, miner, and smelter hand at Chillagoe, Mungana, andCardross, 1900- 1 7. He was the mine proprietor at Mungana, 1 9 1 7-25, an hotelproprietor in Cairns, 1927-29, and was declared bankrupt in 1929. Not to beconfused with J. Smith-Reid (Chillagoe Company) or J.H. Reid (Irvinebank Min­ing Company).

45 . Robert Alexander Dunlop, 1888 - 1955, mining warden, at Chillagoe, 19 16-2 1 , and 1924-27 ; Cloncurry, 192 1 -24; Gladstone, 1927-29; Clermont, 1929-30. He was a partner with F. Reid in the Tarzali Sawmill, 1926-27.

46. Mineral Lease Files, Mining Warden's Office, Mareeba.47. Duncan Campbell McDiarmid in "Transcript of Evidence: Royal Commission

into Chillagoe-Mungana etc.", Q.S.A., ROY/I S, p.4 14.48. EJJ. Rodda to F. Reid, 2 1 November 19 17, Mungana File, History Depart­

ment, James Cook University of North Queensland.49. See Appendix p. I2S, "Metal Prices 1908 - 1928".SO. "Transcript of Evidence: Royal Commission into Chillagoe-Mungana etc.",

Q.S.A., ROY/IS, pp. l9, 20, 25. 51. Alfred James Jones, 1870- 1945, M.L.A. (A.L.P.) for Burnett, 1904-9 ; for

Maryborough, 19 15 - 1 7 ; for Paddington, 1922-32; and M.L.C. (A.L.P.), 1 9 17 -22; Secretary for Mines, 1 9 17-29.

S2. E.G. Theodore to A. Jones, 3 April 19 18, in "Transcript of Evidence: Roval Commission into Chillagoe-Mungana etc.", Q.S.A., ROY/IS, p.20.

S3. Sydney Horsley, 1859- 1934, was Inspector of Mines, 1901 -22. S4. Report by Horsley in "Transcript of Evidence: Royal Commission into

Chillagoe-Mungana etc.", Q.S.A., ROY/IS, pp.21 -22. SS. E.G. Theodore to A. Jones, 13 August 19 18, in "Transcript of Evidence : Royal

Commission into Chillagoe-Mungana etc.", Q.S.A., ROY/I S, p.26. S6. Mineral Lease Files, Mining Warden's Office Mareeba. 57. H. Jensen, "Observations at Mungana", Queensland Government Mining Jour­

nal, 21 (April 1920), pp. I50-S2.S8. Q.P.P. 1 920, I, "Annual Report of Auditor-General 1919-20", p.86.

1 46 The Mungana AJ!air

59. The Chillagoe-Etheridge Railway Act Amendment Act of 1920, 1 1 , Geo. V., No. 7, S. 2c.

60. The relevant correspondence is contained in "Transcript of Evidence: RoyalCommission into Chillagoe-Mungana etc.", Q.S.A., ROY/1 5, pp.26, 27.

6 1 . Companies Office Archives, Brisbane, "Summary of Capital and Shares : Mungana Mines Limited", No. 144/20.

62. P. Goddard to A. Jones, 1 7 December 1 920, in "Transcript of Evidence: RoyalCommission into Chillagoe-Munguna etc.", Q.S.A., ROY/15, p.28.

63. A. Jones to E.G. Theodore, 17 January 1 92 1 , in "Transcript of Evidence: RoyalCommission into Chillagoe-Munguna etc.", Q.S.A., ROY/ 1 5, p.3 1 .

64. Edgar Cecil Saint-Smith, 1 883 - 1 930, was Government Geologist from 1 9 1 2-24,and from 1 924� 27.

65 . Report by E.C . Saint-Smith, 3 1 January 1 92 1 in "Transcript of Evidence : Royal Commission into Chillagoe-Munguna etc.", Q.S.A., ROY/ 1 5, pp.3 1 -32.

66. P. Goddard to A. Jones, 1 2 February 1 9 2 1 , in "Transcript of Evidence: RoyalCommission into Chillagoe-Munguna etc.", Q.S.A., ROY/ 1 5, p.33 .

67. Q.P.P. 1 92 1 , I, "Annual Report of Auditor-General 1 920-2 1 ", p. 1 59.68. Q.P.P. 1 922, II, "Report of General Manager, Chillagoe State Smelters and

Mines", p.66 1 .69. William Poole, 1 8 68 - 1 929, was director of Charters Towers School of Mines,

1 904 - 1 2, and a member of numerous professional societies.70. Report by Poole, Queensland Government Mining Journal, 23 (July 1922),

pp.260-6 1 .7 1 . See Appendix p. 1 27, "Synopsis of Reports on Mungana Mines". 72. Labour's majority from the 1 9 1 8 elections was substantially reduced by the loss

of ten seats following a six per cent swing against the government. For criticism of the state enterprises see Nationalist party policy speech, Brisbane Courier, 10 September 1 920.

CHAPTER 2

1 . James Francis Maxwell, 1 862- 1 94 1 . M.L.A. (Nat.) for Toowong, 1 920-36, and (U.A.P.) for Toowong, 1936 - 3 8 ; Opposition Whip, 1932-3 6.

2. Q.P.D., CXXXIX, p.340.3. Ibid., p.44 7.4. Q.P.P. 1 922, I, "Annual Report of Auditor-General 192 1 -22", p.20 1 .5 . See Appendix p. 130, "Capital Expenditure on the Mungana Mines by the State

Sm�lters". 6. Q.P.P. 1 922, II, "Report of General Manager Chillagoe State Smelters and

Mines", p.66 1 .7. Q.P .P. 1 923, II, "Report of General Manager Chillagoe State Smelters and

Mines", p.880.8. Q.P.P. 1 923, I, "Annual Report of Auditor-General 1 922 -23", p. 1 99 ; also Ap­

pendix p. 1 25, "Metal Prices 1 908 -28".9. Charles Ta)JOr, 1 86 1 - 1 944. M.L.A. (Nat) for Windsor, 1 9 1 8 - 3 5 ; leader of the

Opposition, 1923 -24 ; Speaker, 1 929 -32.10. Q.P.D., CXLII, p. 1 93 3 .1 1 . Ibid., p. 1 934. 1 2. Ibid., p. 1 935. 13 . For biographical details see footnote 5 of the Introduction. 1 4. Q.P.D., CXLII, pp. 1 934-36. 1 5 . Q.P.P. 1 924, I, "Annual Report of Auditor-General 1 923 -4", pp. 1 8 1 - 82.

Notes to Text 14 7

16. Q.P.P. 1 925, I, "Annual Report of Auditor-General 1924-S", pp. 189-92.1 7. Q.P.P. 1 925, III, "Report of General Manager, Chillagoe State Smelters and

Mines", pp. 155 -S6. 18. Q.P.P. 1926, I, "Report of General Manager, Chillagoe State Smelters and

Mines", p. 1249. 19. Moore had said "It seems an extraordinary position that we have to go on losing

a vast amount of money every year, because, as the Minister says, we have not the opportunity to fiX the prices for metals . . . such a state of affairs should not be allowed to continue." Q.P.D. CXLIV, p. 1374.

20. William Gillies, member for Eacham, who had succeeded Theodore as premier inFebruary 1925 , resigned in October 1925 to accept a position on the Board ofTrade and Arbitration. The new premier, William McCormack, scheduled theby-election for late February 1926, whereupon the Country National Partywhich had been formed in July 1924, under Arthur Moore, despatched severalM.L.A.'s to campaign throughout the district.

2 1 . Hubert Ebenezer S�er, 1893 - 1973, M.L.A. (Nat.) for Nundah, 19 1 8-23 and for Sandgate 1923 -3S ; Minister for Labour and Industry, 1929-32.

22. Interview with H. Sizer, 6 June 197 1 .23. George Rymer, born in 1889, was Northern District Secretary of the A.R.U.

from 1 9 1 7 -20, Assistant General Secretary, 1920-22, and State President, 1922-30. He was also editor of Solidarity, afterwards The Advocate from 19 1 7 to1 930.

24. Interview with G. Rymer, 14 June 1970.2S. On 27 November 1925, the Q.C.E. carried a motion compelling all Labour party

members to sign an anti-communist pledge. Rymer and Moroney ·as A.R.U.delegates signed only under protest, resulting in their expulsion from the Q.C.E. and the rejection of A.R. U. delegates' credentials at the Southport Labour-in­Politics Convention. For details on the railway strike, see A.A. Morrison, "Mili­tant Labour in Queensland 19 12-27", J.R.A .H.S. XXXVII, pp.209 fT.

26. The Advocate, 1S February 1926.27. Dally Standard, 1 1 March 1926.28. Ibid.29. Brisbane Courier, 12 March 1926.30. T.L.C. Minutes of meeting held at Trades Hall, Brisbane on 1 7 March 1926.3 1 . William Kelso, 1872- 1956, M.L.A. (Nat.) for Nundah, 1923 -32. 32. Telegraph, 14 March 1926; The Advocate, IS March 1926.33. Companies Office Archives, Brisbane, "List of Shareholders : Mungana Mines

Limited", No. 144/20.34. Telegraph, 26 March 1926.35. William McCormack v Telegraph Newspaper Company Limited, Andrew

Clyesdale and Martin Luther Reading, Writ No. 157 of 1926, Supreme CourtArchives, Brisbane.

36. Telegraph, 16 March 1926.3 7. Brisbane Courier, 9 April 1926. 38. Q.P.P. 1927, I, "Report of the General Manager, Chillagoe State Smelters and

Mines", p. 1355 .39 . Q.P.P. 1 926, I, "Annual Report of Auditor-General 192S -26", p. 1 94. The report

added that as similar over-valuing of ores and by-products had continued for some years, part of this loss had really been incurred in previous years although in no way reducing the accumulated loss.

40. Ibid., p. 19 5.4 1 . Ibid., p. 1 96. 42. An explosion of coal-dust and fire-damp wrecked the mine, killing seventy-five

men, on 19 September 192 1 . It was one of the worst mining disasters in

'1 48 The �ungana AJTair

Australian history, and the entire mine had to be reopened and retimbered. 43. Q.P.P. 1 926, I, "Annual Report of Auditor-General 1925 -26", p. 196.44. Q.P.D., CXLVDI, pp. 13 16- 1 7.45. Ibid., p. 132 1 .46. Deductions (before payment) were to be applied to all ores received with a metal

content that impeded smelting, as follows: Lead with under 10 per cent metalcontent, S units; Zinc with 10 units zinc-oxide free, 6d per unit over; Arsenic with2 units free, 2/6 per unit over.

47. Q.P.D., CXLVDI, pp. 1576- 77.48. Ibid., p. 1574.49. Ibid., pp. 1 578-79.

. SO. Ibid., pp. 1580-8 1 . 5 1 . Ibid., p. 1589. 52. Ibid., p. 1590.53 . Augustus Cecil Elphinstone, 1874- 1964, M.L.A. (Nat.) for Oxley, 19 18-29. 54. Q.P.D., CXLVDI, pp. 1574- 1624.55. John O'Keefe, 1880- 1942, M.L.A. (A.L.P.) for Chillagoe, 1926-29, and Cairns,

1930-42,; Chairman of Committees, 1939-40; Attorney Gen�al, 1940-41 ; Secretary for Mines 194 1 -42.

