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The fuss about Sutch?

Preface/method:

‘Secret service history may be a health hazard. It attacks the mind. After long periods immersed in it everything looks different. Apparently solid objects start quivering and crumbling; fixed points move; spaces appear where there used to be shapes; and shapes start materializing out of nothing at all. There is no firm ground anywhere; no certainties, no reference points. People turn out to be not what they seemed; institutions do not function as they were supposed to; accepted truths may be deliberate disinformation; spies and moles are everywhere; and the cleverest and most dangerous of them are those who appear most unlikely and innocent. It is a bewildering world, even for historians, who are used to regarding things sceptically, but not quite as sceptically as this.

The way of coping with it, if you adopt the secret service approach, is quite simple. You cannot measure the evidence against any external criteria, because they are all unreliable. What you can do, however, is to try and fit it all together, to see if it holds together, irrespective of anything outside. That will produce likely hypotheses, which are the closest you can get to certain truth. The likeliest hypothesis is the one in which all the fits are closest, and there are fewest loose ends hanging over at the end.’

From Bernard Porter’s, Plots And Paranoia... (1989)

Note: You may use the footnote numbers to move about in this work in the HTML format (click on). And the links, including one to this person somewhere near the end of this work, work in that format as well.

***

‘Begin at the beginning,’ the King said, gravely, ‘and go on till you come to the end; then stop.’ From Alice in Wonderland by Lewis Carroll [Charles Dodgson], (1832-1898).

In February of 1974, the following tribute was paid to Dr William Ball Sutch, appointed the year before to be Chairman of the Queen Elizabeth II Arts Council of New Zealand:

‘Edward Tregear was eminent as a civil servant because of his great contribution to the labour legislation of the nineties and the early part of this century. Dr Sutch has been similarly eminent from 1933 onwards for his constructive influence on a much wider, deeper and more subtle range of social and economic developments in this country. New Zealand owes a great dept to him. Throughout his career his ideals, purposefulness and persuasive ability have combined to serve human betterment and to develop

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New Zealand as an independent nation. He has played a key part in the emerging national consciousness. He has lectured, written and worked over the whole of his adult life for the under-privileged and neglected. He has been quick to criticise injustices. As a writer, he has interpreted with insight and deep feeling the social life and history of our country.

He is best known as a political economist and has been for four decades a major influence in shaping New Zealand economic policy. Though he is remembered, with others, for his part, from 1933 to 1942, in the framing of social security, stabilisation, guaranteed prices, and trade policies, his influence on the recent diversification of the New Zealand economy is his most significant structural contribution to New Zealand’s nationhood.

This has all been achieved by his courage and intense drive, by a skilful use of political and administrative power, by his great capacity to write for and speak to diverse professional and lay audiences, by his ability to inspire and organise interested groups with purpose, by the persistent reasonableness of his position and by so obviously putting his country before himself.

More than any other New Zealander he has demonstrated to a wide audience the interdependence of economics, politics, social welfare, history, education, the arts and nationhood. While his achievement in each of these spheres is considerable, it is the essential unity of his vision, his writing and his work that earns him his unique place in New Zealand life.

As a young man he was a housemaster of Nelson College. He played provincial rugby football in the front of the scrum, rowed for the Union Boat Club at Wanganui, was a long distance runner, a good rifle shot and a tramper. Dr Sutch’s university work, particularly in the English Poor Law, led in the early thirties to the award, against world competition, of a university fellowship at Columbia University, New York, where he took his doctorate in economics and political science; his post-graduate work with world authorities ranging from anthropology to central banking, was essential to his later contribution to the texture of New Zealand life.

This contribution was no doubt assisted by his understanding of the underdog and the poor in many countries. After his Columbia work he lived the life of a tramp, travelling through Britain and the countries of Europe, sleeping in the open or in doss houses and unemployment camps. Alone, he made an amazing and, in those days, dangerous journey to New Zealand from the shores of the Arctic Circle through Lapland and Finland to Leningrad, where, unassisted by permission, accommodation or tourist transport, he went further south into Tashkent, Samarkand, Bokhara, across the Oxus River and over the Hindu Kush range,

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through the Khyber Pass to Peshawar, down the Ganges to Calcutta, across to Bombay, over to Sydney, where he dossed in the domain, and back by steerage passage to Wellington.

In 1933 he joined the staff of the Minister of Finance, the Rt. Hon. J. G. Coates and thus became an important member of the economic and social “Brains Trust” which Coates organised to provide the imagination and skills he could not get from the accountants in the treasury and other Government departments.

Dr Sutch was the adviser on the future Reserve Bank, in the centralising of the gold reserves held by the trading banks, and, with others, on the handling of the capital and debt burden of the many insolvent farmers and the reduction of interest rates on the national debt.

The radical so-called socialistic changes in the economy and economic relationships initiated by Coates from 1933 to 1935 were blamed on the Brains Trust. Though by now, on the instance of Coates, a permanent civil servant, Dr Sutch became the main political whipping boy of New Zealand’s right wing. His active participation in the first attempt to manage the New Zealand economy was anathema to many.

When Labour took over at the end of 1935, Dr Sutch remained in a position of influence. The social, financial and economic changes introduced by New Zealand’s first Labour Government – for example, social security, banking, guaranteed prices and import licensing – owe much to the technical advice and social outlook of Dr Sutch.

In 1936 he accompanied Nash in an extensive series of trade and technical discussions with other countries, including those of the Imperial Conference, and in the same year he was a New Zealand delegate to the League of Nations.

His hand was prominent in that long list of legislative measures, now accepted as part of our economic and social fabric, which in those days helped lift New Zealand from defenceless depression and set it on the road to economic revival.

Before World War II he, with other young men, was active in the New Zealand Institute of Pacific relations. He contributed educational, social, international and economic articles to the independent radical journal Tomorrow, wrote Recent Economic Changes in New Zealand, produced for the British Commonwealth Relations Conference held at Sydney in 1936.

He has been elected to the Royal Economic Society, the Royal Statistical Society and the Royal Society of Arts.

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For the celebration of New Zealand’s Centennial in 1940 the Government commissioned Dr Sutch, as the recognised authority, to write New Zealand’s social history. His completed job, The Quest for Security in New Zealand, was refused publication by the Prime Minister. He agreed to write a second book “suitable for secondary school girls”. The result was Poverty and progress in New Zealand. The Prime Minister again forbade publication. Dr Sutch, in his own personal interest, was advised by the Head of the Internal Affairs Department, (Sir) Joseph Heenan, to lock the manuscripts at the back of a filing cabinet and leave them there for a long time. Sutch thereupon submitted both manuscripts to publishers. In 1941 Modern Books, Wellington, published Poverty and progress in New Zealand and in 1942 The Quest for Security in New Zealand appearing as a Penguin Special, sold 100,000 copies. Dr Sutch was and is his own man.

In 1942 he was in the army as a gunner destined for the Middle East and, within a year, was top of the course to provide New Zealand’s Chief Instructor in Gunnery; but in 1943 an injury caused his transfer to the Ministry of Supply as Executive Economist, where he dealt primarily with Lend Lease and mutual aid among the allies, import priorities and price equalisation.

In 1944, as the nominee of the trade unions he took on the added duties of membership of the first railways Tribunal, an arbitrary authority fixing wages.

His work with supplies between countries brought him to the attention of the United Nations Relief and Rehabilitation Administration and in 1945 he became their Director of Supplies and deputy Director of UNRRA for the South-west Pacific. Working from Sydney he organised the UN Appeal for Children, a forerunner of UNICEF and also co-ordinated the work of CORSO with the Australian states in supplying goods for war relief. UNRRA then appointed him Director of Operational Analysis in London. His job was to examine the needs of European countries devastated by War, from Italy and Austria to Poland and the Ukraine, and to decide how international aid could best be given. Here he was noted for his reports on how to rebuild economies as diverse as those of Austria and Poland.

His experience as an international civil servant in a new field was a forerunner to his appointment in 1947 as Secretary-General to New Zealand’s Delegation to the United Nations and a representative on the recently established UN Economic and Social Council.

In those formative years of the United Nations, before the Cold War was at full pitch, Dr Sutch was a strong influence on the UN senior staff and many of the delegates from underdeveloped countries who believed that international service was the objective of the UN. When, in 1949, there was an official board

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of enquiry into UN staff conditions the staff selected him as the delegate they wanted as Chairman.

He served on most of the UNICEF committees and in 1950 became temporarily its Chairman. In both 1948 and 1949, while New Zealand was on the UN Social Commission, the member countries elected him Chairman, not just because of his decisiveness and sensitive understanding as a Chairman, but also because of his objectivity and knowledge of how various societies could be improved in such areas as the welfare of women, children and the aged, the traffic in persons, narcotics, and penal reform.

While representing New Zealand at the UN, Dr Sutch made two very substantial contributions: he led and won the fight (against the USA) to make UNICEF a permanent rather than a post-war and temporary organisation, and he drafted and piloted through the Economic and Social Council’s resolutions on how UN technical assistance to under-developed countries should be handled. In doing so he often had to out-manoeuvre the representatives of the developed Western powers. Several international bodies offered Dr Sutch positions in their respective fields but he, as later, made his choice for New Zealand.

From 1951 to 1956 he served in the Department of Industries and Commerce as Economist, then from 1956 as Assistant Secretary. In 1958 he became the Permanent Head of the Department and immediately took part in the Commonwealth Economic Conference in Montreal and spent some months in London renegotiating the Ottawa Agreement of 1932 both to free New Zealand’s hands for diversified development and to continue New Zealand’s access for farm products sent to the British market.

During his time at the Department it changed from one dealing mainly with price control, trade promotion and import licensing to an organisation vitally concerned with broad economic and development policy. Specifically, the Trade Relations Branch, the Development Division, the Economics Branch, the Industrial Design Section, the Consumer’s Institute, the administration of the Trade Promotion Council, the Trade Practises legislation and the beginnings of the Export Guarantee Organisation and the Development Finance Corporation of New Zealand are among the fruits of his leadership.

He was similarly responsible for the Department’s contribution to the remodelling of the import licensing system, the building of new trade posts abroad and the injection of a new impetus into the Standards Institute. Dr Sutch directed his energy into the work of helping New Zealand as a nation. No one has done more than he in serving, promoting and initiating industrial development. He was the author of the doctrine of development in depth, now widely

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accepted in New Zealand, and of the concept of the export of quality manufactures. He changed the import licensing administration so that New Zealand could build its skills, make components, capital goods and sophisticated equipment, and made room for the New Zealand artists to supply the New Zealand market.

