The CPA success in trade union elections and in recruitment of ALP members hooked something of a prize catch in the shape of one talented union official, Jack Hughes. At the time of his recruitment in 1935, Hughes, was an assistant secretary of the Federated Clerks Union. In 1936 he won an official position on the Labor Council of New South Wales, which was the umbrella group for all unions and which played a key role within the Labor Party machine.
Yet on the surface, 1936 was a year in which Labor splits healed. Since 1931 two Labor Parties had existed in New South Wales. One supported the NSW-based Jack Lang and the other allied to the federal Labor Party. Jack Lang was a former NSW state premier who commanded a mass following in Sydney and other parts of New South Wales. A demogogue and fiery speech-maker, Lang had clashed with the banks at the height of the Depression, then been dismissed as state Premier by the Governor, a relic of Australia's colonial past.
The early 1930s saw Lang establish political supremacy within Labor, defeating the weaker «Federal Labor Party». By 1936 a tenuous re-marriage was concluded between the two parties. This prompted Lang to try to increase his dominance. His first target was the radio station owned by the trade union council, the NSW Labor Council.
The Sydney-based radio station 2KY had been set up in 1925 as «first labour radio station in the western world». Lang urged the Council to integrate it with the Labor Daily newspaper, which he controlled, a move designed to entrench his own political power. The Sydney newspaper, Truth, summed up Lang's move:
Two great assets of the NSW Labor Party - the 2KY wireless station and the Labor Daily - are plums for which many people have hungrily licked their lips. Some have been able to take a bite, but nobody - yet - has been able to snatch them for their own, their very own. Mr Lang is now trying to pluck these golden plums.
Truth's description of the «chilly, alert atmosphere» of the Labor Council when Lang addressed it on 2KY was an indication of the storm which would gather strength over the next three years. The communists, both overt and covert, and the non-communist left wing opposed Lang's move to integrate the radio station with the newspaper and, to widespread surprise, his plan was defeated.
In August 1936 the unions in the Labor Council called what would be the first of many meetings to oppose Lang's control of the party machine. Lang immediately expelled four members of parliament, 17 union officials and a number of others. «This lit the fire,» recalled Hughes many years later.
In December 1936 another major conference of anti-Lang unions and ALP branches was held. By this time it was clear that Lang was also trying to entrench his total control of the Labor Daily. In the preceding months the militant unions had begun to organise the union shareholders to vote against Lang directors on the newspaper's board. But after the ballot opened, it became clear that Lang's men had systematically tried to rig the vote. Ballot papers disappeared, others never arrived at union offices. On Christmas Eve 1936 the result of the ballot for directors was due to be announced but before that could be done the Miners' Federation began a legal challenge to the conduct of the ballot.
In the following year, 1937, a pending federal election led to an uneasy peace in the factional warfare. In June the four expelled MPs were readmitted to the NSW branch after demands from the federal ALP executive. The anti-Lang dissidents continued to mobilise although Lang remained firmly in control of the state party machine. In October the factional warfare revived. Labor had lost the federal election and in the Labor Daily case the Equity Court largely accepted the anti-Lang unions' claim that their board candidates each gained an average of 19,000 votes to the Lang unions' 14,000. On appeal the full court partially reversed this result but it was clear, as anti-Lang unionists pointed out, that «future ballots will result in Mr Lang's influence being completely destroyed».
In 1937 the anti-Lang forces had formalised their opposition to Lang by creating a nameless seven person committee to direct their struggle. Later that year it appointed a full time organiser, Walter Evans. Evans had been a member of the ALP state executive in 1932 and also a member of the left wing of the Labor Party. By 1937 Evans had become an undercover member of the CPA. As dual members of the CPA and ALP, Hughes and Evans would lead the growing anti-Lang struggle within the NSW branch of the Labor Party for the next two years.