·

56. Q.P.D., CXLVIII, p. 1599.57. Ibid., p. 1623.58. Ibid., p. 1626.59. Ibid., pp. 1626-30. Two days earlier, McCormack had attacked Opposition sug­

gestions that he had accrued stocks and bonds over several years. "I have neverhad any desire in this chamber to deal with the private business of bon. memberson the other side; but, when bon. members make references to my personal af­fairs, then I shall hit back every time . . . It is no business of mine what an bon.member does with his money. It is no business of theirs what I do with mine."(Q.P.D., CXLVID, p. 15 1 9.)

60. The other ministers were W. Forgan-Smith, J. Mullan and J. Larcombe. WilliamForgan-Smith, 1887 - 1953 was M.L.A. (A.L.P.) for Mackay, 19 15 -42; MinisterWithout Portfolio, 1920- 22; Secretary for Public Works, 1922-25 ; Secretary forAgriculture and Stock, 1925 -29 ; Premier, Chief Secretary, 1932-42; Treasurer1932-38 ; Secretary for Public Works, 194 1 -42. John Mullan, 187 1 - 1941, wasM.L.A. (A.L.P .) for Charters Towers, 1908 - 1 2, and for Flinders, 1918-4 1 ;Minister Without Portfolio, 1 9 19-20; Attorney General, 1920-29, 1932-40;Federal Senator, (Qld.), 19 1 3 - 1 7. James Larcombe, 1884- 1 957, was M.L.A.(A.L.P.) for Keppel, 19 12-29 and for ·Rockhampton, 1932-56 ; Minister WithoutPortfolio, 19 19 ; Secretary for Public Works, 19 19 -20; Secretary for Railways,1920-29 ; Secretary for Mines, 1939; Minister for Transport, 1939-44; Secretaryfor Public Instruction, 1944-46; Treasurer, 1946-50; Attorney General, 1950-52.

6 1 . Interview with H. Sizer, 6 June 197 1 . 62. Brisbane Courier, 5 November 1926.63. Daily Standard, S November 1926.64. Daily Mail, S November 1926.65 . George Lansley Beat, 1869- 1952, joined the Treasury in 1887 and was accoun­

tant from 1907 - 1 5 ; chief clerk, 19 15 - 17 ; Under-Secretary, 191 7-26; Auditor­General, 1926-39.

66. For full details see Q.P.P. 1927, I, "Special Report of Auditor-General on StateSmelters Ore Reduction and Treatment Works and Mines, Chillagoe", pp. 1399-14 10 passim.

·

CHAPTER 3

I . Q.P .D., CXLIX, pp.S 1 7-23. 2. Ibid., p.S27.3. Ibid., p.S28.4. Ibid., pp.S35 -37.5. Ibid., pp.546-47.6. Ibid., p.S4 7.7. Ibid., p.S49.8. Ibid., pp.549-S2.

Notes to Text 1 49

9. Reginald Macdonnell King, 1 86S - 1 9S9, M.L.A. (Nat.) for Logan, 1920-3S ;Secretary for Public Instruction and Public Works, 1929-32.

10. Q.P.D., CXLIX, pp.SS2-53. I I . The Advocate, IS November 1927. The A.R.U. could not have raised the matter,

because the union's credentials had been rejected by the 1926 Convention, for its refusal to sign the anti-communist pledge. See Chapter 2, Note 00.

12. William Demaine, 1859- 1 939, M.L.C. (A.L.P.), 1 9 1 7-22; M.L.A. (A.L.P.) for Maryborough, 1937-38; President Q.C.E., 1 9 1 7 -38.

13. "Official Report of Labor-in-Politics Convention, 1928", Labor House, Brisbane, p.6.

14. Ibid., p.23. I S . Ibid., pp.23-27. 16. Ibid., p.27. 1 7. McCormack was reported as stating that he held 333 shares, whereas 388 were

in his name. It has been assumed that this was a misprint. 18. "Official Report of Labor-in-Politics Convention, 1 928", p.28. (Italics added)1 9. Ibid., p.30. 20. Ibid., p.32.21 . The Advocate, IS December 1928. 22. The 19S7 elections, won by the Country-Liberal parties under Nicklin, might be

regarded as the exception, although not in voting figures. Then, the Country­Liberal parties gained forty-two seats with 43. 12 per cent of the vote, compared to twenty-four seats won in 1 9S6 with 44.34 per cent of the vote. The 19S7 swing followed the 1 956 A.L.P. split and cannot be compared with the swings of 1 9 1 S ( 6 per cent) and 1929 (S per cent).

23. Brisbane Courier, S April 1 929. The Round Table (19 June 1 929) commented inretrospect, "[Moore] kept prominently before the electors the losses sustained by the State undertakings." (pp. l66-67)

24. Daily Mail, I S April 1929.2S. Godfrey Morgan, 187S - 1957, M.L.A. (C.P.) for Murilla, 1909-3S, and for Dal­

by, 1935 -38 ; Secretary for Railways, 1929-32. 26. Ernest Atherton, 1879- 1 9S4, M.L.A. (C.P.) for Chillagoe, 1 929-32; Secretary

for Mines, 1929-32. 27. Moore's choice had been limited by the fact that Labour still had its stronghold in

the north and northwest, having only three members to choose from: Atherton (Chillagoe), Duffy (Eacham) and Kenny (Cook).

28 . Companies Office Archives, Brisbane, "List of shareholders for 1 927 : Argentum Mining Company", No. 180/23 ; "List of shareholders for 1 927 : Fluorspar Min­ing Company", No. 1 8 1/23.

29. Interview with H. Sizer, 6 June 197 1 .30. Q.P .D., CLIII, p. 7 12.3 1 . Ibid., p. 7 1 7. �

32. Randolph Bedford, 1868- 194 1 , M.L.C. (A.L.P.), 19 17-22; M.L.A. (A.L.P.) for

1 50 The Mungana AJfair

Warrego, 1 923--37, 1 937-4 1 . Bedford floated the Mount lsa Silver Lead Proprietary Company in 1924. See G. Blainey, Mines in the Spinifex (Sydney, 1960).

33. Q.P.D., CLlli, p.7 17. Bedford's case parallels McCormack's argument that his M ungana interests were public property simply because they had been registered in the Supreme Court. See Q.P.D., CXLVlli, pp. 1629 -30.

34. Brisbane Courier, 9 October 1 929. 35. "ExJUilination of Fred. Reid in Federal Bankruptcy Jurisdication", Mungana

File, History Department, James Cook University of North Queensland, pp.27-29.

36. Q.P.D., CLlli, p. 778. 37. Brisbane Courier, 10 October 1 929. 38. Ibid. 39. Q.P.D., CLIII, pp.84 7-48. 40. This view is still widely held today. See Brennan, John Wren: Gambler, pp. 1 7 1 -

72; _ E.G. Whitlam, "Foreword", in Young, Theodore: His Life and Times (p. xiv).

4 1 . Voting in the Federal Election, compared with the 1928 poll:

Party 1928 1929 % Vote Seats % Vote Seats

Nat. 39.09 29 33.89 14 Ind.Nat. 3 .89 3 C.P. 10.47 1 3 10.27 10 C.Prog. 1 .6 1 1 0.97 1 Lab. 44.64 3 1 48.44 46 Ind. 4. 19 1 2. 1 3 1

Voting in Queensland. Party 1928 1929

% Vote Seats % Vote Seats Nat. 36.68 6 43.52 5 C.P_ 15 .92 2 10.66 2 Lab. 47 .40 2 39.79 3 lnd.Nat. 2. 1 3 Ind. 3.90

42. Brisbane Courier, 14 October 1929. 43. Q.P.D.·, CLlll, p.933. 44. Q.P .D., CLIV, p. 1 222. 45. Ibid., p. 1225. 46. Ibid. 4 7. H. Sizer has claimed, "It was ethics alone which influenced Moore". In an inter­

view on 6 June 197 1 , he recalled Moore instructing his Cabinet that "there should be no black marks on Ministers, nor should they be involved in share transactions."

CHAPTER 4

1 . Bemays, Queensland-Our Seventh Political Decade, p.26 1 ; R. Connolly, "The Mungana Story", Sunday Mail, 8 February 1954; Interview with H. Sizer, 6 June 1 97 1 .

Notes to Text 1 S 1

2. Francis Stewart Boyce, 1872- 1940, M.L.C. (Nat., N.S.W.), 1 923 -32; Hon. Minister, 1924-25 ; Attorney General, Vice-president Executive Council, 1927-30; admitted to Bar, 1897 ; K.C., 1924; Judge, N.S.W. Supreme Court, 1 932-40.

3. James Lang Campbell, 1860- 1 936, admitted to Bar, 1886 ; K.C., 1 9 10; Judge, N.S.W. Supreme Court, 1922-29.

4. Allan Victor Maxwell, 1 887-0000, admitted to Bar, 19 1 3 ; K.C., 1 929 ; Judge, N.S.W. Supreme Court, 1 934-35 .

5 . A. Moore to F. Boyce, 4 February 1930 (letter 2225 of 1 930), PRF/A 1048, Queensland State Archives.

6. H. Sizer to A. Moore, 13 February 1930 (letter 0946 of 1930), PRF/A 1048, Queensland State Archives.

7. Interview with M. Sizer, 6 June 197 1 . 8 . W. McCormack to V. Macrossan, 28 April 1 930, "McCormack Legal Papers" 9. Q.P .P. 1 930, I, "Terms of Reference, Royal Commission into Chillagoe­

Mungana etc.", pp. 1347-48. See Appendix p. 132, "Terms of Reference". 10. Companies Office Archives, "List of Shareholders for 1928 : Fluorspar Mining

Company, No. 18 1/23. 1 1 . "List of Shareholders for 1923 : Argentum Mining Company", No. 180/23. 12. A. Macdonald to W. McCormack, 3 February 1930, "McCormack Legal

Papers". 1 3 . Hubert James Hungerford Henchman, 1 876- 1963, legal assistant, Justice

Department, 1 9 14-22; Acting Crown Solicitor, 1922-23 ; Crown Solicitor, 1923-37; Solicitor General, 1937-45 ; admitted to Bar 1907; K.C., 1945 .

14. Bartley Francis Fahey, 1880- 1 962, admitted to Bar, 1904 ; Associate to Mr Justice Power, 1904 -9.

15 . Edward Thynne Real, 1885 - 1 94 7, admitted to Bar, 1908 ; Associate to Judge J. Real, 1907 -9; K.C., 1946.

16. Edward Ernest Quinlan, 1868- 1952, admitted to Bar, 1899. 1 7. Peter McCaffrey, 1 885- 1954, audit clerk, Auditor-General's Department, 1907-

16; accountant, S.G.I.O., 19 16 -20; Appointed Audit Inspector, 1920. 18. Vincent Eugene James Macrossan, 1883 - 1969, was admitted to the Bar in 1905. 19. Herbert Vere Evatt, 1894- 1965, M.L.A. (Ind.Lab., N.S.W.) for Balmain, 1925 -

30; M.H.R. (A.L.P.) for Barton, 1940-58, and for Hunter, 1958 -60. Attorney General, Minister for External Affairs, 194 1 -49 ; deputy Prime Minister, 1946-49 ; leader of the Opposition, 195 1 -58. Dr. Evatt was elected President of the United Nations General Assembly for 1946-47. He was. admitted to the Bar in 1923 ; became a K.C. in 1929 ; Justice of the High Court of Australia, 1930-40; Chief Justice, N.S.W., 1960-62.