The Labour Government in office from the end of 1957 to 1960 was faced with an incipient depression. The great reduction in foreign exchange in 1958 because of heavy falls in all farm prices meant that New Zealand had to deal with an imminent shortage of imported goods plus inflation. The financial side of this crisis was well handled by the Finance Minister, Mr Nordmeyer, and the responsibility for administering the supply side fell on Dr Sutch. If orthodox economics had prevailed, New Zealand would have suffered severe unemployment, but Dr Sutch saw the conjuncture of a Labour Government, a young and sympathetic minister and an economic crisis as the opportunity to start changing New Zealand from an economic colony – a phrase he often uses – to a nation – a concept he sees as elusive.

He believes in a high, well-distributed, steadily rising level of demand and set about laying the foundations to provide this by administrative techniques which include New Zealand processing more of its raw materials and applying its skills to unprocessed or semi-processed imports. The oil refinery which Dr Sutch negotiated and the steel industry for which he was the departmental Chairman are examples.

He was aiming at the skills and this philosophy was behind his advocacy and assistance with the establishment of the technical institutes, the setting up of a Design Council, a Consumers Institute and the active encouragement of the arts.

Until he became Head of the Department he was Chairman for seven years of the Architectural Centre Gallery, a forum for artistic ideas and new artistic work. In 1961 he also ran the organisation of the extensive art exhibition of the Wellington Festival.

He insisted on the highest standards in everything and astonished his Department and the State Services Commission by having departmental publications and furnishings well designed and requiring the New Zealand Trade Commissioner’s offices abroad to be up to international standards in interior (and, where possible, exterior) architecture.

His administrative precision was exemplified in his organisation of the Industrial Development Conference of 1960 and the Export Development Conference of 1961. Out of these conferences came the recommendations to build the understructure necessary for a balanced country and to set the guiding aims. Prominent was the emphasis on people, which, in the advocacy of Dr Sutch, begins

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essentially with the value of the human being and the need to discover, nurture and harness the potentialities of the child so that he, and society, might be the more enriched. So it was that he was led again and again to seek in education the key to the future: few people can have had his awareness of the possible role of education in our economic and social life.

The Industrial Development Conference in 1960 united almost all the diverse interests of New Zealand in its decisions on diversification, development of state-supported understructure to this end, and its most explicit acceptance of the idea that New Zealand should become another Denmark with a high proportion of domestic ownership and control. The acceptance and successful preliminary application of these conclusions alarmed some established business, financial and other political interests, so much so that from 1961 onwards there was inexorable pressure on the ruling party to get rid of Dr Sutch. The result was his leaving the Department in 1965. He conducted himself with dignity and head unbowed. He became an economic and industrial development consultant and was consultant to the Governor of the Reserve Bank and to the New Zealand Steel Company; his main consultancy in recent years has been with the textile mills.

His work as an adviser, mediator, lecture, broadcaster and writer has continued and his versatility and output appear greater that in his days as an administrator. His freedom from high level Government work has enabled him to lecture at the university in developmental economics and in 1970 he was visiting Fellow in New Zealand History to Victoria University of Wellington.

He has also given exhaustive and penetrating evidence to various commissions: his evidence to the Royal Commission on Social Security, published as The Responsible Society in New Zealand, has become internationally known and has profoundly influenced New Zealand’s thinking on the ideal social security and health systems. The church denominations which once eyed him askance now consult him on social policy. His evidence to the Commission of Inquiry into Equal Pay in New Zealand was the major evidence presented and markedly influenced the recommendations of the Commission.

His work for education was recognised by his being the only non-service member of the Post Primary Teacher’s Curriculum Committee whose report, published in 1969 as Education in Change, has also had a marked affect on educational thinking. New Zealand has materially benefited from his freedom to write the books he has produced since 1966: Colony or Nation, The Quest for Security in New Zealand 1840-1966, Poverty and progress in New Zealand; a Reassessment, The Responsible Society

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in New Zealand, Takeover New Zealand and Women With a Cause. These books together with his earlier publications have had an immediate impact in changing the thoughts and objectives of new Zealanders. But they have a wider importance: they explore the theme of the impact of an imperial power on a colony. Hobson and later, Lenin, have described the motivations, mechanics, and results of imperialism, but the colony has been typically poor. Dr Sutch has made a contribution to the theory of imperialism by studying its effects on a colony that is rich and, by stripping away the political façade, has shown the very great extent to which New Zealand’s economic, and, therefore, social decisions are made outside New Zealand.

He has also shown how a colony, whether rich or not, remains stunted in its development with its people and its society deprived of opportunity because of this lack of economic independence. Dr Sutch was incidentally preparing New Zealand to think about not only British accession to the EEC but what it is that makes a country a nation and free. Not least in this have been his efforts to encourage and strengthen the arts as an expression of New Zealanders best perception of themselves. His appointment as Chairman of the Queen Elizabeth II Arts Council enables him to continue his work...’1

***

Seven months later (on 26 September 1974), police and SIS agents apprehended Dr Sutch as he met that evening with a Soviet diplomat. This was not the first meeting. They had first begun on 18 April 19742 and that, and subsequent meetings, had all been observed by New Zealand’s Security Intelligence Service (NZSIS).

Prime Minister Kirk, told of these meetings on 2 August 1974, and insistent that the SIS find out more before they moved to seek an explanation from Dr Sutch, had just recently died (on 31 August 1974).

Bill Rowling, Labour’s Finance Minister before Kirk died, and who had by then succeeded Kirk as Prime Minister had given (so history goes – but this was not exactly so), the SIS permission to involve the police at the next meeting after he was ‘fully briefed’ on 13 September 1974. The SIS also told Rowling that at the last meeting between Sutch and the Russian diplomat (on 28 August 1974), Dr Sutch had been seen to raise his briefcase and to balance it on his right knee for about thirty seconds, and to open it. Whether or not he was told that Dr Sutch handed anything over can not be known, but the imputation is plain. Sutch would later claim that when he did this it was only so that he could steady a partly filled bottle of milk, left over from the office, and that had fallen over.

1 Jack Shallcrass, February, 1974. In Spirit of an age: New Zealand in the seventies: essays in honour of W.B. Sutch. Edited by John L. Robson and Jack Shallcrass (1975).2 This ‘diplomat’ had entered New Zealand in January 1974, and had been followed since then.

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The Russian diplomat, Dmitri Razgovorov, was spoken to and allowed to leave the scene – his diplomatic immunity protecting him (shortly after he left the country). Dr Sutch was driven to Wellington Police Station to be interviewed, and his home and office were both searched. Nothing incriminating was ever found, not in his briefcase or in his home or office, and Sutch stuck to his story. He was doing nothing wrong.

At four in the morning, on Friday 27 September 1974, Dr Sutch was arrested – charged first (so the New Zealand Herald of Saturday 28 September reported):

‘...under section 3-1C of the Official Secrets Act, 1951, which is headed “spying”...that on or about April 18 and September 26 at Wellington, for a purpose prejudicial to the safety or interests of the State, he obtained information which was calculated to be or might be, or was intended to be, directly or indirectly useful to an enemy.’

Another article on the front page of the New Zealand Herald that day was entitled, ‘Why The Fuss’. But this was not about Dr Sutch and was instead about Kiri Te Kanawa and a memorial ceremony to Norman Kirk that she would not allow to be broadcast to New Zealand from London:

‘New Zealand soprano Kiri Te Kanawa said yesterday that the reason she would not allow her voice to be broadcast to New Zealand from Westminster Abbey on Thursday night was that she was making a personal and private contribution to Mr Kirk’s memorial service.

“It is ridiculous to suggest that I was doubtful about the acoustics. In the Abbey they just have to be the best in the world,” she said. It was my wish – in fact it was my insistence – that I was making a personal contribution to the memory of a great man and that I wanted it to be a private gesture and confined just to the Abbey.”

Miss Te Kanawa said that she did not find out until the night before the service that it was to be relayed. She had said then that she was not willing to be broadcast [that] perhaps the people were too far away to appreciate that I was singing solely for the immediate service [nor could she] understand the fuss.’

Attending that memorial service held in Westminster Abbey that same day that Dr Sutch was apprehended meeting with this Russian, was more than 2500 people, and ‘guests’ included three former Governors-General of New Zealand. And back in New Zealand ‘Gentleman Jack’ Marshall’s knighthood was also announced. Prime Minister before Kirk, he then became Sir John and was the first person in New Zealand to be created a Knight Grand Cross – this the highest award in the Order of the British Empire.

Not good enough reason for change:

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The call for a professional and secret security service to be set up as part of the bureaucracy of New Zealand did not, for Prime Minister Sidney George (‘Sid’) Holland, seem to become pressing until 1954. And this only after a telephone call from the Prime Minister of Australia, Robert Menzies, who informed him, that according to a Russian diplomat, Vladimir Petrov, who had recently defected in Australia, the Russian’s had a ‘contact’ in his (Holland’s) Prime Minister’s Department in Wellington, New Zealand.

A case before that, for a professional and secret security service for New Zealand, had been put to two public servants of the New Zealand Government in 1948 - in Wellington by the then Head of MI5, Sir Percy Sillitoe. Sillitoe who had met with the Head of the Prime Minister’s Department (also the Secretary of External Affairs), Alister McIntosh, and with the Deputy Secretary of External Affairs, Foss Shanahan.

Sillitoe’s case was that the destabilisation of western-style regimes had become the modus operandi of the Soviets, and that this needed to be countered. And so, if New Zealand would consider setting up a service akin to Britain’s Counter-Intelligence Service (MI5), then the British would be prepared to help establish such a service and indeed would like to provide some of the personnel as well.

The call in Britain for a professional and secret intelligence service to be set up as part of their bureaucracy had come about in 1908. The spur, if you like, for the British had been a wave of anti-German hysteria beginning in 1905 with letters to editors and with newspapers themselves reporting that Germany, intent eventually on invading Britain, was intent before that began, upon conducting a campaign of subversion and sabotage in Britain.