Throughout the period Hughes remained in contact with the CPA largely through Ernest Knight, the CPA official who was responsible for party work among the trade unions in Sydney. Knight had a nondescript office in near the dockside in Sydney unadorned by any sign. Hughes, as a Clerks' Union official, excited no attention by visiting Knight's office as he did hundreds of other city offices to collect membership dues. As an increasingly significant Labor Council official, Hughes could also regularly visit all leftwing unions and thereby keep in touch with leading CPA trade union officials. On one level there was no secrecy at all about the growing alliance between CPA members and the anti-Lang Labor forces. At the weekly meetings of the NSW Labor Council this co-operation occurred in public. As well, there appears to have been at least two types of dual membership of the ALP and CPA. While Hughes' membership was «deep cover», other communists' allegiances were not so hidden. The editor of the miners' union newspaper, Edgar Ross, who was a member of the Botany ALP branch, recalled that his CPA membership was known to non-communist anti-Lang ALP members.
In the following years the organisation of the communist underground in the ALP became more systematic and was directed by the CPA Political Bureau which met every six weeks. Both Hughes and Edgar Ross (the most senior surviving dual members) state that they did not know the identity of all the dual members in the ALP but their identities must have been known to the CPA Political Bureau. Both Hughes and Ross later minimised the degree of organised CPA activity within the ALP and claim that there was never a fraction meeting of this group or any other defined organisational expression. Yet minutes of the Political Bureau clearly record such a meeting.
In February 1938 the anti-Lang forces tasted victory, when they took possession of the offices of the Labor Daily. Behind the scenes the Political Bureau of the CPA discussed the situation and devised «a plan covering the taking over of the Labor Daily and replacement of various members of the staff». The price of victory was the repayment of a loan which Lang had earlier made to the newspaper. The Labor Council decided to make a clean break and to change the format and name of the newspaper. What emerged in late 1938 was the Daily News. To bankroll this undertaking Hughes called on a rather unusual source. For some time Hughes had been cultivated by the general manager of the Bank of New South Wales, Sir Alfred Davidson, a forward-looking banker who made a habit of selecting and promoting talented young people. Davidson had been appalled by Lang's hostility to the banks while Premier and made overtures to Lang's enemies on both the right and left. For example, Davidson paid for an organising tour by Hughes of interstate trade union centres when the anti-Lang forces were trying to influence the ALP federal executive. Davidson apparently looked on Hughes as a possible national Labor leader with whom he could garner some influence. In establishing the Daily News Hughes used his influence with Davidson to get a substantial bank loan. A version of the Hughes-Davidson relationship appeared in Lang's autobiography in which Lang said that in 1938 Davidson invited the visiting British Labour figure, Ernest Bevin, to a dinner with Hughes, Evans, Lloyd Ross and F. O'Neill, all Labor dissidents. At the time, however, Hughes' contact with Sir Alfred Davidson was by no means public. The unusual alliance between a communist and a top banker was one of the odd consequences of the CPA's underground work in the Labor Party.
The growing CPA influence within the Labor Party was of great interest to the Communist International largely because of its wider world campaign against isolationism and in favour of collective security. From July to November 1937 the Anglo-American secretariat of Comintern held a series of discussions on «the Australian Question» and spent considerable time on the closely intertwined issues of foreign policy and the position of the Labor Party. Among those present were the French Comintern leader Andre Marty and the British representative, Robin Page Arnot, as well as CPA Political Bureau members Richard Dixon and Jack Blake.
To achieve a collective security pact linking the Soviet Union to Britain, the election of Labor administrations in countries of the British Empire was crucial. To achieve this the CPA worked to strengthen anti-fascist feeling in the society generally but in particular to use its secret members in the Labor Party to change its isolationist policy. In early July Dixon addressed the Anglo-American Secretariat arguing that Australia's main responsibility was to work for a change in British policy, which was then both warlike and opposed to collective security involving the Soviet Union. Change was possible because «the British Government is sensitive to Dominion pressure». To «bring about such a rupture with this Empire front on foreign policy, it is essential to defeat the Lyons government and elect a Labor government». Dixon noted that Lang's group was dominated «by the Catholic element» and that this was the reason that the Labor Party had made no declaration on Spain, although the trade unions on the NSW Labor Council had. Dixon summed up as follows:
Just a few words about our views on the question of influencing the Labor Government should it be elected. Our first line is that we expect to bring pressure to bear on the Labor Government through the trade union movement. Secondly, our line is to bring about a plan of getting as many Communists as possible within the LP. The Party in New South Wales has one or two Communists in the LP Executive. In Victoria out of 46 organisations, we have about 34 in which we have Communist organisation. At the same time we are trying to get direct union representation at the LP conference. This would mean we would probably control in the future the LP conference.
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