20. W. McCormack to V. Macrossan, 5 April 1930, "McCormack Legal Papers". Boston, the Labour member for Wagga Wagga (N.S.W.) from 1 9 1 3 - 1 7, had al­legedly accepted payments as an inducement to expedite the government purchase of the Hillside Estate. On appeal to the High Court in 1 923, the N.S.W. government successfully obtained a decision that Boston was guilty of con­spiracy to defraud. "The King v Boston and Others", 33 C.L.R. 386.

2 1 . V. Macrossan to W. McCormack, 1 May 1 930, "McCormack Legal Papers". 22. Statement by William McCormack, 28 April 1 930, "McCormack Legal Papers". 23 . Ibid. 24. Ibid. 25 . Daily Standard, 2 March 1930. 26. Interview with H. Sizer, 6 June 197 1 . 27. "Transcript of Evidence, Royal Commission into Chillagoe-Mungana etc.",

Q.S.A. ROY/15, p.33. 28. Ibid., pp.52-56.

1 5 2 The MungtuUJ AJ!air

29. Ibid., pp.44-47.30. Ibid., p. 72.3 1 . Ibid., pp. 1 1 5 - 16. 32. Ibid., p. 14 1 .33 . Ibid., p. 123. 34. Ibid., pp. 148 -52.35. Ibid., pp.207 -20.36. Ibid., p.253.37. Ibid., p.3 1 7.38. Ibid., p.324.39. Ibid., p.323.40. Ibid., p.356.4 1 . Ibid., p.3 7 1 . 42. Ibid., pp.38 1 -88.43. Ibid., pp.448 -49.44. Ibid., p.546.45 . Ibid., p.66 1 . 46. Ibid., p.684.47. Ibid., pp. 709- 1 1 .48. Ibid., p. 754.49. Ibid., p. 745.SO. W. McCormack to V. Macrossan, 5 May 1 930, "McCormack Legal Papers". 5 1 . V. Macrossan to W. McCormack, 1 7 May 1930, "McCormack Legal Papers". 52. W. McCormack to V. Macrossan, 28 May 1930, "McCormack Legal Papers". 53. W. McCormack to V. Macrossan, 28 May 1 930, "McCormack Legal Papers".54. Acting on McGill's advice, as expressed in his opening address, Campbell issued

a written summons on 5 May 1930 demanding that the Bank of New SouthWales produce McCormack's accounts. On 7 May he followed that with a verbaldirective for the accounts to be produced.

55. "McCormack v Campbell and Others", Queensland State Reports, 1930-3 1,p.236.

56. V. Macrossan to W. McCormack, 13 May 1930, "McCormack Legal Papers".57. V. Macrossan to W. McCormack, 1 7 May 1 930, "McCormack Legal Papers".

Sizer suggested in an interview of 6 June 197 1 that O'Mara had been retained by John Wren in Theodore's interest, but there is no evidence to hand to substantiate this.

58. V. Macrossan to W. McCormack, 29 May 1930, "McCormack Legal Papers".59. W. McCormack to V. Macrossan, 4 June 1 930, "McCormack Legal Papers".

This important letter is reprinted in Appendix p. 1 34.60. Ibid.6 1 . V. Macrossan to W. McCormack, 6 June 1 930, "McCormack Legal Papers". 62. "Transcript of Evidence Royal Commission into Chillagoe-Mungana etc.",

Q.S.A. ROY/16, p.827.63 . Ibid., pp.856 -58. 64. Ibid., p. 778.65 . Ibid., p.8 1 8. 66. Brisbane Courier, 1 2 June 1930.67. "Transcript of Evidence, Royal Commission into Chillagoe-Mungana etc.",

p.894.68. Ibid., pp.905 -6.69. Ibid., p.9 15 .70. Ibid., p.927.7 1 . Brisbane Courier, 20 June 1 930. 72. "Address by Counsel, Royal Commission into Chillagoe-Mungana etc.", Q.S.A.

ROY/14, p.946. 73. Ibid., pp.94 7-49.7 4. Ibid., p. 949. 75. Ibid., p.952.76. Ibid., p.954.77. Ibid., pp.962-63.78. Ibid., p.968.79. Ibid., pp.972-73.80. Ibid., p.967.8 1 . Ibid., pp.978 -80. 82. Ibid., p.985.83. Ibid., pp.985 -87.84. Ibid., p.999.85. Ibid., p. 1008.86. Ibid., pp. 101 2- 13 .

Notes to Text 1 53

87. "Transcript of Evidence; Royal Commission into Chillagoe-Mungana etc.",Q.S.A. ROY/16, p.890.

88. Ibid., pp. 727-28.89. For details, see Minutes of Queensland Central Executive of A.L.P., General

: Meeting, 12 November 1926, Brisbane.

CHAPTER 5

1 . Q.P.P. 1930, II, "Report of Royal Commission into Chillagoe Mungana etc.", p. 1 372. All references in this chapter to the Royal Commission Report can besighted in Q.P.P., 1930, II, pp. 1362-72.

2. W. Denning, Caucus Crisis (Sydney, 19 3 7), p. 79.3. Sydney Morning Herald, 7 July 1930.4. Brisbane Courier, 7 July 1930.5. Ibid.6. Sydney Morning Herald, 7 July 1930.7. John Latham, 1877 - 1964, M.H.R. (Nat.) for Kooyong, 1922-3 1 and (U.A.P.)

for Kooyong, 1 93 1 -34 ; Attorney General, 1925-29; Attorney General andMinister for External Affairs, 193 1 -34; leader of the Opposition, 1929 -3 1 ; ad­mitted to the Bar, 1904 ; Chief Justice, High Court of Australia, 1935 -52.

8. J. Scullin to A. Moore, 5 July 1930 (in letter 4 1 3 1 of 1 930), Q.S.A. PRE/ A 1048;J. Latham to A. Moore, 5 July 1930 (in letter 42 13 of 1 930), Q.S.A.PRF/A1048.

9. Argus, 7 July 1930.10. Daily Standard, 7 July 1930. 1 1 . Denning, Caucus Crisis, p. 79. 1 2. C.P.D., CXXV, p.3749. Theodore's resignation on 5 July 1 930 was tabled in

caucus at a special meeting on 8 July. See P. Weller (ed.), Caucus Minutes 191 7-31 (Melbourne, 1975), pp.382-83.

13 . Ibid., pp.3749-5 1 . 14. Ibid., p.3752.1 5. Ibid., pp.3752-53. 16. Q.P.D., CLV, pp.730-32.1 7. Denning, Caucus Crisis, p.80. 1 8. W.F. Whyte, William Mo"ls Hughes (Melbourne, 1957), p.490. 19. Brisbane Courier, 9 July 1930. 20. Henry Boote, 1 868 - 1 949, was appointed editor of the Queensland Worker in

1 902, and editor of the Australian Worker, 19 1 1 -43.

1 54 The MungtuUJ AJfair

21 . Australian Worker, 9 July 1930. 22. Sydney Morning Herald, 9 July 1930. 23. Brisbane Courier, 10 July 1930. 24. See V. Macrossan to W. McCormack, 6 June 1930, "McCormack Legal

Papers". -25 . V. Macrossan to W. McCormack, 1 7 July 1930, "McCormack Legal Papers". 26. V. Macrossan to W. McCormack, 24 July 1930, "McCormack Legal Papers". 27. V. Macrossan to W. McCormack, 1 7 July 1930, "McCormack Legal Papers". 28. W. McCormack to V. Macrossan, 1 8 July 1 930, "McCormack Legal Papers". 29. Brisbane Courier, 1 1 July 1930. 30. See J. Robertson, "Scullin as Prime Minister: Seven Critical Decisions", Labour

History 19, 1970, p.3 1 .

CHAPTER 6

1 . Brisbane Courier, 16 July 1930. 2. Interview with H. Sizer, 6 June 1 97 1 . 3 . V. Macrossan to W. McCormack, 24 July 1930, "McCormack Legal Papers"-. 4. W. McCormack to V. Macrossan, 29 July 1 930, "McCormack Legal Papers". 5. Brisbane Courier, 30 July 1930. 6. Q.P.D., CLV, pp.589 -90. 7. Daily Mail, 26 July 1930; V. Macrossan to W. McCormack 30 July 1930, "Mc­

Cormack Legal Papers". The Act was to be amended as follows (Section 2): . "From and after the date of this Act coming into force all debts damages duties sums of money lands goods or liabilities due payable or belonging or from time to time to become due payable or belonging to Her Majesty or to which she may lawfully lay claim within this colony of Queensland shall be sued for and recovered by the means or process and in the manner hereinafter mentioned in that behalf and not otherwise." Amended by addition of: "and may be so sued for and recovered whether proceedings to sue for and recover the same have been commenced before on or r.fter the passing of 'The Crown Remedies Act Amend­ment Act of 1930' notwithstanding that the claim to such debts damages duties sums of money lands goods or liabilities is founded upon or in any way depends upon facts or allegations of fact which establish or tend to establish that some person has committed a crime and that no prosecution has been instituted against such person in respect of such crime." Q.G.G., 1 35, pp. 1 279-80.

8. Section 10: "The time form and manner of process and proceeding in any Crown suit except where it is otherwise provided by this Act shall be the same as nearly as may be as by any law or rule or practice or pleading now or hereafter to be in force in the Supreme Court is or shall be directed in any civil action between sub­ject and subject." Amended by addition of: "Provided that in any such suit against any person, whether commenced before or after the passing of 'The Crown Remedies Act Amendment Act of 1930' it shall not be a ground for refus­ing to answer any interrogatory delivered to any person that the answer thereto criminates or tends to criminate such person or exposes or tends to expose such person to any penalty. And provided further that no answer to any such inter­rogatory which criminates or tends to criminate the person making the same or exposes or tends to expose him to any penalty shall be used in evidence against him in any criminal proceedings." Q.G.G., 135, p. 1280.

9. Q.P.D., CLV, p.59 1 . 10. Ibid. 1 1 . Ibid., p.592.

1 2. Brisbane Courier, 21 August 1 930. 13. Daily Standard, 21 August 1 930. 14. Daily Mail, 28 August 1930. 1 5. Q.P.D., CLV, p.730. 16. Ibid., p.732. 1 7. Ibid., p.733 . 1 8. Ibid., pp.733 -34.

Notes to Text I S 5

19. The two Independent members were T. Dunlop and A. Weinholt. Thomas Alberto Dunlop, 188 1 - 1956, M.L.A. (Ind.) for Rockhampton, 1929-32. Arnold J. Weinholt, 1877- 1944, M.L.A. (Lib.) for Fassifern, 1909- 1 3 ; (Ind.) for Fas­sifern, 1930-35, and M.H.R. (Nat.) for Wide Bay, 19 19 -22.

20. W. McCormack to V. Macrossan, 30 August 1930, "McCormack Legal Papers".

2 1 . I. Young, Theodore: His Life and Times (Sydney, 197 1), pp.9 1 - 1 14, 122- 14 1 . 22. Denning, Caucus Crisis, pp.23 -26. 23. The Round Table 21 (October 1 930), p. 1 87. The reference to defamation referred

to the publication in Smith 's Weekly on 19 July of photographs of some of the cheques made out by McCormack in favour of Theodore. Macrossan com­mented to McCormack, "I suppose it will be said the opportunity of gratifying [Theodore's] . . . expressed desire now presents itself for he may institute proceedings against the newspaper for defamation and support his case by per­sonally giving evidence to prove the untruth of the statements." V. Macrossan to W. McCormack, 1 7 July 1930, "McCormack Legal Papers''.