The main source of these fears was thriller writer William Tufnell Le Queux. Le Queux’s first novel was published in 1890 and after that publications averaged four to five a year up until 1927 and his death. Publications with a German spy theme were a winner for Le Queux. His most successful was The Invasion of 1910, published in 1906. In response many readers reported their own growing suspicions about something somewhere and sometimes to Le Queux as well who apparently took them seriously – more seriously anyway than did the British authorities take these reports or himself for that matter. This riled Le Queux who had a growing readership amongst whom were included not only some well-known establishment figures but also the Queen.

Late in 1908 Spies of the Kaiser was published, and, although fictional, was widely believed to be factual. In Spies of the Kaiser Le Queux reported that he had been shown a list of British traitors at a meeting in Zurich with a former German agent – a Herr N (Herring?).These ‘traitors’ were said to be part of an organisation called the Hidden Hand – working at the behest of and for Germany. The positions some of these people held were some of the highest in the land – by this time something that Le Queux had come to believe was entirely possible also. On top of this there were said to be several thousand others at hand.

Much, it seems, can be laid at the door of Le Queux due to the journalistic style with which he wrote. Conviction grew that the country was riddled with objectionable aliens and that no existing law could redress that situation. Furthermore, many of these

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objectionable aliens only remained in their place so long as they awaited some word from the Kaiser.

All this led, late in 1909, to a sub-committee of the Committee of Imperial Defence being set up to consider the question of foreign interference into the affairs of Great Britain. The result of deliberations was the setting up of .two departments. At home there would be a department (known as MI5) to detect subversive activities and to protect British secrets from (then) Germany; and in 1912 another department (known as MI6) was formed, to collect secrets from and to influence events abroad.3

In New Zealand, in 1948, there wasn’t then that much enthusiasm for Sillitoe’s proposal. This in part because ‘emergency powers’ given the police at the outbreak of the Second World War (in 1939), remained in place, and in part also because something along the lines of what Sillitoe was proposing had been tried in New Zealand before.

In New Zealand, following the outbreak of the Second World War, a net had been cast widely over those whose loyalty might be ‘questionable.’ An Alien Authority was set up so as to distinguish the risk to security, great or otherwise, of all individuals who had ever been resident in an enemy state, and where thought necessary there was internment. Also considered a risk to security were any New Zealander’s who had ever expressed fascist sympathies and also those that seemed sympathetic to communism. Altogether, the net was cast over quite a large group and the police did and still could in 1948 closely monitor the activities of any individual or group in New Zealand.

A ‘liaison bureau’ established with the British during the war had also of necessity reverted to control of the New Zealand police in 1942, after its British Head had been taken in by an invasion theory - sold to him by a person who had convictions for dishonesty. Called in to investigate, the police had questioned this person after the Head of this Security Intelligence Bureau had laid out his information to the Chiefs of Staff in Wellington. Large numbers of fifth columnists, he had been led to believe, were awaiting the imminent arrival of a large German force, and this called for urgent action. When his informants credentials were checked though, and this person was then told by the police that they were aware of his background, he then admitted that he had merely been trying to keep his lifestyle going, which since he’d made the acquaintance of the Head of the Security Intelligence Bureau, he also admitted, had been going well.

The Head of this liaison bureau was thence returned, in late 1942, to where he came from – Britain. And from then on, until the end of the war in 1945, Police Superintendent James Cummings is said to have run his ‘sensible eye’ over everything 3 The initials ‘MI’ stand for Military Intelligence. MI6 conducted many successful operations in co-operation with resistance movements in Europe during World War II. It has since received adverse publicity through disclosure that that some of its agents were double agents whose allegiance was to the Soviet Union. The most well known of these is Kim Philby, Guy Burgess, Donald Maclean and Anthony Blunt – all intellectuals and recruited during the 1930s while at one of Britain’s most prestigious Universities, Cambridge. MI5 also received adverse publicity during the 1980s when strong evidence began to emerge that MI5 had attempted to destabilize the Britain’s (1974-79) Labour government. Evidence (though it would be disputed that there is much of this), also began to emerge at that time that Sir Roger Hollis (Director General of MI5 between 1956 & 1965) may have been another whose allegiance lay with the Soviet Union.

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that was brought to the attention of the Security Intelligence Bureau, which was disbanded at the end of the war - it files said to have been destroyed.

In 1949, when there was a change of government, Foss Shanahan, the keener of the two public servants that had met with Sir Percy Sillitoe in 1948, brought the meeting with Sillitoe to the attention of the Leader of the New Zealand’s first National Government, Sidney Holland. Though Prime Minister Holland thought the idea timely for other reasons, he did not proceed then and would not until after he received that phone call from Prime Minister Menzies of Australia in 1954.

Heads or Tails?

Before 1887 political parties as such didn’t exist in New Zealand, and Parliamentary factions shifted - revolving around local leaders. The first Ministry, constituted 7 May 1856, and led by Henry Sewell, lasted thirteen days. And from then on, up until 8

October 1887 (and the election of the Liberal government), Ministries seldom lasted more than a year before there was yet again another change of leader.

There was during the Liberal era, considerable settlement and also expansion of New Zealand’s economy. And within the Liberal Party (during the early 1900s), there also arose considerably sized factions. By the time Prime Minister Richard (‘Dick’) Seddon, whom had led the party almost from its very beginning (from 1 May 1893), died on 10 June 1906, the era of ‘Liberal heaven’ (as this period has been referred to) had most definitely ended.

By then two issues that had arisen within the party, and that had led to significant differences, were coming to a head. These issues would eventually lead to a revolt, and when this ‘double’ revolt came, it finally split the liberals. The result of this ‘split’ was the formation of the two main parties of the twentieth century - the Reform Party (which with elements of the Liberal Party would eventually become National); and the Labour Party, which stood on its own, and contested its first general election in 1905.

At issue, almost immediately the Liberals came to power in 1887, was the question of land ownership. A stated aim of the Liberal leadership up till then had been to ‘get men on the land’ so as to get dairy products on to the world markets. This followed the successful delivery to London in 1882 of a shipload of refrigerated meat. Large holdings, in many cases not being farmed, were repurchased, subdivided, and then leased cheaply to those that wished to work this land.

Those that gained this leasehold land would soon begin to argue that, if for any reason they gave up this leasehold land, they would lose the value of any improvements they had made. They also complained that tenancy in perpetuity (999yr) deprived them of a sense of security.

A more powerful feeling though, it came to be claimed by opponents to the freeing up of leasehold land, was a compulsion towards cashing in on rising land values. A Farmers Union, formed in 1899, also demanded that secure tenure for Leasehold land should also be granted for near to its original rather than any increased value.

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That the leaseholders should be granted freeholds was accepted as policy by the Reform Party in 1911, and the freeholds were duly granted to the leaseholders by Prime Minister William Ferguson Massey, a farmer himself from the village of Mangere, after Reform came to power on 10 July 1912.

In opposition to the government during the Liberal era, had been a ‘small, dispirited, loosely organised collection of conservative independents’4 whom Massey had joined with after he was first elected to Parliament 9 April 1894, having successfully contested the seat of Waitemata. The New Zealand Herald in its editorial 31 August 1903, commented on Massey’s selection as leader of this Opposition in fine style:

‘Massey new leader of Opposition.

The selection of Mr Massey as Leader of the Parliamentary Opposition is one which will meet with universal approval. His many friends will be agreed that his qualification and merits have received no more than due recognition, while his many political opponents will nonetheless feel that the important work which falls to the lot of the Leader of Opposition is perfectly safe in his hands.

The parliamentary opponents of the Administration are by no means deficient in talent. They comprise the ablest and most experienced men in Parliament. For the cold winds of Wellington, from which the party in power is able to shelter its partisans, weed out of the Opposition ranks all but those who are strong enough to hold their own without fear and without favour.

So the choice of Mr Massey is not the choice of a political section whose field of selection is limited. Half a dozen Opposition members must be acknowledged as qualified for the post, because they are capable of assuming the reins of Government.

In Mr Massey we have not only sterling character, which has won him the respect of his neighbours at home as well as of his antagonists in the House, but we have an instinctive appreciation of democratic methods and that genial tactfulness which is a strength in political combat.

Whether we look at his election from the point of view of party or from the point of the great outside public which is so strangely ignored in general politics, it is undoubtedly good, and could not at present be bettered. Indeed, if Mr Massey ultimately proves himself as efficient and capable in office as he has done in Opposition, his appointment will make him prominent from one end of the colony

4 Gustafson, Barry. 'Massey, William Ferguson 1856 - 1925'.  Dictionary of New Zealand Biography, updated 31 July 2003. http://www.dnzb.govt.nz/dnzb/Find_Quick.asp?PersonEssay=2M39

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to the other, and will cause not a little rejoicing on the one hand and not a little consternation on the other.

Mr Massey takes a worthy and commendable interest in every question which affects the public of the colony. But every man has his special interests, his inherent tendency. Mr Massey’s special interests are in the North Island, and his inherent tendency is to champion the cause of the producer of wealth.’

An indication of the beginnings of the tension that continued between town and country in New Zealand probably up until the 1980s can be found in Professor Keith Sinclair’s, A History of New Zealand, (1988):

‘The growth of industry was paralleled by the much more rapid rise of dairying [hence] the ‘cow cockies’ became an important, numerous section of the community; and one long resentful of the influence of organised labour.

The appearance of ‘unionism’ among farmers led to an accentuation of a feature of political life which, though not new, had not previously been very important: the rivalry of town and country. According to a popular cliché, the farmers were ‘the backbone of the country’. Since the export of primary produce was the basis of New Zealand’s wealth, it followed that the welfare of the farmers should be the first concern of the Government. The aim of the Farmer’s Union was to see that the Government appreciated the force of this argument.

One of the specific objectives of the Union was the abolition of the very moderate protective tariff. In the eyes of many a farmer the ‘townies’ were mostly parasites who, sheltering behind the tariffs, lived by selling him dear and inferior goods. Moreover, the farmers considered that the tariff, by creating jobs in unnecessary industries, was responsible for the shortage of rural labour.’(p.204)

Also coming to a ‘head’ within the Liberal Party in the early 1900’s were the differences between those that were employers, businessmen and shopkeepers, and those that were at heart part of the expanding workforce.

The first compulsory system of state arbitration in the world had been introduced into New Zealand in 1894. The ‘Industrial Conciliation and Arbitration Act’ was meant to stimulate and protect unionism. Its mover, William Pember Reeves, had considered then (with much justification – a mainstream view then and since), that the unions were too weak to safeguard the interests of an expanding workforce against the growing number of employers.