24. J. Larcombe, Notes on the Political History of the Labour Movement in Queensland (Brisbane, 1934), pp.92-93.

25 . J.T. Lang, The Great Bust (Sydney, 1962), p.3 1 5 . 26. Joseph Aloysius Lyons, 1879- 1939, M.B.A. (A.L.P., Tas.) for Wilmot, 1909-29;

Treasurer, Minister for Education, Minister for Railways, 19 14- 16 ; Premier, Treasurer, 1923 -28 ; Minister for Railways, 1923 -24; Minister for Mines, 1925-27 ; M.H.R. (A.L.P., Tas.) for Wilmot, 1929-3 1 ; (U.A.P.) for Wilmot, 193 1 -39; Postmaster-General, Minister for Works and Railways, 1 929-3 1 ; Prime Minister, Treasurer, 1932-38; Prime Minister, 1938-39. James Howard Fenton, 1 864- 1 950, M.H.R. (A.L.P., Vic.) for Maribyrnong, 19 10-3 1 ; (U.A.P.) for Maribymong, 193 1 -34; Minister for Trade and Customs, 1929-3 1 ; Postmaster­General, 1932.

27. John Thomas Lang, 1876- 1975, M.L.A. (A.L.P., N.S.W.) for Granville, 19 1 3 -29, for Parramatta, 1920-32 and for Auburn, 1 932-46 ; Treasurer, 1920-22 ; Premier and Treasurer, 1925 -27 and 1930-32 ; M.H.R. (Ind., N.S.W.) for Reid, 1946 -49.

28. Lang, The Great Bust. p.329. 29. J. Robertson, "Scullin as Prime Minister: Seven Critical Decisions", Labour

History 1 9 ( 1970), p.3 1 . 30. John Albert Beasley, 1895 - 1949, M.H.R. (A.L.P., N.S.W.) for West Sydney,

1928-3 1 ; (Lang Lab.) for West Sydney, 19 3 1 -4 1 , and (A.L.P .) for West Sydney, 194 1 -46 ; Honorary Minister 1929-3 1 ; Minister for Supply and Development " 1941 -42 ; Minister for Supply and Shipping, 1942-45 ; Vice President Executive Council 1945 ; Minister for Defence, 1945 -46. John Joseph Daly, 189 1 - 1942, Senator (A.L.P., S.A.), 1928 -34; Vice President Executive Council, 1929 -3 1 ; Minister for Defence, 1 9 3 1 . Frank Anstey, 1865 - 1940, M.L.A. (A.L.P., Vic.) for East Bourke, 1902-7, and for Brunswick, 1907- 10; M.H.R. (A.L.P. Vic.) for Bourke, 19 10-34; Minister for Health, Repatriation, 1929-3 1 , ; deputy Leader F.P.L.P. 1922-27.

3 1 . J. Robertson, "Scullin as Prime Minister: Seven Critical Decisions", Labour History 1 9 ( 1970), p. 3 1 .

1 5 6 The Mungana A/fair

32. James William Blair, 187 1 - 1 944, M.L.A. (Ind.) for Ipswich, 1 902- 1 5 ; AttorneyGeneral, Secretary for Mines, 1903-8 ; Secretary for Education, 19 12- 15 ; admit­ted to the Bar, 1894; Supreme Court Judge, 1922-25 ; Chief Justice, 1925-40;Lieutenant Goyemor, 1940-44. Knighted 1930.

33. The jury comprised C. Jackman (accountant), R. Stevens (garage proprietor), J.Turtle (storekeeper), and A. Stower (insurance agent).

34. Benjamin Henry Matthews, born in 189 1 , was admitted to the Bar in 1 925. Hewas a legal assistant in the Justice Department from1925 -29, Acting Judge in1945 and President of the Arbitration Court, 1946-S 2.

3-5. Neil William Macrossan, 1889- 1 955, was admitted to the Bar in 19 12, a Supreme Court Judge, 1940-46, and Chief Justice, 1 946-55.

36. Alan James Mansfield, born 1 902, admitted to the Bar in 1924; lecturer inBankruptcy law, 1938 -40; Chairman of the Land Appeal Court, 1942-44;Supreme Court Judge, 1940-56; Chief Justice, 1956-66 ; Governor, 1966-72.Mansfield was knighted in 1958.

37. Roslyn Foster Philp, 1 896 - 1 965, was admitted to the Bar in 1923 ; a Supreme Court Judge, 1939-65 and senior Puisne judge, 1956-65. Philp's knighthood was awarded in 1958.

38. Queensland Law Reporter, September 1 93 1 , p.4 1 .39. Brisbane Courier, 23 July 193 1 .40. Ibid.4 1 . Ibid. 42. Ibid.43. Brisbane Courier, 25 July 193 1 .44. Ibid.45 . Brisbane Courier, 3 1 July 193 1 . 46. Ibid.47. Ibid.48. Brisbane Courier. 1 August 1 93 1 .49. Ibid.SO. Ibid. 5 1 . Brisbane Courier, 4 August 193 1 , 5 August 1 93 1 . 52. Brisbane Courier, 6 August 1 93 1 .53. Ibid.54. Ibid.55. Brisbane Courier, 7 August 1 93 1 .56. Brisbane Courier, 1 1 August 193 1 .57. Ibid. 58. Brisbane Courier, 1 1 August 1 93 1, 12 August 193 1 .59. Ibid.60. Ibid.6 1 . Brisbane Courier, 14 August 193 1 . 62. Ibid.63. Brisbane Courier, 18 August 193 1 .64. Ibid.65. Brisbane Courier, 19 August 193 1 .66. Brisbane Courier, 20 August 1 93 1 .67. Ibid.68. Brisbane Courier, 21 August 1 93 1 .69. Brisbane Courier, 22 August 1 93 1 .70. Ibid.7 1 . Ibid. 72. Ibid.73 . Brisbane Courier, 24 August 193 1 .

74. Interview with Sir Alan Mansfield, 1 1 May 1972.

CHAPTER 7

1 . Brisbane Courier, 25 August 1 93 1 . 2. Ibid.3. Ibid.4. Ibid.s. · Sydney Morning Herald, 25 August 1 93 1 . 6. Argus, 25 August 193 1 . . 7. The Round Table 22 (October 193 1), p. 187.

Notes to Text 1 S 7

8. Samuel John Brassington, 1901 -50, M.L.A. (A.L.P.) for Balonne, 1 927-32 andfor Fortitude Valley, 1933-50; _Chairman of Committees, 1942-44; Speaker,1944-50.

9. Q.P.D., CLIX, p.444.10. Henry Adam Bruce, 1884- 1958, M.L.A. (A.L.P.) for Kennedy, 1 923 -32 and for

Tableland, 1 932-50; Secretary for Public Works, 1932-38 and 194 1 -47 ;Secretary for Public Works and Instruction, 19 38-4 1 ; Secretary for PublicInstruction, 1947-50; M.H.R. for Leichhardt, 195 1 -58.

1 1 . Q.P.D., CLIX, p.448. 12. Interview with Sir Alan Mansfield, 1 1 May 1972. 1 3. Great Britain, Parliamentary Debates (Commons), Sth ser., 54, Cols : 547-60. 14. Q.P.D., CLIX, p.452. See also F. Owen, Tempestuous Journey: Lloyd George,

His Life and Times (London, 1954), pp. 10 1 -2. 15 . Owen, Tempestuous Journey, pp.226 -40. 16. Q.P.D., CLIX, p.453. See also, Annual Register, 19 14, p. 14 1 . 1 7. Q.P.D., CLIX, p.454. 1 8. Charles Arrowsmith Bernays, 1862- 1 940, Sergeant at Arms of Legislative As­

sembly, 1908-20; Clerk of the Legislative Assembly, 1920-22; Clerk of the Parliament, 1922-32.

19. Bernays, Queensland-Our Seventh Political Decade, p.28 1 .20. Interview with H. Sizer, 3 June 197 1 .2 1 . See Young, Theodore, pp.91 -93. C.P.D., CXXXll, p.208 . 22. Beasley had alleged that Theodore had arranged relief grants to the Cockatoo

Island Dockyards which took in part of Theodore's own electorate. C.P.D. CXXXII, pp. 1888 - 1 90.6.

23. The Lang Labour group consisted of J. Beasley, E. Ward, H. Lazzarini, J.Eldridge and R. James. Voting against the Government were the former Labour members, J. Lyons, J. Fenton, J. Guy, J. Price, D. McGrath and J. Gabbe.

24. In 1929 the A.L.P. had polled 48.84 per cent of the vote for forty-six seats. (SeeChapter 3, Note 4 1 .) In 193 1 , it polled only 27.09 per cent for fourteen seats, while Lang Labour gained four seats with 10.5 7 per cent of the vote. In contrast, the non-Labour forces held fifty-six seats.

25 . The other ministers were P.J. Maloney (Minister for Markets and Minister for Transport); B. Chifley (Minister for Defence); and L. Cunningham (Honorary Minister).

26. John Soloman Rosevear, 1892- 1 953, M.H.R. (Lang Labour) for Dalley, 193 1 -4 1 and (A.L.P.) for Dalley, 194 1 -53 ; Speaker, 1943 -49.

27. The voting figures for Dalley in 1929 were : T.H. Morrow, 8,870; E.G. Theodore,3 1,276 ; Informal, 1 , 126 ; (on roll, 4 1 ,276). In 1_93 1 they were : W.C. Little, 902; S. Massey, 10,459; J.S. Rosevear, 1 7,835 ; E.G. Theodore, 7,272; J. Sylvester, 6 1 7 ; Informal, 2,832; (on roll, 39,97 1 ).

1 58 The MungtuUJ A/fair

28. C.P.P. 1926-28, IV, "Report of Royal Commission following statements in thepress, etc." pp. 1240-43.

29. Denning, Caucus Crisis, p.27.30. Daily Standard, 1 June 1932.3 1 . Ibid. 32. "Electoral Districts Act of 193 1 ", Q.G.G. 1 37, pp. 1069-74; 1 38, pp.483-50.33. Although Sizer never spelled out his attitude as clearly as Moore had in debate,

he was strongly opposed to politicians profiting by virtue of their public office,and even as recently as June 1970, he expressed his opinion in a letter to theeditor of the Courier Mail, denouncing the acceptance of Comalco shares byQueensland cabinet ministers.

34. Sizer maintained that his position in the Irish Association and the large catholicvote were the two main factors influencing both his success in 1 929 and hisdefeat in 1932. (Interview with H. Sizer, 6 June 197 1 .)

35. Vincent Clair Gair, born in 1 901 , M.L.A. (A.L.P. for 'South Brisbane, 1932-57and (Q.L.P.) for South Brisbane, 1 957-60. Secretary for Mines, 1942-44;Secretary for Mines, Secretary for Labour and Industry, 1944-4 7 ; Secretary forLabour and Industry, 1 947-50; Treasurer, 1 950-52; Premier, Chief Secretary,1 952-57 ; Senator (D.L.P.), 1 964- 1 974 ; leader of the D.L.P. in Senate, 1 965 -73.Gair was appointed Ambassador to Ireland from 1974-76.