From 1893, when trade unions had numbered only thirty-seven, this number grew to two hundred and seventy four by 1906 - albeit, with small membership, but all registered. It has been said many times since that it was then that the workers in New Zealand began to feel their strength, but equally it has also been said that it was then

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that they also began to overestimate it – for the unionists were no more powerful a group than the farmers, nor even more so than the employers, businessmen and shopkeepers combined either.

By 1906, Arbitration, and whether or not it was of actual benefit to wage earners, became a debatable issue for the labour movement as a whole, and there was a strike over wages that had been fixed since 1902. Employers, who had previously been hostile to the system of arbitration, had by then come to regard the system as a quite proper leash on unreasonable demands. In urban areas throughout New Zealand, the talk of wage earners turned towards politics.

In 1898, a Trades and Labour conference in Australia resolved that a Labour Party be set up there.5 And in 1904, a Trades and Labour Council meeting in New Zealand moved that a political Labour movement be established in New Zealand also. Candidates were selected and the first Labour candidates were put forwards in time for the general election of 1905 and they gained their first seat in 1908. The Reform Party, on the other hand, gained fifteen seats when they first stood candidates in 1905, and twenty-six in the1908 general election. Seddon had foreseen this rift coming and had tried to forestall it by founding, in 1898, a Liberal and Labour Federation - known forever more as the ‘Lib-labs’. Seddon’s problem had always been though, that in considering one constituency, he also always stood at risk of offending another constituency.

From 1908 onwards, there were a number of strikes in defiance of awards already settled in the Arbitration Court and under the Arbitration Act of 1894. Some Unions, in order to avoid breaking the law, simply cancelled their registration. One of their profound hopes was that by direct negotiation they might open the door for better wages and for better conditions at work for all. This rejection of the Arbitration system was not generally supported by all though - as many union members felt that the arbitration system served their interests as well as could be hoped for by them.

In 1908, a strike ‘roused’ the West Coast coal miners against the system. They formed a Federation of Miners and this soon expanded to become a Federation of Labour - soon to be called the Red Feds. This Federation of Labour consisted of in the main of miners and waterside workers.

The Red Feds were not for sitting around at arbitration. They were in fact antagonistic towards a system that minimised class antagonism. And antagonism was indeed what ensued. During 1912 and 1913 the most violent scenes since the Maori struggle to resist their domination by the colonials, were said to have been witnessed – as the Government, employers and mounted ‘cow cockies’ combined to smash the Red Feds.

A novel way of dealing with union power had occurred at the turn of that century to one Edward Tregear6– a civil servant considered eminent for his great contribution to labour

5 Australia's first Labour Government took office in Queensland in 1899, but lasted only seven days. The British Labour Party was founded the following year.6 Mentioned by Shallcrass in our introductory piece above footnote 1.

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legislation during the 1890s and early 1900s. Tregear had foreseen a means whereby the members of any union that cancelled its registration might be forced back into another association regulated by the Act. In the event that any union did deregister, and in so doing leave an association in ‘any’ district uncovered by the Act, it was then possible for ‘any’ fifteen persons in that district to form another association and then to apply for, and to obtain from the Arbitration Court, an award that would cover that industry. Members of that previous union could then be ‘obliged’ to join the new union - the choice being to starve or to accept, again, the authority of the Arbitration Court. This ‘mechanism’ was first employed successfully, in Auckland, in 1911, against a labourers union.

By 1908, Massey was a well-known and distinctive figure and had the advantage over Seddon’s successor, Joseph Ward, in that Ward was nothing like the impressive figure that Seddon, who had died in 1906, had been. This counted for Massey and for his collection of independents at the elections of 1908, when his Reform movement gained twenty-six seats in parliament (up from fifteen in 1905), the Liberals having lost ten since 1905 (down to fifty-one). At that election Massey had,

‘...campaigned for the return of a strong, unified opposition which could challenge alleged Liberal corruption, cronyism and incompetence, especially in the public service [and had] continued to emphasise freehold tenure and to exploit growing concern among both rural and urban property owners at the advent of militant unionism and socialist, syndicalist and anarchist propaganda.’7

Buoyed by their result at the 1908 General Elections, Massey then announced, in February 1909, the formation of his Reform Party.

At the 1911 General Election the Liberals lost another eighteen seats (down to thirty-three), and the Reform Party gained a further eleven (up to thirty-seven). This left the balance of power in the hands of other members of parliament, six of which were Independents, and four of which had stood as Labour party candidates.

With the support of Independents not aligned to Massey the Liberals formed their last government which saw Massey then embark on a campaign of introducing votes of no–confidence into the house. Eventually this strategy worked, and on 10 July 1912, and with the help of five dissident Liberal members, Massey and his Reform Party prevailed.

One of Massey’s first actions was to employ Tregear’s ‘mechanism’ (see above) against the Miner’s Union in Waihi, which had gone on strike in 1912 after cancelling its registration and joining with the Federation of Labour (Red Feds). A ‘scab’ union, as the strikers called them, was formed and with the protection of large numbers of police, these workers took over from where the miners on strike had left off.

7 Gustafson, Barry. 'Massey, William Ferguson 1856 - 1925'.  Dictionary of New Zealand Biography, updated 31 July 2003. http://www.dnzb.govt.nz/dnzb/Find_Quick.asp?PersonEssay=2M39

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It is considered doubtful that the miner’s employers would have survived this confrontation without the support of the government. In clashes with the police, and with the strike-breakers, one of the striking miners was killed. Many of the leaders of the strike were imprisoned and any that weren’t were forced out of the district by a hard core of the strike-breakers - while the police looked on.

This ‘action’ of the employers at Waihi, and the support they received by way of the large police presence offered by, and accepted from, the Government, eventually led to a hardening of attitude by many unionists towards the Reform Government.

Up until 1912, the Red Feds had resisted the temptation to call for a general strike - the level of ‘class antagonism’ no doubt not yet quite apparent enough. That changed. A watersiders strike in Timaru had already seen the government experiment with alternative unionists – farmers - as strike-breakers. And in 1913, when in Wellington a waterside workers lock-out led to a nationwide strike on the wharves (and in mining towns), the Government went further on to the offensive.

This time a force of special constables was enlisted from amongst the unionist farmers. These constables (called specials), organised themselves along military lines. On foot, protected by military forces, they worked the wharves; at sea, protected by Naval personnel, they worked the ships; and on horseback, ‘Massey’s Cossacks’ clashed with the strikers.

The call by the Red Feds for a general strike went out, but by in large this was ignored by more unionists than heeded the call, and that particular challenge, by the Red Feds to the economic structure and direction of New Zealand, was over.

The rise of the Labour Party in New Zealand.

Because half a dozen grasshoppers under a fern make the field ring with their unfortunate chink…do not imagine that those who make the noise are the only inhabitants of the field.

Edmund Burke (1729-1797).

In 1908, and during a brief recession (1907-09), Labour gained its first seat. From 1908 onwards, in periods of recession, Labour’s vote improved at the expense of the Reform Party and the Coalitions that governed New Zealand following the end of the Liberal era in 1912.

The end of the ‘Great War’ was celebrated, as it was all over the world, in New Zealand on 11 November 1918. From a population of just over one million people8 the small colony’s contribution had been great, but very costly in terms of fathers, uncles, brothers and sons who were not for the return home. There were near seventeen thousand killed in that war and some fifty-six thousand wounded, some forty thousand of them seriously. And those who did return home also brought the ‘Great flu’ of 1918-19 with them,

8 This mark was reached in 1908.

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To what had seemed in New Zealand a possibly never-ending casualty slate was added a deadly strain of influenza that added to the loss. And in New Zealand the influenza struck almost twice as many men as women (the reverse of what happened internationally). And it struck especially those aged between thirty and forty. Some eight thousand five hundred died, and the number of widows and fatherless children left behind because of the influenza epidemic, added to the numbers left behind by the thankfully ended slaughter of their fathers, uncles, brothers and sons at war.

The introduction of the virus was blamed for a while on Prime Minister Massey, and on his Finance Minister, Sir Joseph George Ward, who had been aboard the SS Niagara – the ship thought at the time to have brought the virus to New Zealand in October, 1918. In fact he virus was already in New Zealand by then. But the ship did pass the virus on to the Talune, which in turn carried the virus to Samoa where eight thousand five hundred of its inhabitants succumbed also.

Sir Joseph George Ward had been leader of the Liberal Administration from August 1906 (after Seddon died) until the end of March 1912. That is, for all but three and a bit months of the last term of the Liberals twenty-five years in power.

Prime Minister Massey was the first leader of the Reform Administration from July 1912 until August 1915. He was then leader of a ‘National Coalition’ (comprised of Reform and Liberal elements), from then (1915), until August 1919. He was then Leader of the Reform Administration (in power again from 1919 until 1928), until his death while in office 10 May 1925 – twenty days short of next scheduled general election (30 May). In all, Massey, a farmer and a renowned ‘anti-socialist,’ remained in office as Prime Minister of New Zealand for thirteen years.

Following Massey’s death, and from 30 May 1925 until December 1928, Gordon Coates, another farmer, and the first Prime Minister of New Zealand born in New Zealand, led the Reform party up until the end of its last period alone as government (until 10 December 1928).

In 1925, Coates election slogan, Coats off with Coates, did hit the mark, but by the time of the next general election, late in 1928, he had come to be considered by business elements within the Reform Party to be too ‘soft’ and worse, ‘socialist inspired’ - due in part to his attempting (as world wide recession was setting in) to set butter prices at a fixed level through the mechanism of a Dairy Board; and also in part due to his introduction of a family allowance to give relief to hard-pressed working families with more than two children.

United, a new Party was thus formed by these ‘business elements’ of the Reform party, and was composed as well of remnant members of the Liberal party, which also included the well-remembered Liberal leader Sir Joseph George Ward (from1906 after Seddon died, until 1912 when Massey’s Reform part wrested power away from the Liberals, 10 July).

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Though past it, and eventually considered to be so, Ward (born in Australia in 1856) returned to power as Leader of United in December 1928, with twenty-six seats and the support of four independents; as against the Reform Party’s twenty-nine seats and Labour’s nineteen.

The problems that were besetting the country though are said to have been all too much for Ward, and he died in July 1930 (aged 74) having resigned in May. It is said that in dying when he did he was spared more of the despair that he was beginning to feel for his country then. Depression was setting in.

***

The ‘Great War’ years (1914 –1918) had also seen the rural areas of New Zealand prosper. The British Government had paid high prices for everything that could be produced - for frozen meat and for wool. And after the war, for several years, there was still demand.International recession, however, soon saw export receipts, and therefore the country as a whole, affected. There were cuts in pay for public servants, unemployment rose, small businesses went broke and borrowing began. By the time the ‘Great Depression’ arrived at full force in New Zealand (following the Wall Street crash of 1929), a quarter of the payments in foreign exchange for New Zealand’s exports were paying the interest only, on foreign debt

Many returned soldiers, having been settled on marginal land after the war, walked away from land that they had hoped to make pay. A moratorium on mortgages and a devaluation of the pound instituted by Coates came too late for many. Labour’s policy of guaranteed prices and cheaper credit gave some hope to those that had managed to hang on, and labour made gains in what came to known as, ‘butter seats.’

Following the resignation of Ward (in May 1930 – he died depressed in July), and until the end of September 1931, George Forbes took over as leader of United, and as Prime Minister. Then, following the General Election held 22 September 1931, Forbes led a coalition of United and Reform elements.

In January 1933, Forbes made Coates (the former Prime Minister and Leader of Reform for its last lap on its own after Massey died), Finance Minister of the new ‘National’ Coalition (United-Reform) government (this was the last coalition government until present day times).

Coates enlisted the help of three economic ‘doctors’ (W.B. Sutch was one of them), and so was shaped his ‘brains trust’. Influential on him, it was to be alleged for evermore that this ‘brains trust’ held ‘socialistic’ views. Coates himself, would also later hit out at those whom it was supposed had inspired him also.

In 1932, Coates had pressed for one intervention in particular in the New Zealand economy. He had been of the opinion that altering the exchange rate further would improve the position of farmers by raising their income. And, in turn he had suggested,

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the urge to import would at the same time be dampened down and that this should stimulate industry.

Farmers and economists alike voiced support for this intervention. His moratorium on mortgages and his devaluation of the pound when Prime Minister (1925-28), had widely been felt to be too little and too late - and perhaps he felt so as well. At Coates’s insistence, the exchange rate was altered in 1933 - from the previous position in 1931, of £110 NZ to £100 Sterling; to a new rate in 1933, of £125 NZ to £100 Sterling.

Another intervention, also undertaken in 1933, was more controversial though, and unexpectedly, was to the advantage of the alternative administration (Labour) still waiting in the wings.

On the advice of, and with the assistance of his ‘brains trust’, Coates also set up the Reserve Bank of New Zealand in 1933 - so that the State could direct monetary policy and deliver cheaper credit. This move was far more controversial, as up until then the securing of funds and the delivery of credit in New Zealand had been solely the province of privately owned banks.

Several circumstances, all related to the depression, had, however, strengthened Coates’ hand as regards this intervention. For not only had there been public disorder in the towns and cities, but the increasing alarm being expressed by the small farmers at the fall in dairy prices (butter down from 183 shillings a hundredweight in 1929, to 66 shillings in 1934), seemed likely to turn to further public protest and disorder. The devaluation did help there, and if not for other ‘considerations’ industry might well have been able to have been stimulated then as well (the cost of imports rising being the down side of devaluation).

There was a problem there though, and this had followed on from the Imperial Conference held in Ottawa in 1932 - to which the New Zealand and Australian delegations had travelled to together on the Aorangi:

‘When the depression began most governments adopted various restrictive measures intended to protect their domestic economy, what ever happened to any other country. High tariffs, quotas, competitive devaluations, exchange controls, became the order of the day. There was great drop in the volume of world trade.

Britain’s response was to hope that Empire trade might prove its salvation. In 1931 it introduced a protective tariff and, at the Ottawa conference, accepted the idea of imperial preference which the Dominions had been advocating for forty-five years and practising for thirty or so. At Ottawa – by a series of bilateral agreements – the Dominions gained exemption from the new British 10 per cent duty,9 while Britain retained and extended her preferential position in Dominion markets. Tariff protection against British manufactures was to be given only to Dominion industries ‘reasonably assured of sound opportunities

9 This new British 10 percent duty had been the idea of Neville Chamberlain, British Chancellor of the Exchequer from 1931 until 28 May 1937.

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for success’. Even then, British producers were to be given ‘full opportunities of reasonable competition’.’ (in Sinclair’s Walter Nash, 1976, p.135).

This ‘principle’ adopted at Ottawa in 1932, would be at odds with Labour Party policy post 1935 in that:

‘Many in [the] party...including Savage and Dan Sullivan as well as John A. Lee, were less interested in whether new industries were ‘economic’ and more in their potential for providing jobs, import substitutes, ultimately a less dependent economy, and (in Lee’s case, at least), national cultural progress.’ (in Sinclair’s Walter Nash, 1976, p.139)

That aside, Labour’s prospects were improved by Coates’s reforms - and this because of considerable conservative opposition within the ‘National Coalition’ (United-Reform) to the setting up of the Reserve Bank in which Coates’s ‘brains trust’ had had their hand.

Considered a measure way too far to the left, and not warranted by events, this interference with interest rates, through the mechanism of this Reserve Bank, was also considered to be interference with the very sanctity of contracts themselves.

This considerable opposition even went so far as to form another party, the Democratic Party, to contest the next General Election in 1935. And at that election this Democratic Party gained no seats but damaged the vote for the newly formed National Party - an amalgam of United and Reform. This kept that conservative opposition out of power for fourteen years (until 1949).10

In the 1922 General Election, Labour had improved its vote - up from eight seats in 1919 to seventeen. This dipped again in 1925 to thirteen; though in 1928 they gained nineteen – two more than 1922. Labour finally became the official opposition after the General election of 1931. In that election they gained twenty-five seats - still four less than United, but three more than Reform (who joined with United to form a government).

Full employment, social security and ‘economic insulation’ were given equal emphasis by Labour in the run up to the general election of 1935, and Labour more than doubled its vote of 1931 when it came into office on 6 December 1935 – up from twenty-five seats in 1931, to fifty-five in 1935.

New Zealand’s first Labour Government.

The affects on the country as a whole during the ‘great depression’ had been severe but had not been felt evenly. At times there had been protest and violence also when

10 The damage done to that amalgam was far greater than that inflicted by the next Democratic Party - formed by Labour politician John A. Lee (the member for Grey Lynn), after his expulsion from the Labour Party in 1940 for ongoing dissent. That Democratic Party also gained no seats but cost Labour several by splitting the vote in 1943.

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attempts were made to suppress protest. Orthodox policies did not stop unemployment rising (the books still had to balance), and this created suspicion and resentment towards a system that had let so many down. Suspicions seemed confirmed when, following the 1935 general election, Labour revealed that the newly formed Reserve Bank contained a not inconsiderable source of funds It was these funds though (and Coates’s has been given credit for this), that were used to begin to pay for Labour’s work programmes so as to get the unemployed into more meaningful work.

Types of ‘relief work’ insisted upon during the depression included road building (by hand), the planting of large forests of the fast growing Pinus Radiata not thought of then to be suitable for housing (not until 195211 after the development of a treatment process by two NZ scientists, Don Spiller and Kennedy Harrow – this discontinued for a while with calamitous consequences in the 90s), swamp clearing, and also the clearing of land for the odd golf course or two. These types of works required a heavy input of labour rather than of material content and kept many of the ‘men’ out of the towns.

Labour undertook a number of public works programmes, one of which was a State housing programme, which James Fletcher, of Fletcher Construction, offered to help with. Plans for building houses in large numbers, and quickly as well, were soon drawn up – and large numbers of state houses (32,500), available for rent depending on means, were built during Labours first fourteen years in office.

The fostering of more productive employment by Labour was meant to encourage consumption. So far as Labour was concerned, one of the main problems for the economy of New Zealand (or any economy for that matter) was not over-production, creating lower returns, but rather, under-consumption (a form of malnutrition), creating less demand and certainly no stimulus for industry.

Labour also wished to give heart back to the small farmers by protecting them so far as was possible from their exposure to the world market conditions. To that end Labour took control of marketing farm produce and introduced a guaranteed price regime so as to provide a buffer for farmers from overseas price fluctuations. By 1949, when National first took office, the Dairy Industry Stabilisation Account had amassed what was considered a considerable cushion then – near £12 million.

The first Labour government was also keen on diversification. W.B. Sutch was only one of those that had looked back at New Zealand’s past and had lamented that after the successful delivery to London in 1882 of a shipload of refrigerated meat from New Zealand, New Zealand had then overlooked other possibilities for economic development and so had neglected markets that had been developing in Australia and California.

Grass Roots.

11 Post war, migration to New Zealand increased, and by 1952 New Zealand’s population reached two million. This exacerbated housing difficulties.

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The leader of the first Labour Government in New Zealand was Michael Joseph Savage. ‘Micky’, as he was endearingly known, was by birth an Australian and had arrived in New Zealand in 1907.12

As leader of the Labour Party in New Zealand, he had succeeded another Australian, Henry (Harry) Holland, when he died leading the party in 1933. In fact the first Labour Government Ministry in New Zealand, though it contained five New Zealanders, one Englishman and one Scot, contained no fewer than six ex-Australians. Reasons expressed for this are interesting. More than one commentator has noted that the political ground in New Zealand at the beginning of the twentieth century was more fertile for those that sit quite comfortably at the more radical end of politics - more fertile anyway than was the ground in Australia, Britain or America. Geography may have something to do with this as well though, as campaigning in Australia involved travelling great distances at some cost.