36. Young, Theodore, p. 156.37. See, Consolidated Press, E.G. Theodore-A Profile (Sydney, 1949). 38. Young, Theodore, p. 1 56.39. E.G. Theodore to A. Macdonald, S August 1 937, Theodore Papers, Trustees of

Theodore Estate, Sydney.40. "E.G. Theodore-Once Red Ted", Sydney Morning Herald, S September 1945.4 1 . John Curtin, 1885 - 1 945 , M.H.R. (A.L.P.) for Freemantle, 1928-3 1 , and 1934-

45 ; leader of the Opposition, 1 935 -4 1 ; Prime Minister, Minister for Defence,1 94 1 -45.

42. Interview with M. Byrne, 26 November 197 1 .

CONCLUSION

1 . Q.P.D., CLIX� p.454. 2. P. Appleby, Morality and Administration in Democratic Government (Westport,

1 952), pp.39-44. 3. I. Jennings, Cabinet Government (Cambridge, 1959), p.96.4. Appleby, Morality and Administration pp.39-44; G. Graham, Morality in

American Politics (New York, 1 952); B. Manning, Federal Co1iflict of InterestLaw (Cambridge, Mass., 1964); R. Davis, "The Federal Conflict of InterestLaws", Columbia Law Review 54 ( 1954), pp.893 -9 1 5.

S. Reproduced in C. Leys, "What is the Problem About Corruption?", The Journal of Modern African Studies 3 no.2 ( 1965): p.2 19.

6. Rulings have been made for the following, gifts ; shares ; company directorships;trade union portfolios ; legal practices and press articles. See, Jennings, CabinetGovernment, pp.95 - 106.

7. C. Pearl, Wild Men of Sydney (London, 1958), pp.7-8.8. Other politicians included Sir David Brand (Premier of Western Australia) and

two New South Wales ministers, F.M. Hewitt and Tom Lewis.9. Courier-Mail, 10 June 1 970.

10. Ibid. 1 1 . Courier-Mail, 12 June 1 970.

12. Brisbane Courier, 25 August 193 1 . 13 . Courier-Mail, 1 1 June 1970.

Notes to Text 1 59

14. Courier-Mail, 16 June 1970. Bjelke-Petersen himself had been challenged in 1969 over his shareholdings in Exoil No Liability ; since that occasion he has dis­played considerable indignation, if not hostility, when the question of conflict of interest has been raised.

1 5 . Q.P.D., CCLIV, pp.5-44. 16. Theodore Papers, Trustees of the Theodore Estate, Sydney. The flle consists of

the journalist notes, "A New Light on the Famous Mungana Case"; a handwrit­ten memorandum by Theodore, and three letters: H. Allan to A. Macdonald, 1 7 June 19 19 ; A. Macdonald to E. Theodore, 2 August 1 937 ; E. Theodore to A. Macdonald, 5 August 1937.

17. H. Allan to A. Macdonald, 17 June 1 9 19, Theodore Papers. 18. Sydney Morning Herald, 5 September 1945 ; Young, Theodore, pp. 144-45 , 1 77-

79 . 19. See Appendix p. 125, "Metal Quotations 1908-28". 20. W. McCormack to V. Macrossan, 4 June 1930, "McCormack Legal Papers". 2 1 . See, V. Macrossan to W. McCormack, 21 July 1930, "McCormack Legal

Papers"; Q.P.D., CLV, pp.589-9 1 . 22. Interview with Sir Alan Mansfield, 1 1 May 1972. 23. R v Boston and Others, 33 CL.R . 386. It was held that should a member of

parliament use his position to expedite a transaction or influence a minister to that end, and in turn receive or share in any payments or profits, he was guilty of an act of criminal conspiracy.

24. V. Macrossan to W. McCormack, 30 July 1930, "McCormack Legal Papers". 25 . Halsbury, Laws of England, 1st edn, vol. 13, sect. 2.76 (London, 19 14), p.67. 26. Interview with Sir Alan Mansfield, 1 1 May 1972. 27. Interview with H. Sizer, 6 June 197 1 . 28. V. Macrossan to W. McCormack, 1 7 July 1930, "McCormack Legal Papers".

Select Bibliography

UNPUBLISHED OFFICIAL RECORDS

QueensltJnd State A rchtves, Brisbane

JUS/54-57 Chillagoe Railway and Mines Ltd. (Reports, forms of agreement, memoranda and correspondence related to the Chillagoe Railway and Mines Ltd, 1898- 1920.)

PRF/A 1048 In letters, February-September 1930, Premier's Department. (Correspondence related to C ampbell's appointment.)

ROY/15 - 1 6B Transcript of Evidence: Royal Commission into Chillagoe­Mungana etc.

ROY/14 Address by Counsel: Royal Commission into Chillagoe-Mungana etc.

Compt���ies Offlce, Brisbane

No. 144/20 Summary of Capital and Shares, Mungana Mines Ltd.No. 144/20 List of Shareholders, Mungana Mines Ltd. No. 1 80/23 List of Shareholders Argentum Mining Company. No. 18 1/23 List of Shareholders of Fluorspar Mining Company.

Supreme Court, Brisbane

Writ No. 157/1926 W. McCormack v Telegraph Newspaper Co Ltd, Andrew Clyesdale and Martin Luther Reading.

Mining Warden 's OjJfce, Mareeba

M.L.'s 502, 503, 556, 557, 558, 559. Mineral lease files showing area and description of Reid's leases .

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Australian Labor Party, Brisbane, Minutes of the Queensland Central Ex­ecutive.

Trades and Labour Council, Brisbane, Minutes of the Queensland Trades and Labour Council.

Sekct Bibliography 1 6 1

E.G. Theodore, Papers, Trustees of the Theodore Estate, Sydney. Mungana File, History Department, James Cook University of North

Queensland, Townsville. Includes the transcript of the examination of F. Reid in bankruptcy jurisdiction; McCormack's legal papers; ex­tracts from McCormack's bank accounts; Rodda's report to Reid on the Mungana Mines.

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Australian Labor Party, Brisbane, Official Record of Proceedings of the Thirteenth Labor-in-Politics Convention, held in Townsville, May, 1928.

Queensland Government. Queensland Government Gazette. "The King v McCormack, Theodore, Goddard and Reid",

Queensland Law Reports, September 193 1 . "McCormack v Campbell and Others", Queensland State Reports,

1930-3 1 . Queensland. The Mareeba to Chillagoe Railway Act of 1897 (Vic., No. 19).

The Etheridge Railway Act of 1906 (6 Edw. 7, No. 2). The Chillagoe-Etheridge Railway Act of 19 18 (9 Geo. S, No. 17).The Chillagoe-Etheridge Railway Act Amendment Act of 1920 ( 1 1

Geo. 5, No. 7). -- The Crown Remedies Act Amendment Act of 1930 (21 Geo. 5, No.

5). Queensland Parliament. Queensland Parliamentary Debates.

Queensland Journals of Parliament. See especially session of 19 18.Queensland Parliamentary Papers. See in particular, "Annual

Report of Auditor-General 19 19-20", Q.P.P. 1920, I, pp.63-7 1 ; "An­nual Report for Auditor-General 1920-2 1", Q.P.P., 1921 , I, pp.78 -85 ; "Annual Report of Auditor-General 1921 -22", Q.P .P., 1922, I, pp.82-85 : "Annual Report of Auditor-General 1922-23", Q.P.P. 1923, I, pp.87-91 ; "Annual Report of Auditor-General 1923-24", Q.P.P. 1924, I, pp. 100- 106; "Annual Report of Auditor-General 1 924-25", Q.P.P. 1925, I, pp. 100- 106; "Annual Report of Auditor-General 1925 -26", Q.P.P. 1926, I, pp. 1 12- 1 16. These reports on state enterprise at Chillagoe include annual profit and loss accounts,balance sheets, analyses of the financial position, memoranda relating to the state purchase, the Mungana tribute agreement, statements of capital expenditure at Mungana, the 1922 purchase agreement and an­nual account, metal price fluctuations and recommendations by the auditor-general to improve the financial position of the undertaking. See also "Special Report of Auditor-General on State Smelters, Ore Reduction and Treatment Works and Mines, Chillagoe", Q.P.P. 1927, I, pp. 1 399- 1433. This report contains the auditor-general's fmdings,and details of the investi&ation undertaken by Deal and Goode follow­ing McCormack's decision to set up a departmental inquiry into the al­legations made in parliament. See also "Special Report by the Auditor-

1 62 The Mungana A/fair

General on Royal Commission into Mungana-Chillagoe etc.", Q.P .P. 1930, I, pp. 1373 - 1380. Following Campbell's criticism of the "tacit connivance" of the auditor-general, Beal issued this report to reaffirm his fmdings on Chillagoe in 1927. See also "Minutes of Evidence before Select Committee of Inquiry into the Chillagoe and Etheridge Railway Bill", Q.P .P., II ; "Report of Select Committee 9f Inquiry into Chillagoe and Etheridge Railway Bill", Q.P.P. 1 9 1 8, II; "Minority Report of Select Committee of Inquiry into Chillagoe and Etheridge Railway Bill", Q.P.P. 1 9 1 8, II ; "Further Report of Select Committee of Inquiry into Chillagoe and Etheridge Railway Bill", Q.P.P. 19 1 8, II; "Report of General Manager, Chillagoe State Smelters and Mines for 1 92 1", Q.P.P. 1922, II and "Report . . . for 1922", Q.P.P. 1923, IT; "Report . . . for 1923", Q.P.P. 1924, II; "Report . . . for 1924", Q.P.P. 1 925, II ; "Report . . . for 1925", Q.P .P. 1926, I; and "Report . . . for 1 926", Q.P.P. 1927, I. These reports of the general manager include summaries of operations for the year, details of capital expenditure, statistics for ores supplied, and recommendations to improve the posi­tion of the undertaking. See also "Report of Royal Commission, Mungana-Chillagoe Mines etc.", Q.P.P. 1930, II.

De Keyser, F. and Wolff, K. "The Geology and Mineral Resources of the Chillagoe Area", Geological Survey of Queensland 3 1 7 (Melbourne, 1964).

Jensen, H.I. "Observations at Mungana", Queensland Government Mining Journal 21 (April 1920).

Poole, W. "Mungana Mines", Queensland Government Mining Journa/ 23 (July 1 922).

Commonwealth of Australia. "The King vs Boston and Others", Com­monwealth Law Reports 34 ( 1923 -24).

Commonwealth Parliament Parliamentary Debates, 1929-3 1 . Parliamentary Papers. In particular, "Report of the Royal Commis­

sion into Statements in the Press in regard to offers alleged to have been made to members to resign their seats in the Federal Parliament", C.P.P. 1926-28, vol. 4.

NEWSPAPERS

The Advocate, 1925 -30. Argus, 1930-3 1 . A ustralian Worker, 1930-3 1 . Brisbane Courier, 19 1 5 -3 1 . Courier-Mall, June 1 970. Dally Mall, 1 930-3 1 . Dally Standard, 19 15 -3 1 . Smith 's Weekly, July 1930. Sydney Momlng Herald, 1930-3 1 . Telegraph, 1926 Worker, 1930-3 1 .

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Hughes, C. "Theodore: The Politician Who Walked by Himsetr'. Mea1Cfin 3 1 , no.3 (1972).