Seven members of the first Labour Ministry had been former members of the ‘Red’ Federation of Labour – six of those on the executive. And several members of the first Labour Ministry had openly opposed conscription during the First World War and had been imprisoned as a result of this. Notably, one of those was Peter Fraser, the first Labour Minister of Health and Education, who then succeeded Savage as Prime Minister when Savage died (in office on 1 April 1940), and who then himself advocated

12 Michael Savage was born 23 March 1872 at Tatong, near Benalla in Victoria, Australia. He was the youngest of eight children of Irish immigrants Richard Savage and his wife, Johanna Hayes. His mother died in 1878 when he was five years old, and from then on his sister Rose raised him. Brought up a Roman Catholic, he rediscovered his faith a few years before his death (in 1940). In 1891 his sister Rose died (while in labour), and his closest brother Joe died as well. Thereafter he adopted his brother's name - from then on calling himself Michael Joseph Savage. Unemployed during a period of recession in Australia (in 1893), he shifted to the Riverina district of New South Wales, where he found work as a labourer and irrigation ditch-digger on the large North Yanco station near Narrandera. It was at North Yanco (for seven years) that Savage became a member of the General Labourers' Union, and also became familiar with the political theories of the Americans thinkers Henry George and Edward Bellamy. In 1900 Savage moved to North Prentice, near Rutherglen, Victoria, where he worked as a goldminer, engine driver and where he was became involved in founding a bakery co-operative. At North Prentice, Savage also became active in the local miners' union and also in the Political Labor Council (PLC) in Victoria. Chosen as the PLC's candidate in the state electorate of Wangaratta and Rutherglen in 1907, Savage was forced to withdraw for lack of funds. He continued to be active though, at both the local and state levels of the PLC and became a close friend of two other members - Paddy Webb (Minister of Mines then Labour in the first Labour government in New Zealand – a coal miner blacklisted in Victoria before he emigrated to New Zealand in 1905), and Harry Scott Bennett (returned to Australia in 1917 to campaign against conscription), who both moved to New Zealand (in 1905). In response to a letter from Webb, Savage arrived (aged thirty-five), in Wellington on the Manuka on 9 October 1907. He first stood for parliament in New Zealand in 1911 – standing as a Socialist Candidate for Auckland Central, polling near half the votes of the successful Liberal candidate. At the 1919 local body elections in Auckland, he was elected as a Labour candidate to both the Auckland City Council and to the Auckland Hospital and Charitable Aid Board. Although he served as a councillor only until 1923, he was a member of the hospital board from 1919 to 1922 and again from 1927 to 1935. In 1919 he also stood for Parliament again (for the third time), and this time he was successful in the seat of Auckland West, and became, at the age of 47, one of eight Labour members in Parliament. Into office as Prime Minister (in 1935), Michael Joseph Savage (‘Micky’), pledged that he wished to, ‘…abolish poverty and its followers, anxiety and humiliation…’ and in came New Zealand’s social welfare system still being delicately dismantled. A common expression in New Zealand is that this or that action would have Micky Savage turning in his grave. Of late, remedial action is being planned due to subsidence at his grave site (reported in the NZ Herald, 21 January 2004).

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conscription - much to the chagrin of the Labour Party rank and file. Later, in 1949, a very similar stance adopted by Fraser would cost the first Labour Government office; and would also usher in the first National Government led by Sidney George Holland (no relation to the Holland whom Savage succeeded in 1933). A tradition, if you like, of Radicalism in New Zealand can be traced back to the political ideals of the New Zealand Liberal Party. Though a disparate group, the New Zealand Liberal Party united initially in opposition to the political power of the new gentry with their large estates and to the economic power of the wealthy merchants.

First promoted as a political faction by the Colonial Governor, Sir George Grey, in 1879,13 the Liberals, against a background of recession, poverty and exploitation, became government in their own right in 1891 – after gaining the support of the five successful ‘worker’ candidates that had stood in the General Election of 1890. United, they were intent on cutting up the large estates, on taxing unimproved land values and absentee landlords, and on introducing an old age pension, which they did in 1898.

The political ideals of the New Zealand Liberal Party were very similar to those of other political movements in Australia, Britain and America. The same thinkers had influenced all. Popular with the scholarly at that time were the writings of the Englishman John Stuart Mill, and with the less educated the writings of Americans, Henry George and Edward Bellamy.

Mill’s theory of ‘economic rent’ advocated that there was an ‘unearned increment’ on land that was naturally more fertile than other land and that this increment should be taxed so that the community might share in this ‘social’ premium.14 (The community, if you extend this, might also be entitled to a share in the value of something that but for its existence would not be of value as well…).

Henry George went further than this. In Progress and Poverty (1879),15 George advocated that land should be the only form of property taxed. Known as the ‘single-taxer’, George’s experience was that of a Californian where access to vast tracts of land was no longer possible due to corporate as well as individual control.16 This access, he

13 New Zealand’s sixth Colonial Governor, and later another of New Zealand’s short-term Prime Ministers (Oct 1877 to Oct 1879).14 See, Mill, John Stuart, 1806-1873. The spirit of the age. University of Chicago Press, Chicago, 1942. (Note that this title is the same as that of the collection of essays from which this works introductory piece by Jack Shallcrass – above footnote 1 - is derived).15 W.B. Sutch would later write a book ‘more suitable for schoolgirls’ (see above – our introductory piece by Jack Shallcrass – above footnote 1 - for first mention of this), entitled: Poverty and progress…1941.16 Interestingly (or not), the Federal Bureau of Investigation (FBI), formed by President Theodore Roosevelt in 1908, came into being as much to investigate the activities of the ‘land pirates’ out West as they did to curtail the activities of the ‘big-business pirates’ of the East. During the First World War the FBI was also charged with preventing sabotage on the home front at which they weren’t totally successful. In 1924, John Edgar Hoover was appointed director of the FBI, and at his insistence improved standards and training were set in place. It was during the time of Prohibition, with the extended power and authority given to the FBI to prevent organised traffic in liquor, that the FBI began to make inroads into organised crime. Following the attack by the Japanese on Pearl Harbour President Franklin Roosevelt again set the FBI the task of guarding against sabotage, and also then with dealing with espionage and subversion. The

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imagined, would only become more difficult the more that this control was extended and hence liberty itself was threatened.

Edward Bellamy, the other Californian, in Looking Backward (1887), emphasised equality rather than liberty. Considering the ethos of individualism excessive, he also felt that the liberties of the advantaged curbed the liberties of the less well off – thereby, as George also imagined, producing inequality. For Bellamy, co-operation might better be the way forwards so that all might benefit by opportunity, and he imagined a time when this might be achieved by – the year 2000.

These ‘influences’ aside, W.B. Sutch’s analysis of this period in his first controversial work, The Quest for Security in New Zealand (1942), was that many of the wage workers without access to land in New Zealand were at that period near starvation as well – for want of extra means to feed themselves. Yet, he said:

‘There still remained a distinct prejudice against making land easy to get. The emphasis was laid on maintaining an adequate

Bureau was this time more successfully able to penetrate groups sympathetic to Germany and thus able to gain the intelligence necessary to identify several spy cells. They even managed to greet more than a few German agents as they were landed by submarine on the East Coast of America. As the war progressed, Hoover also began worrying, apparently, about a possible Soviet threat further down the track, and so also turned his Bureau’s attention on to groups sympathetic to the wartime plight of the USSR. Following the end of the Second World War, Hoover continued with his concentration on these groups. And they had successes there as well with several Russian spy-rings also being identified. There was though, growing unease about the activities of the FBI, and this concerned the relationship that many sensed was growing between the Hoover’s FBI and Senator Joe McCarthy - the self proclaimed Communist-bagger. Although the FBI was supposed to refrain from passing judgement and was in fact only ever supposed to acquire information, it became clear that the type of information that the FBI was acquiring they were also supplying and that it was somewhat ‘tendentious’ (having an underlying purpose, calculated to promote a particular cause or viewpoint, and so on…in any dictionary), as American history puts it. In 1956, in the foreword to a book on the FBI sanctioned by himself, Hoover wrote that: ‘In recent years, a campaign of falsehood and vilification has been directed against the FBI by some ignorant and some subversive elements. In the world-wide struggle of free peoples, the truth is still one of our most potent weapons. And the record of the FBI speaks for itself. It is the best answer to the falsehoods, half-truths and rumours spread by Communists, their stooges and defenders.’ (see Whitehead, Don The FBI Story, Random House New York, 1956). Investigations following Watergate, however, revealed that it was not only the CIA (formed in 1947 and soon linked to the break-in) that had been breaking the law. The FBI had also been ‘systematically’ breaking the law for years. Their first illegal entries onto the premises of ‘targeted’ organisations had begun in 1942, and had continued until 1966, and had only stopped when Hoover had become fearful that some of his agents might get caught conducting operations against domestic targets. The CIA was not so careful though and became enmeshed in the Watergate Affair. A Senate Committee (set up to Study Government Operations with Respect to Intelligence Activities), The Church Committee, investigated the affair and eventually President Richard Nixon resigned in 1974 after finally admitting he had ordered the FBI to halt its investigation into the break-in to the headquarters of the Democratic Party located in the Watergate apartment building in Washington D.C. (a break-in that he knew of and had approved of). The Church Committee did not rest there though, and revealed the ‘illegal’ break-ins that the FBI had also conducted, and also took great exception to the attempts by the FBI (between 1961 and 1966) to neutralize and discredit the black American clergyman and civil rights leader, Martin Luther King (assassinated in Memphis in 1968 while about to lead a multi-racial Poor People’s March for anti-poverty legislation). Hoover escaped public disapproval for many of his actions though as he died (in 1972) before The Church Committee released its report (in 1976).

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labour supply...Wages would be kept low by competition for jobs’. (p.42).

Whatever, there was still one thing the growing numbers of unemployed had in common with the large run holders and the proprietors of the banks and institutions – a vote. And by 1893, women in New Zealand got their vote as well.

The first calls for a state bank in New Zealand were also answered at this point in time. Though no state bank was set up, Ward’s Advances to Settlers Act of 1894, made credit (normally available on terms ranging from eight per cent to fifteen per cent), available at five per cent. This measure, it has been calculated, between 1894 and 1908 saved small farmers £8 million in interest.

Keith Sinclair, in his History of New Zealand (1988), sets out that:

‘The first object of the new Liberal Government [1887 to 1912] was to encourage closer settlement; it was their belief that in this way they could reduce unemployment and bring about a more effective utilization of the country’s resources. They also believed small farming to be desirable in itself. To this end they meant to ensure that Crown lands should be alienated only to genuine settlers; to re-purchase estates for subdivision; and by means of taxation to force great land owners to subdivide their properties’. (p.178).

Mills influence on the new Liberal leadership was plain. The ‘unearned increment’ they had decided could be got at by leasing the repurchased land in perpetuity (999 year), and then by periodic revaluation. They could not though force this measure through though, and had eventually to settle for what Sinclair referred to as a ‘curious compromise’, introducing:

‘A lease-in-perpetuity’, a tenure which carried no right of purchase, but abandoned the periodic revaluations. For a low rental, state tenants were to receive a 999-year lease. The state could insist on genuine occupation and improvement and could regulate the size of the holdings; but there was no provision to secure for the public purse a share in future increase in land values...For the next twenty years ‘the battle of the tenures’ was fought as much within the liberal ranks as between the two parties.’ (pp.181-182)

Keith Sinclair has also linked Liberal policy of the 1890s to that of Labours in 1935:

‘In 1890 the major aim of the Liberals was to encourage small farmers, to get men on the land and get the country’s dairy products on the world market. By 1935 Labour wanted to protect the small farmer – and the country – from exposure to world market conditions.’(in Sinclair’s History of New Zealand, 1988,p.269).

Too Liberal?

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For some it was perhaps felt that Labour was too Liberal though - for from 1938, even with a clear majority of the vote, Labour began to lose the rural seats. And then it began to lose the rural towns.

For others then, Labour wasn’t liberal enough. By 1938 the more militant unionists were unhappy with their ‘regimentation’ (in 1937), into a Federation of Labour. And in ‘action’, they felt (as they always had felt), too restricted by compulsory arbitration. The first Labour Government wanted the unions to accept its policy of fostering employment, and to enable this policy, Labour advocated partnership. This was, of course, broadly at odds with unionist ideology intent generally on improving their share of the ‘surplus’ that only labour produces anyway. And this by threatening to disrupt the production and distribution of all goods and then by ‘action’ if that failed!

When unions struck, and of course several certainly did, the first Labour Government came down as hard on them as it could. Where strikes could be deemed illegal, the Government deregistered the unions involved. In a ‘neat’ (if you like) twist of an earlier method of dealing with union power, these unions were removed from the protection afforded by the Industrial Conciliation and Arbitration Act.

This only offended the ‘left wing’ (unionists/party members), of course - without satisfying another stronger body of opinion. This stronger body of opinion, consisting of other unionists as well, were unhappy with the increasing number of industrial stoppages and the shortages caused by these and especially by the actions of the waterside workers, or the ‘wharfies’ as they had come to be called.

And when Prime Minister Fraser returned from the Commonwealth Prime Minister’s conference (in 1948), greater offence to this ‘left-wing’ was given. As Fraser returned convinced that Communism threatened the world. Back in New Zealand there were, of course, many that would need convincing of this.

Fraser also returned very much in favour of peace-time conscription, which was very much against Labour Party policy and had been so from the Labour Party’s very beginnings. A referendum, it was claimed, that he ‘jacked up’ saw him get his way and this is said to have damaged relations between affiliates.

Gordon Dryden, a young journalist at the time, had this to say later about Prime Minister Fraser and that referendum. In Out of the Red, (1978), Dryden recalls:

‘Fraser himself had gone to prison in the First World War for refusing to go and fight. But in the Second World War he almost immediately introduced compulsory military training. And, in its treatment of conscientious objectors to military service, his government was almost brutal.

By 1949, as the Communists swept to power in China after one of the longest revolutions in history, Fraser was swept up in the hysteria that bordered on paranoia he repeatedly talked of a navy of Chinese junks sweeping down to New Zealand, and he

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decided that a compulsory military force was the answer. But he was finally forced by both the labour Party and Federation of labour conferences to hold a referendum on the issue.

At times it was hilarious, at others frightening. Having been forced to have a referendum on the subject Peter Fraser then did something I thought could only happen in fascist or communist states. He started to spend a fortune of public money in advertisements telling people why they should vote in favour of his proposals. No State funds were provided for the other viewpoint to be put. Even worse only the case for conscription was given headline treatment. As a classic example, I personally covered the final Wellington meetings of both the pro- and anti-conscription campaigns. Both were in the Town hall. Both packed it. Both had prominent speakers. For conscription: Prime Minister Fraser and defence Minister Fred Jones to the fore. For the anti-meeting: Labour rebel John A. Lee17 who had been expelled from the Party in 1940 at the time Michael Joseph Savage was dying18 and just before Peter Fraser took over; and waterside workers leader Jock Barnes.

The anti-conscription meeting rated a single column heading and about none inches of space buried well inside the paper, but the pro-conscription stand earned banner headlines and coverage over most of the front page. Peter Fraser’s own performance that night and the next day typified his decline and fall. His speech was almost incoherent. It rambled. One sentence I remember started off in Czechoslovakia and ended up on the west coast of the south island. It was anti-communist in a sense that would only be matched by Joseph McCarthy in the United States a year or two later.’(pp.118-119).

On McCarthyism, Dryden provides as good a perspective on that phenomenon as any and a New Zealand one at that:

17 The one-armed politician (war-hero), and prolific author – also said to be a ‘Catholic-hater beyond reason’, by Gordon McLauchlan, in an article entitled: As politicians go, Clark looks good; and Kirk (the first Prime Minister of the third Labour Government in New Zealand (1972-75) who died just as he was getting into his stride), ‘a paranoid idealist’ (in the New Zealand Herald 8 March 2003).18 An ill-timed article, written by Lee, and very critical of Savage (at that time terminally ill) preceded Lee’s dismissal from the Party though it took some months to shift him. Appearing in the journal Tomorrow (in December 1939), this article, entitled Psycho-Pathology in Politics, ‘discussed examples of leaders who were pathological as a result of physical illness. Unless a political party with such a leader ‘managed to cut off the diseased limb, it went down to a crashing defeat.’ (from Sinclair’s Walter Nash, 1976, p.193). Fraser, who would succeed Savage as Prime Minister, said of this article after it appeared that: ‘Its cold-blooded cruelty appalled me. It clearly indicates that the author is not a normal person who can be trusted to observe the ordinary decencies in life and friendly association.’ (in Walter Nash, 1976, p.194).

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‘From 1950 onwards the trend was to grow. Senator Joseph McCarthy launched his first crusade in the United States in February 1950 by claiming he had evidence that scores of communists were in the State Department. That led to one of the biggest witch-hunts the world has ever seen in a democracy. Before he was to be exposed – four years later by ridicule, and by the courageous stand of radio and television star Ed Morrow19 – McCarthy and his strong supporters had blackened the name of every prominent person of liberal ideals in the United States.

Writers, artists, scientists, authors – hundreds of liberal people were pilloried under the McCarthy charge of ‘communist’.

A similar pattern was emerging in New Zealand in 1951, when anyone opposing the Government’s emergency regulations was also tarred with the Communist label.’ (p.125).

Back in New Zealand, Fraser felt that those with communist sympathies were also likely to be feeling encouraged by the growing number of Soviet style regimes in Eastern Europe. This saw James Cummings, the man with the ‘sensible eye’ (above), and by then Commissioner of Police, being directed by Fraser to resurrect the functions (and possibly the files as well?), of the Security Intelligence Bureau that Cummings had overseen from late 1942 until the end of the war. This new bureau was called the Special Branch and was the precursor, in New Zealand, to the New Zealand Security Service formed in 1956.

***

In the 1943 General Election, National gained thirty-four seats (up nine on the previous election); and Labour lost eight (down from to forty-five). This result was blamed on John A Lee’s newly formed Democratic Soldiers Party (expelled from the party in 1940), which, despite gaining no seats, split to some extent, the vote. There was one independent elected.

In 1946, Nationals vote improved by four seats (up to thirty-eight); and Labour lost three more seats (down to forty-two). No independents were elected. In this election (1946), several candidates also stood as representatives of the New Zealand Communist Party, though prior to this, those who might have voted for a Communist Party candidate had always been urged to vote for Labour. This also alarmed Prime Minister Fraser.

19 Joseph McCarthy (1908-57) was elected on the Republican ticket to the U.S. Senate in 1946 and was reelected in 1952. He first attracted national attention in America in February 1950 with his charge that the Department of State had been infiltrated by Communists. Although his accusations were never substantiated, he repeatedly accused high-ranking officials of covering up subversion and many others of actual subversive activity over the next three years. On March 9, 1954, Ed Murrow highlighted McCarthy’s style on his popular television show See it Now. Most of this show involved showing clips of McCarthy speaking and making accusations with very little commentary. This provoked McCarthy to appear on the show himself three weeks later and then in front of a nationwide television audience McCarthy attacked the popular host himself at a cost to his own popularity.

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Between 1946 and 1949, the first Labour Government, having tried to isolate the waterside workers from the rest of the trade union movement seemed ‘dogged’ by the demanding ‘wharfies’ – their go-slows; their overtime bans, and also their ‘wild-cat’ strikes.

The National Party, in the run up to the 1949 General Election, quite rightly asked who was running the country – the Government or the ‘wharfies’. They said they would protect the arbitration system and restore industrial order. And National also said that they would ‘make the pound go further’.

Overall though, commentators have since said, the main reason for Labour’s loss in 1949 was not so much any alienation of ‘grass-roots support, but rather, the continuing period of austerity ushered in first by the great depression, and not then eased by the experience nor the aftermath of a second world war.

After the war Labour had continued to export as much as possible, and to import only as much as was needed as well. Food rationing was continued so as to ship as much as was possible to Britain, and petrol rationing was continued so as to conserve foreign funds. The coffers when they were opened (by National) were brim full. Controls such as those described above, were described in the lead up to the 1949 General Election, by the National Party, as more evidence, if ever it was needed, of Labour’s intent to continue with its socialism.

And once again, ownership of property was also at issue. National took exception to Labour’s State housing programme. They would sell these houses. This from John Ross (‘Gentleman Jack’) Marshall, the first National Minister placed in Charge of the State Advances Corporation, responsible for the Governments housing policies, in Volume One of his Memoirs, published in 1983:

‘Our policy was based on the belief in private ownership. Our election slogan was ‘Own your own’; our objective, ‘A property-owning democracy.’ The emphasis was on providing the opportunity for people to build or buy their own homes. We recognised that, in some circumstances, renting a house was the best and, in some cases, the only way in which a family cold be housed. But we believed (as I still do) that home ownership was to be preferred.’ (p.144).

John Ross Marshall (who would later become Prime Minister of New Zealand), was born in Wellington on 5 March 1912. His father, Allan Marshall, an accountant and a clerk in Wellington when John Ross was born, and was from Perthshire, Scotland and had immigrated to New Zealand when he was twenty-five. His mother, Florence May Ross, had been born in New Zealand though her parents were from Scotland also.