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I ndex

Acts. See Legislation Advocate, The, prints allegations of

mismanagement, 23 -24 ; ex­poses McCormack's share­holdings, 24; publicizes Opposi­tion attacks, 43 ; criticizes Labour-in-Politics convention, 45

Allan, H., 57, 62, 120-2 1 Allied Works Council, 1 1 S Amalgamated Workers' Association,

S, 25, 143n Anstey, F., 94, 155n Appleby, P ., on public morality, 1 1 7 Argentum Mining Co. Ltd., Goddard's

involvement in, 28, 30, 4 7, 56, 59, 60, 67, 70, 7 1 , 75, 93 ; Theo­dore's involvement in, 60, 66, 67, 75, 93 ; terms of reference of royal commission, 1 32-33

Argus, The, on Royal Commission report, 78-79; on Theodore's resignation . speech, 8 1 ; assess­ment of verdict, 109

Asquith, H.H., on ministerial respon­sibility, 1 10

Atherton, E.A., 2, 46, SO, 1 1 3, 1 14, 149n

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1 68 The Mu"ganaAJTair

Crown Remedies Act, 89 ; on interest in trial, 104 ; defends prosecution, 108 ; assessment of verdict, 108 ; on ministerial responsibility, 108, 1 1 9 ; Jury's answers, 1 39-42

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Chillagoe Smelters. See Chillagoe Undertaking; Chillagoe Com­pany

Chillagoe Undertaking, state enterprise policy, 2, 6-8, 9, 1 3 - 14, 45 ; government purchase, 12- 14, 1 6, 58, 68-69, 74-77 passim, 95 - 1 04 passim, 1 30 ; and

Mungana mines, 1 1 - 1 2, 14- 16, 28, 45, 59, 60, 62-63, 69, 70, 74-77 passim, 92-93, 95 - 104 passim, 1 28 ; operations, 1 3, 20-22, 26-28, 29, 30, 32-34, 39-44 passim, 63, 68 -70, 74-77, 95 -104 passim, 13 1 ; political con­troversy over, 20-2 1 , 25 -26, 28 -30, 39-42, 43 -44, 46, 48, 49 ; Auditor-general's inquiry, 32-4 ; terms of reference of Royal Commission, 55 -56, 1 3 1 -32; mentioned in Royal Commission evidence, 59-63, 68-70; report of Royal Com­m i s s ion , 7 4 - 7 7 pass i m ; Theodore's public defence of, 92-93 ; and Mungana trial, 95 -104 passim

C.I.A. scandal, 1 18 Civil Proceedings. See Mung ana trial Cloncurry, 22, 26 Collins, L.A., 98 Comalco Affair, 1 1 9 - 20, 1 5 8n;

preferential share issue to Queensland cabinet members, 1 1 9 ; cabinet members' at­titudes, 1 19 -20

Conflict of Interest, Australian at­titudes toward s , 1 1 7 - 20; American attitudes towards, 1 1 8 ; British attitudes towards, 1 10, 1 1 8 ; attitudes of Queens­land cabinet in 1970, 1 19-20; ALP attitude towards, 120. See also Ministerial responsibility

Consolidated Press, 1 1 5 Corbould, W., 9, 70, 101 , 145n Courier Mail, The, attitude to

Comalco share issue to cabin� members, 1 19-20

Curtin, J., 1 15 , 158n

Daily Mail, The, 32; on amendments to Crown Remedies Act, 89

Da ily Standard, The, defends Mungana purchase, 24, 32; denounces Royal Commission report, 79; on amendments to Crown Remedies Act, 89; h i g h l i g h ts M ac gro arty 's "political vendetta" statement, 1 1 3

Dalley, Electorate of, SO, 1 1 1 ; scandal in 1 927, 1 12; Royal Commis-

sion into, 1 1 2; voting in, 157n Daly, J.J., 94, 155n Demaine, W., 43, 149n Denham, D., 3 -4, 45, 144n Denning, W., Caucus Crisis, 77, 80,

9 1 , 1 1 2- 13 Dunlop, R., 10, 27, 28, 30, 56, 57, 69,

75 -76, 1 33, 145n Dunlop, T.A., 1 55n

Einasleigh Mine, 2, 8, 13, 24, 69 Elections, Queensland ( 1 9 1 5), 1 ;

( 1920) 17, 1 46n ; Eacham by­election, 23, 1 47n; ( 1926), 25 -26 ; ( 1929), 34, 45 -46, 86 ; ( 1 9 3 2), 109 , 1 1 1 , 1 1 3 - 5 ; ( 1956� 149n ; ( 1957� 149n; Federal ( 1 928) 157n; ( 1929), 4 8, 50, 1 1 2 , 15 On , 1 S 7 n ; ( 193 1), 1 1 1 - 1 3, 157n

Electoral Redistribution, Qld. ( 193 1), 1 1 3 ; effect on 19 3 1 elections, 1 1 3, 1 14

Elphinstone, A., 30, 40, 148n Etheridge mineral field, 3. See also

Einasleigh mine Evatt, H.V., advice to McCormack,

57, 123 ; on possible prosecu­tion, 8 7, 1 23 ; retained by Theodore, 93 ; appointment to High Court, 93, 1 50n

Fahey, B.F., 56, 60, 64 ; address to Royal Commission, 68 -69; 80, 8 1 , 82, 150n

Federal Labour Party, 26 ; Theodore, E.G. Mount I sa controversy, 48, ·50; Impact of Royal Com­mission report, 77 - 78, 8 3 ; schism over economic policy, 93 ; Theodore's reinstatement, 94; conflict with Lang Labour, 94, 1 12; reactions to Mungana trial verdict, 109 ; electoral defeat, 1 93 1 , 1 1 1 - 1 3, 157n; im­pact of depres.sion, 1 1 2. See also Elections-Federal

Fenton J., 93, 94, 155n Fluorspar Mining Co. Ltd., Goddard's

involvement in, 28, 30, 4 7, 56, S9, 60-62, 67, 70, 7 1 , 75, 93 ; Theodore's involvement in, 56, 59, 60, 66, 67, 75, 93 ; terms of reference of Royal Commis­sion, 56, 132-33

Forsyth J., 8, 145n

Index 1 69

Gair, V.C., defeats Macgroarty, 1 14, 1 S8n

Girofla Mine, 9, 10- 1 1 , 12- 1 3, 15 , 16, 2 1 , 22, 26, 39, 103, 12 1 , 127-28, 1 30, 1 39 -42. See also Mungana Mines

Goddard P.L., appointment, 9, 1 3, 69-70, 7 1 , 1 4 5 n ; Mung ana purchase 14 - 16, 61 , 67 -68, 74-77 passim, 95 -97, 1 39 -42 pas­sim ; management, 2 1 -23, 26-30, 3 1 , 70, 74-27, 82; Auditor­general's report, 32-34 ; collu­sion with Reid, 30, 32-34, 39-42, 58-63 passim, 67 -68, 69 -7 1 , 74-77, 95 - 104 passim, 139-42; resignation, 34, 39, 44, 47 ; interests in Mungana Mines, 47, 48 -49 , 6 1 , 1 3 7 ; terms of reference of Royal Commis­sion, 55 -51, 1 32-33 ; mentioned i n R o y a l C o m m i s s i o n proceedings, 58 -63, 67 -68, evidence to Royal Commission, 6 1 , 68 ; address by counsel, 69-7 1 ; Royal Commission Report, 74-77, 82 ; prosecution of, 47, 87, 89, 1 23 ; Mungana trial, 95 -104; interrogatories, 98-99;

jury's answers, 1 39 -42 ; post M ungana career, 1 16

Halsbury's Laws of England on breach of trust, 123

Hardy, F., Power Without Glory, xii, xiv

Henchman, H.J.H., 56, 86, 15 1n Henderson, A., 60 Hewitt, N. T ., 1 19 ; attitude to preferen­

tial share issue, 1 19 Higli Court, appointments to, 93 ; pos­

sible alternative action in, 123 , 1 24

Hodges, A .M . , 1 1 9 ; attitude to preferential share issue, 1 19

"Honest Graft". See Plunkitt, G.W. Horsburgh, J., 3, 8, 70, 144n Horsley, S., 12, 13, 97, 127, 14Sn Hughes, D., 67 Hughes, F.G., 7

Isaacs, Sir Rufus, involvement with Marconi Company, 1 10

Jackson, W., 25 Jennings, Sir I vor, on public morality.

l 70 The Mungana AJ!air

1 1 7 ; on ministerial respon­sibility, 1 1 7

Jensen, H.I., xiv, 9, 1 3, 56; evidence to Royal Commission, 68 ; expel­led from ALP, 72 ; evidence at trial, 97, 1 28, 145n

Jone s , A .J ., 1 1 , 1 2 ; Mung ana purchase, 14 - 16 ; defends Chil­lagoe Undertaking, 20-22, 24, 29-30, 32, 34, 42; and Mount lsa controversy, 47-48,. 56, 59; evidence to Royal Commission, 62, 68, 69, 72 ; censured in Royal Commission report, 75-76 ; mentioned in trial, 97, 10 1 ; loses seat, 1 14 ; post Mungana career, 1 14, 14Sn

Jones, F., 67

Keenan, J .A., 98 Kelso, W., uncovers McCormack's

shareholdings, 24; on Mount I sa controversy, 4 7, SO; post Mungana career, 1 14, 147n

Kennedy, J.S., 97 -98 Kerr, J.A., and Mount Isa controversy,

1 1 4 ; loses seat, 1 1 4 ; post Mungana career, 1 14

King, R., criticizes Chillagoe undertak­ing, 41 -42, 43, 46, 90, 149n

Kingsbury, E.A., 97 Kynoch 's Limited , scandal over

government contracts, 1 10

Labour-in-Politics Convention, 1928, 43-45, 49

Lady Jane Mine, 3, 9, 10- 1 1 , 12- 1 3, 1 5 - 16, 2 1 , 22, 26, 103, 12 1 , 1 27-28,- 130, 139-42. See also Mungana Mines

Lang, J.T., 93, 94, 1 1 1 , 15Sn. See also Lang Labour

Lang Labour party, 94 ; defeats Scullin government, 1 1 1 , 1 57n; 193 1 elections, 1 1 1 - 1 2 ; and NSW Labour movement, 1 1 2; secures Theodore's expulsion from ALP, 1 1 5

Larcombe, J ., 148n Latham, J., 78, 153n Laun, E.J ., 99 Legal Proceedings (see Mungana trial;

Boston case; McCormack); alternatives to civil proceedings,

122-24

Legislation Bankers Book Evidence Act 1879,

64 Chillagoe-Etheridge Railway Act

1918, 6-1, 8-9, 1 1 , 13, 14, 24, 58, 6 1 , 62, 69, 95, 96, 102, 103, 1 2 1 , 1 32-33

Chillagoe-Etheridge Railway Act Amendment Act 1920, l3 -14, 1 01 , 132-33

Commonwealth of Australia Con­stitution A.ct 1900, 123

Crown Remedies Act 1874, 87, 88, 9 1 , 122

Crown Remedies Amendment Act 1930, 81-92, 122, 154n

Duchess to Mt. lsa Railway Act 1925, 47, so

Etheridge Railway Act 1906, 3 Jury A.ct 1929, 95 Mareeba to Chillagoe Railway Act

1897, 2, 3 Official Inquiries Evidence Act

1867, 87 -89 Liberal Party Convention, 1 970,

resolution on ministers' share­holdings in Comalco, 120

Lloyd George, D., on ministerial responsibility, 1 1 0; involvement with Marconi company, 1 10

Lockheed scandal, 1 1 8 Lyons, J., 93, 94, 1 1 5, 15Sn

McCaffrey, P ., 56, evidence to Royal Commission, 62-63, 68, 70, 72, 15 1n

McCormack, W ., xiii, xiv, early career, S, 25, 143n, 14 7n; involvement in Mungana, 23 -25, 28 -29, 44-45, 48 -49, so, 57-59, 6 1 -72 passim, 74-77 passim, 93, 95 -105 passim, 1 10, 1 1 7, 12 1 -23, 1 34-38, 1 39-42, 148n, 149n, 1 SOn; and A.R. U ., 23, 42 ; writ against Telegraph, 25 ; criticized over shareholdings, 25, 30, 149n; Auditor-general's report, 32, 34, 3 9-42 ; Labour-in­Politics Convention, 43 -45 ; election defeat, 45 -46 ; Mount lsa controversy, 47-52, 137 ; Reid bankruptcy, 48 -49, SO; resigns seat, SS ; terms of reference of Royal Commis­sion, 56, 132-33 ; Royal Com-

mission proceedings, 59 -63, 67-7 1 ; c o r re s p on d e n c e with solicitor, 5 7 - 5 8, 63 -67, 124, 1 34 - 3 8 ; production of bank ac­counts, 64- 65, 67, 7 1 -72, 74, 1 34 - 38, 1 5 2n; payments to Theodore, 65 -67, 74 - 77, 95 -1 OS passim, 1 34 - 3 8 ; Royal Commission report, 74 - 7 7 ; reaction to report, 8 1 -82; cor­re s p o n d e nce on po s s i b le prosecution, 82 -83, 86, 9 1 , 1 22 ; prosecution, 8 7 - 88, 89. (see also Mungana trial); at­tacked by Macgroarty, 90; che­ques published by Smith 's Weekly, 92, 1 52n ; advice from Evatt, 93 ; Mungana trial, 95 -1 05 passim, 1 3 9 -42 ; inter­rogatories, 99 ; verdict, 104 - 5 , 1 39 -42; Moore on verdict, 108, 109, 1 1 0, 1 1 7 ; defended by Labour supporters, 1 09 ; post M ungana career, 1 1 4 - 1 5 ; role reassessed, 1 1 7 ; alternative legal proceedings, 1 22- 23

McCormack v. Telegraph Newspaper Co. Ltd., A ndrew Clyesdale and Martin Luther Reading, 25

McCormack v. Campbell and others, 64 - 65

Macrossan, N., 95, 97 -98, 100, 10 1 , 103, 1 56n

Macrossan V.E.J . , M cC ormack 's solicitor, 57, 1 50ri; and Royal Commission, 63 -6 7 ; produc­tion of McConnack's bank ac­counts, 64-65 ; McCormack's payments to Theodore, 65 -67, 1 34 - 38 ; advice on attendance at Royal Commission, 67 ; on possibilities of prosecution, 82, 86, 1 22 ; opinion on Crown Remedies Act Amendment Act, 9 1 ; possible legal recourse against Smith 's Weekly, 1 5 5 n

McDiarmid, D., 1 5 , 5 6 , 60; evidence to Royal Commission, 6 1 -62, 69, 1 37, 1 3 8

Macdonald, A., 7 , 56, 5 7 , 59 -6 1 ; cor­respondence with Theodore, 1 1 5 , 1 20 - 2 1 ; 144n

Macgroarty, N.F. , xiii ; appointed atto r ney - g en e r al , 4 6 , 8 3 ;

Index 1 7 1

meeting with Theodore, 86; presses for prosecution, 86 ; amends Crown Remedies Act, 87- 89, 1 22; attacks Theodore and McCormack in parliament, 89-90; criticized by Labour party, 90 ; and M ungana trial, 95, 99, 100, 105, 1 08 ; legal fees from, 1 09, 1 1 3 ; rebuked by ALP, 109 ; loses seat 1 1 3 , 1 5 3n; impact of Mungana on 1 932 elections, 1 1 3 ; importance of catholic vote to, 1 1 4, 1 5 3n ; post M ungana career, 1 1 4, 1 43n

Maher, F., 25 Mammoth Copper Mines, 7, 56, 1 20-

2 1 , 144n Mammoth Copper Mines Ltd. See

Mammoth Copper Mines Mammoth-Mungana No Liability,

1 20- 2 1 Mangan, P., 25 , 28, 58, 59, 82 Mansfield , A., 95, 97, 99, 10 1 , 102,

1 5 6n Manumbar Timber Co. Ltd., Theo­

dore's shareholdings in, 1 1 1 Marconi Company, scandal over share

transactions, 1 10 M areeba, 1 1 6 Marvel tin mines, 66, 1 34, 1 3 8 Matthews, B.H., 95, 97, 1 5 6n M axwell, A.V., 55 , I S I n Maxwell, J.F., 20, 146n Ministerial responsibility, xiii, xiv ;

Moore on, 1 10, 1 1 7 ; Jennings on, 1 1 7 ; attitudes towards, 1 10, 1 1 7, 1 1 8-20. See also political morality

Moffat, J . , 2, 1 44n Moore, A.E., xiii, 32, 142n ; criticizes

Chillagoe Undertaking, 2 1 , 22-23, 25 , 1 20, 147n, 149n ; alleges malpractices, 23, 27-29, 1 20 ; attacked by McCormack, 29 ; on Auditor-general's report, 39 ; 1 929 elections, 46 -4 7 ; appoints Cabinet, 46, 149n ; on prosecu­tion of Goddard, 47 ; Mount lsa controversy, 49 - S 2 ; Reid bankruptcy, 48 -SO; appoint­ments to Royal Commission, SS, 58 ; source of information on Chillagoe-Mungana, 63 ; at-

1 72 The Mungana A.ffair

titude to Royal Commission report, 78, 86, 1 20 ; attacked by Labour press, 79 ; considers possibilities of prosecution, 86, 8 8 , 1 2 2 ; i n t e r v i e w w i t h Theodore, 8 6 , 1 23 - 24 ; in­stitutes civil proceedings, 86 -8 7 ; criticized over, 87 -88, 89 ; attitude to verdict, 1 08, 1 09, 1 10, 1 1 7, 1 50n; defended by press, 108 -9, 1 1 7 ; on public morality, 1 10, 1 1 7, 1 20, 1 50n; opinion on character, 1 1 0- 1 1 ; unpopularity of government, 1 1 1 ; exposes Theodore's timber shareholdings, I l l ; 19 34 elec­tions, 1 1 3 , 1 14 ; · post Mungana career, 1 1 4 ; possible legal alter­natives for, 1 22 - 24

Morgan, G. , 46, 1 50n Moroney, T., 14 7n Mount Elliott, 9, 1 45 n Mount Isa controversy, 47 - 5 2, 1 1 4 ;

impact on Theodore's career 1 1 2, 1 48n

Mount Isa Mines Ltd. See Mount Isa controversy

Mount Isa Proprietary Silver-Lead Ltd. See Mount Isa controversy

Mount Mulligan mine, 3, 27, 29, 6 1 , 70, 147 -48n

Mullan, J. , 1 48n Mungana, xiii. See also Mungana

mines Mungana mines, 7 ; Horsburgh on, 8 ;

Rodda on, 8, 1 0- 1 1 , 60, 1 27 ; Horsley on, 1 2, 1 27 ; Jensen on, 1 3 , 68, 1 28 ; Saint-Smith on, 1 5 , 60-6 1 , 1 28 ; Poole on, 1 6 - 1 7, 6 1 , 1 27 ; Goddard on, 1 4 - 1 6, 20, 6 1 , 68, 1 27 ; essential to Chillagoe operations, 1 1 - 1 2, 1 7, 20, 28, 70, 92 ; government purchase, 1 4 - 1 7, 20 -2 1 , 23 - 24, 29 , 32, 1 2 1 , 1 29 ; (see also Mc­Cormack); expenditure on, 2 1 -22, 26, 92, 1 2 1 , 127, 1 30; Mc­Cormack involvement, 23 , 25 , 40-4 1 , 5 7, 63, 65 -67, 68 -69, 95 - 104 passim, 1 34 - 38, 1 39 -42 ; opposition criticisms of purchase, 26, 27, 34, 4 1 -43, 46, 50; issue at Labour-in-Politics convention, 43 -45 ; Reid bank-

ruptcy, 48 -49, 50; Royal Com­mission, 46, 48, 50- 5 1 , 55 - 56, 5 8 - 63 , 64- 7 1 , 1 32 - 3 3 ; Royal Commission report, 74 - 77, 82 ; Theodore's involvement, 48 -49, 5 1 , 63, 65 -67, 68 -69, 74- 77, 9 5 - 1 04 passim, 1 1 2 - 1 3, 1 34-38, 1 39 -42; (see also Theo­dore); Crown Remedies Act A m en d m e n t A ct , 8 7 - 9 1 ; Mungana trial, 95 - 1 04, 1 39 -42; political ramifications of scan­dal, 1 08 - 1 6 ; effects on Theo­dore's career, 1 1 2 - 1 3 ; Mac­donald's option on, 1 20-2 1 ; legal alternatives to recover purchase price, 1 22 - 24

Mungana Mines Ltd., formation of, 1 4 - 1 5 ; leases purchased from, 1 7, 1 26 ; shareholders in, 2 1 - 22, 24- 25, 3 1 , 40, 45, 47, 48 -49, 5 5 , 6 1 , 65, 66-67' 75 , 76, 87, 95, 96, 97-99, 1 02-3, 104, 1 1 4, 1 2 1 , 1 3 1 , 1 34-35, 1 38, 140-42. See also McC ormack ; Reid, F.

Mungana Mining Company, 2, 8, 9, 1 0, 1 1 , 1 2, 20, 1 3 1 , 145n

Mungana Royal Commission. See Royal Commission

Mungana trial, 95 - 105 ; personnel, 95 , 1 56n ; Crown case, 95 ; defence c a s e , 9 6 ; d e fe n c e l e g a l manoeuvres, 97, 10 1 ; opening address, 96 - 9 7 ; evidence, 97-99 ; interrogatories, 98 -99, 104; addresses by counsel, 10 1 -4; judge's summary, 104 ; verdict, 1 0 1 - 2, 1 04-5, 1 39 -42 ; news­papers on verdict, 108 -9 ; legal fees, 105, 109 ; debated in Qld. parliament, 109 - 10; impact on 1 93 1 Federal elections, 109, 1 1 1 ; impact on 1 932 State elec­tions, 109, 1 1 1 , 1 1 3 ; impact on Theodore's political career, 1 1 2 - 1 3 ; r u i n s p ri n c ip al s careers, 1 1 4 - 1 6 ; alternative legal proceedings to, 1 22 - 23

M urray, Lord, Involvement with Mar­coni Company, 1 1 0

Nationalist Party, Mount lsa con­troversy, 47 -48, 50; denounced by Theodore, 78, 108 ; hostility

to Theodore, 9 1 ; attacked by Labour members, 108, 109 - 1 0; exposes Theodore's timber shareholdings, 1 1 1 . See also Moore, McGill, Macgroarty

Nichols, H., 67

O'Keefe, J., 30, 34, 39, 148n O'Mara, D.J., 65 , 1 5 2n

Pacific Hotel, Cairns, 56, 1 1 6, 1 33 Packer, F., 1 1 5 Pearl, C., on public insensitivity to cor­

ruption, 1 1 9 Philp, R., 95, 100, 10 1 , 103 -4, 1 56n Plunkitt, G.W., defmed 'honest graft',

1 1 8 Political Morality, xiii, xiv. Moore on,

1 10 ; Appleby on, 1 1 7 ; Jennings on, 1 1 7 ; attitudes towards, 1 1 7 -

. 20. See also Ministerial respon­sibility

Poole, W., Report on Mungana Mines, 1 6 - 1 7, 24, 29, 57, 60-6 1 , 69, 82, 92, 96, 97, 100, 1 0 1 , 103, 1 28, 146n

Queensland Labour Party ; State enterprises, 1 -2, 8, 14, 45 ; ef­fects of conscription, 1 ; and A W A, 5 ; opposition from legislative council, 6 - 7 ; South Johnstone strike, 42 ; anti­communist pledge, 42, 72, 14 7n, 149n; Labour-in-Politics Convention, 43 -45, 49 ; elec­tions ( 1 9 10), 1 45n, ( 1 926), 25 -26, ( 1 9291 45 -46, ( 19321 I l l , 1 1 3 ; change of leadership, 46 -47, 1 47n; 1 929 Federal elec­tions, 48, 50; impact of Reid bankruptcy, 49 - 50 ; attitude to Royal Commission, 56, 67; represented by counsel at, 56 ; reaction to Crown Remedies Act Amendment Act, 87 - 8 8 ; attitude to M ungana trial, 88, 89, 90-9 1 ; reaction to verdict, 109- 1 0 ; defeats Macgroarty, 1 1 3 ; attacks McGill, 1 1 5 ; at­titude to Comalco affair, 1 20; early history of, 143n; 1 95 7 split, 149n. See also McCor­mack

Index I 73

Queensland Prospectors and Ore · Producers Association, 28, 29, 30

Quinlan, E. E., 56, 1 5 1n

Rex v. Theodore, McCormack, God­dard and Reid. See Mungana trial

Rae, W., 1 1 9 Real, E.T., 56, 69 - 7 1 , 80, 8 1 , 82, 1 5 1 n Redcap mine, 26 Reid, F., acquires Mungana mines, 9-

1 0, 12 1 ; obtains government loans, 1 1 - 1 3, 69, 1 2 1 - 22 ; sells mines to government, 1 4- 1 7, 25 , 1 2 1 -22 (see also M ungana mines) ; promotor Mungana Mines Ltd., 25 , 28, 1 34, 1 38 (see also M ungana Mines Ltd); interests in Tarzali, · 27, 28, 56, 6 1 , 70, 1 33 ; collusion with Goddard, 28 -30, 32-34, 39-42, 5 8 - 63 passim, 67 - 7 1 , 74- 77, 95 - 1 04 passim, 1 22, 1 38, 1 3 9 -42 ; bankruptcy hearing, 48 -49, 5 1 , 1 20 ; terms of reference of Royal C ommission, 5 5 - 5 6 , 1 32 - 3 3 ; mentioned in Royal Commission proceedings, 5 7 -6 3 , 67 - 7 1 passim; evidence to Royal Commission, 6 1 , 68 ; payments to McCormack, 65 -66, 1 34, 1 3 8 ; Royal Commis­sion report, 74 -77, 82 ; prosecu­tion, 87, 89; Mungana trial, 95 -1 04 passim ; interrogatories, 9 8 ;

jury's answers, 1 39 -42; post Mungana career, 1 14, 145n; opinions of character, 1 1 6 ; reassessment of role, 1 2 1 - 22

Reid, J.S., 2, 4, 144n, 145n Robertson, J . , on Theodore's reinstate­

ment, 94 Rodda, E.J.J., 8, 1 0, 1 2 - 1 3, 1 5 , 16, 60,

99, 10 1 , 1 27 -28, 145n Rosevear, S., I l l , 1 5 7n Round Table, The, on legal recourse

for Theodore, 9 1 -92, 1 55 n ; as­s e s s ment of verdict, 1 09 ; predicts electoral repercussions, 1 09, 1 1 3

R o y a l C o m mi s s i o n : C h i l l ag o e ­Mungana, call for, 28 -29, 42-43 ; prospect of, 46 ; impact of

1 74 The Mungana A.ffair

Mount Isa controversy, 4-8, 50-S 1 ; impact of Reid bank­ruptcy, 48, S 1 , 120; notice of, 48, 49, SO, 1 20 ; C ampbell's ap­p o i n t m en t , S S ; ter m s of reference, 55 -56, 1 3 2 - 3 3 ; pro­ceed i ng s , 5 6 - 6 3 , 6 7 - 7 2 ; political complexion of, 56, 58, 64, 67, 78 -82, 1 20; McCor­mack's bank accounts, 64-65, 67, 68, 80 ; Theodore's offer to g i v e e v i d e n c e , 6 8 , 7 1 ; Theodore's non-appearance, 72, 74, 80-8 1 , 1 08 ; report, 74- 77, 92-93, 96 ; impact of report, 77-83, 1 25 ; Theodore's reaction to report, 78 - 8 1 ; McCormack's reaction to report, 8 1 -8 2 ; pro­ceedings arising from report, 82-83, 86-87, 88 ; Theodore's reinstatement, 94 ; impact of report on politics, 1 1 3 - 1 S ; re­assessment of legal alternatives arising from report, 122-24

Royal Commission : Dalley electorate, 1 1 2

Ryan, T.J., state enterprise policy, 1 -2s 5 , 45 ; purchases C hillagoe Undertakings, 6, 1 43n

Rymer, G., 23, 42 -43, 45, 147n

Saint-Smith, E.C., report on Mungana mines, 1 5, 1 6, 24, 29, 56, 60-6 1 , 69 - 7 2 , 9 7 , 1 0 1 , 1 2 8 ; evidence to Royal -commission, 60-6 1 , 69 - 72, 1 46n

Scullin, J .H., impact of Royal Com­mission report, 7 7 - 79 ; on Theo­dore as treasurer, 79 ; rumour of further inquiry to test Royal Commission report, 86, 88 ; Theodore's reinstatement, 93 -94, on M ungana trial verdict, 1 08 ; fall of Scullin government, 1 1 1 - 1 3 , 1 23, 1 5 7n

Sizer, H., reports rumours of Labour politicians, involvement in Chil­lagoe undertaking, 23 ; criticizes Chillagoe undertaking, 30, 39; recollects impact of probing into Chillagoe undertaking, 3 2 ; o n delay over Royal Commis­sion, 47 ; interviews Campbell, 55 ; on McGill legal status, 5 8 ;

defends C ampbell's appoint­ment, 5 8 ; attitude to prosecu­tion, 86; on Moore's character, 1 1 1 , I SOn; on possibility of in­quiry by Scullin, 1 23 ; on Wren's influence, 1 5 I n ; on Comalco affair, 1 5 8n

Smith, T.H., 97 Smith W.F., 39, 44, 47, 87, 89, 90,

148n Smith 's Weekly, publishes defamatory

material, 92, 1 23, l SSn State enterprise. See Queensland

L.a b o u r P arty ; C hil l agoe Undertaking ; Mungana Mines

South Johnstone strike, 42, 46 Stones, J., 40; evidence to Royal Com-·

mission, 63 Sydney Morning Herald, The, on

Royal Commission report, 78; Theodore's resignation speech, 8 1 ; assessment of verdict, 108 ; view on Mungana in 1 945, 1 2 1

Tammany Hall, corrupt practices of, 1 1 8

Tarzali sawmill, 27, 28, 30, 56, 6 1 , 70, 1 33

Taylor C., 2 1 , 30, 39, 146n Telegraph, The, exposes McCormack's

shareholdings, 24 ; anti-Labour c am p a ig n , 2 4 - 2 5 ; s late s M ungana purchase, 25 ; at­tempts to reopen Mungana case, 1 1 5

Theodore, E . G . , x ii , xiv ; state enterprise policy, 1 -2, 6; early career, 4 - 5, 142n ; government purchase of Chillagoe under­taking, 6, 8 -9, 2 1 , 143n ; sup­ports Reid for government loans, 1 1 - 1 3, 7 1 , 1 2 1 ; amends C hillagoe-Etheridge Railway A c t , 1 3 - 1 4 ; M u n g a n a purchase, 14, 1 5 , 1 22 ; allega­t i o n s o f i n v o l v e m e n t i n M ungana, 4 1 ; militant union hostility to, 42 ; Mount I sa con­troversy, 47 - 5 2, 1 1 2 ; Reid bankruptcy, 49 ; 1 929 elections, 47 -48, SO ; terms of reference of Royal Commission, S S - 5 6, 1 32 -33 ; interests in Fluorspar, 56, 60, 75 ; non-appearance at

Royal Commission, 51, 12, 74, 80-81 , 88, 89, 90, 108 ; men­tioned in proceedings, 59-63, 6 7 - 69 , 7 1 ; offers to give evidence, 68, 7 1 ; payments from McCormack, 65 -67, 74-77 passim, 12 1 -22, 1 34-38; legal advice to, 66-67, 82-83 ; production of bank accounts, 68, 7 1 -72, 74 ; defended by Reid, 68; Royal Commission report, 74-77; impact of, 77-83, 88, 92, 1 12; denounces Camp­bell, 78, 80-8 1 ; resignation, 78-80, 88, 92, 1 12, 1S3n; resigna­tion speech , 8 1 - 8 2 ; seeks prosecution, 86, 88-89, 122; civil proceedings against, 87, 88, 89; and Crown Remedies Act Amendment Act, 87-88; attacked by Macgroarty, 89-90; newspapers on prosecution, 89; stature in Scullin govern­ment, 91 ; Denning on, 9 1 , 1 12-13; defends involvement, 92-93 ; Evatt as counsel, 93 ; High Court appointments, 93 ; re­instatement as treasurer, 93-94, Mungana trial, 9S - 104 passim, 1 39-42; interrogatories, 99 ; ac­claims verdict, 108 ; denounces

Index 1 75

N atiodalists, 108 ; Moore on verdict, 108, 109, 1 10; news­papers on verdict, 108-9, 1 1 7; defended by Labour members, 1 09 ; timber shareholdings revealed, 1 10- 1 1 ; loses seat, 1 1 1 , 1 1 3, 1 15, 157n ; impact of affair on career, 1 1 1 - 1 3 ; feud with Lang, 1 12, 1 1 S ; Dalley electorate scandal, 1 12; expel­led from Labour party, 1 1 S ; sensitivity on Mung ana, 1 1 S ; post Mungana career, l i S ; role reassessed, 1 1 7, 120-24; legal recourse open to, 1 23 -24, 15Sn; Wren connection, 1 S2n

Thynne, A.J., 3, 144n Timber strike, 1 1 1 Toomey, T. 67 Tooth, D., 1 19

Watergate scandal, 1 1 8 Weinholt, A., lSSn Wren, J., 93, 1 1 5, 1 52n

Young, 1., Theodore: His Life and Times, conclusions question, xiv, 120-2 1 ; E.G. Whittam on, xiv, C.A. Hughes on, xiv

Zillmanton Mine, 3