At the age of seven, in 1919, Marshall left Wellington with his parents to live in Whangarei (to Coates electorate - at that time Minister of Railways in Massey’s ‘National Coalition’ (at that time comprising of Reform and Liberal elements), to where his father had been appointed the District’s first Public Trustee. In Wellington, Allan

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Marshall had also been the Brooklyn’s Sunday School Superintendent and Marshall recalls in the first volume of his Memoirs (1983) that:

‘I went, whether I liked it or not, to Sunday School, and then to Church, where I endured the hour-long service with restless patience. But this, at least, can be said, that I went with my parents: I was not sent by my parents.’ (p.22).

The church would later become very important to Marshall when on his own and at University in Wellington. From 1926 until the end of 1928, when his father was transferred to Dunedin, Marshall attended Whangarei High School where he did well in class and at sport. He then attended Otago Boy’s High School, noted the ‘Scottish atmosphere’ and also did well - earning a bursary pass in his fourth year at high school (1929) entitling him to assistance with University Fees for three years.

In 1930, Marshall attended Victoria University College, took Law, and also gained a part-time job as a law clerk with Luke, Cunningham & Clere. In 1930 though, his father also died and Marshall took this news hard, but never really showed this – not then nor later either:

‘The influence of my father on me was persuasive and pervasive, rather than dominating or directive – the influence of precept and example. We had a happy, relaxed father-son relationship. I remember him best in my years of growing and learning, in which he played a formative role, quietly and firmly.’ (p.39).

By 1935, Marshall had completed his Law training, and from then on also studied part-time for an Arts Degree, which he finally completed in 1946 (after war service) – majoring in Political Science.20

In 1939 he took leave from the position he had obtained with the City Solicitor’s Office of the Wellington City Council, and travelled via Australia to Britain. Having travelled around Britain, and with companions that also intended to attend the World Conference of Christian youth in Amsterdam in July of 1939, Marshall and his companions also visited Germany just after the conference – leaving Germany just one week before war was declared.

Marshall then returned, via America, to New Zealand, and in 1941 joined the army and after Officer training was assigned to 36 Battalion in Fiji. He served subsequently on Norfolk Island and in New Caledonia. Then, after five months in the United States for further Officer training, he was posted to join New Zealanders serving in the Solomon Islands. He later, at the end of the war when reinforcements were required in Italy, also served there. It was there that he first met Rob Muldoon who would succeed him later after his short period as Prime Minister of New Zealand.

20 Marshall was the first Prime Minister of New Zealand to have had any ‘real’ education - his predecessors all having left school a long time before he did. It was he, rather than me that made something of this – comparing himself to Holyoake mainly (see his Memoirs).

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When Marshall entered parliament in 1947, he set out in his maiden speech 8 July, that he was an adherent to the principles of Liberalism, and that he saw no worthwhile future for humankind unless persons were free. This whole speech is well worked and is also well worth reading. There is also though, an element of the religious being worked into it:

‘Only a free man can work with his fellows in building a good society, that society where enlightened self-interest and service go hand in hand. The conditions of the good society are liberty, property, and security, and the greatest of these is liberty.’ (see Hansard vol. 276, pages 293-6; or Memoirs, 1983, p.304-309)

From I. Corinthians, X111, verse 13, and from a bible given ‘from his loving grandmother, January 4, 1914’, to this persons expatriate Scottish grandfather:

‘And now abideth faith, hope, charity, these three: but the greatest of these is charity.’ The tide turns.

In 1949, the tide turned, and National, with a majority of twelve seats, took control of the treasury benches for the first time - with Sidney George (‘Sid’) Holland as their first parliamentary leader. The first National Government would last in office until December 1957 (when Labour would govern for a short period again); and their next period in office after that would be from December 1960 until December 1972 (when Labour would again govern for a short period – until 1975). In 1949, the tide also turned for the waterside workers.

In the run up to the 1949 General Election, Holland had promised he would be firm in his dealings with the trouble-makers in industry. There are bitter feelings down to this day for what happened over the next two year, this period finally culminating with wartime like ‘emergency regulations’ being directed at the waterside workers in 1951. These measures were employed after a prolonged strike (called so by the employers and Government, and which, quite rightly, called for ‘deregistration’ and the employment of ‘arbitrationist’ labour); or a lock-out as it came to be called by the strikers and violently protested against.

Within a short time the armed forces were deployed to work the ships, and Prime Minister Holland claimed justification for that and for further measures when he claimed in Parliament early in 1951, that:

‘There was a very determined effort to overthrow orderly government by force and he said that the country was actually at war. The strike was part of the Cold War, engineered by communists to advance their cause and the cause of Russia, another Minister declared.’ (in Sinclair’s History of New Zealand, 1988,p.287).

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Once again, though the larger unions had often played an important role in improving wages and conditions by direct ‘action’ or ‘negotiation’, the weaker unions, who depended more on the arbitration system, offered little support to the ‘wharfies’. Indeed (as has been pointed out before), blows struck at the arbitration system were often considered by many to be blows also struck at them.

And on 26 July 1950, New Zealand had got itself involved in yet another war – this time in Korea. At the end of that year, when families got together again, there was doubtless little concern expressed for the welfare of a few wharfies as opposed to the possibility that family members might yet again end up in the armed forces and be sent overseas to fight again. The last war had only just finished.

On 26 February 1951, Holland’s government declared the strike illegal. ‘Emergency powers’, first brought into being by the Labour Government in 1939 - though never applied fully by them, were enacted. The National Government was enabled to suspend Parliament at its will. And the Labour Party, in Opposition, was powerless to oppose the Government in Parliament.

For the ‘ordinary’ person, there was denial of the right to freedom of speech. No newspaper was allowed to print the waterside workers side of the story. And instead the Government dictated the story to the newspapers. Those that had been accused of being Communists or ‘wreckers’ could neither deny this on the street nor in a newspaper.

And under emergency regulations it was also illegal to supply strikers or their dependants with food, and the strikers, but more so their families probably, soon began to suffer, what must have been felt by them to be extra-ordinary punishment.

If arrested, under any of the emergency measures, there was no right to trial by jury, nor right of appeal against any sentence either. By April 1951, their civil liberties lost (and the civil liberties of many others lost as well), the Watersiders were virtually on their own. When a new port union was formed in Auckland on 28 April 1951, frustration turned to violence. On 30 April, explosives were found primed under a railway bridge in Huntly. The worst outbreak of violence occurred on 1 June in Auckland, when police battoned a crowd of men and women in a ‘no-shame’ (the crowd called) display of excess, that hadn’t been seen since the height of the great depression in1932 - and that wouldn’t be seen again in New Zealand until 1981 and the Springbok tour.

This ‘emergency’ situation ended on 11 July 1951, when the only recently re-assembled parliament was dissolved on the same day, and a ‘snap’ election, called for by Holland, was scheduled for 1 September. Over all, it has been surmised, there must have been approval of the Governments actions against those it called ‘industrial wreckers’ and Communists to boot, as the outcome of this surprise election was an improvement for National on their majority – up four seats to fifty. This gave them a majority of twenty over Labour - more than enough to work with, and gave Labour no show again until Christmas 1957.

The strike/lockout had lasted for one hundred ad fifty-one days. Twenty-six small port unions had replaced the once all-powerful Watersiders Union. Many ‘stood firm’ – and

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those that are left (they are a dwindling number) still do. Although this election has gone down as probably one of the ‘dirtiest’ ever in New Zealand, it is also considered that had Labour been returned to Office in 1949, then they would also not have been spared some sort of showdown with the trade union movement then either.

Maurice Shadbolt, One of Ben’s, (1993), has written of this period and of an inspirational influence that helped him move on from involvement in those events:

‘There was comedy here, though I was slow to see it. The waterfront unions were said to be commanded by communists. They might have been less ruinously heroic if they had been. They were largely led by suicidal syndicalists bewitched by the sound of their own oratory. Communists sensitively dived for cover when trouble began. Persuaded that the revolution was at hand, with counter-revolution hard behind, they left beleaguered watersiders on the barricades and began meeting in obscure parks and in bush clearings outside the city. Otherwise they communicated in invisible ink. That was unnecessary. They already were.

Commotion reached the railways. Soldiers moved on to the waterfront to load and unload cargo. The question was whether railwaymen would handle the tainted goods. It went to a union vote. With fellow comrades I argued the need to back the watersiders; otherwise, we claimed, the trade union movement was imperilled. The vote went narrowly against us. Failure to win railway union backing left the watersiders even more on their own. Goods began arriving from the waterfront the next day. Rather than handle it, I joined other militants walking off the job.

I made a late return to university. I had begun to think journalism a likelier vocational bet than law. The ladder was shorter, the rungs fewer. And Wendy of the shining eyes and plaited hair might be persuaded to surrender herself rather sooner. I walked up Queen Street and into the headquarters of reaction. The New Zealand Herald, to ask for a job. The Herald had been founded in the 1860s with a call for the blood of the insurgent Maori tribesmen; now it was howling for trade union hides. Its evening rival [The Star] was no improvement: it was urging that the police to be armed and empowered to shoot strikers on sight. It was Hobson’s choice. On the promised of eventual promotion to the Herald newsroom, I took employment as a proof-reader. The reading room was a hushed and lifeless place, a series of hutches occupied by ageing men who had joined the Herald with promise of promotion to the newsroom and found themselves settling for less. They wore Harris tweed jackets with leather-patched elbows, and sometimes a faintly sporty pork-pie hat. They talked of unwritten books, chances missed, wives, children and mortgages. They corrected the columns of the Herald with a scornful air.

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My gentle mentor in the maze was a retired British army colonel named Robert H. Neill. Elderly, grizzled and dwarfish, Robert H. Neill gave as little attention as he could to the solecisms of the Herald. Unlike his frustrated colleagues, he didn’t lament his lowly standing in the forth estate; he turned his proof-reader’s hutch into the branch office of Grub Street. Most of his time at the Herald was spent profitably plagiarising the Encyclopaedia Britannica for freelance articles compiled in stylish script. He wrote gripping first hand accounts of events he had never glimpsed. There was no corner of the twentieth century or quarter of the globe left uncoloured by the busy pen of Robert H. Neill; he had been everywhere, done everything, and there was no one to say any different. He was fluent enough to get away with an eyewitness report of Adam’s difficulties in Eden. It was a poor week when he sold fewer than four articles. Though they posed as robustly factual, most were undiluted fantasy. I had met my first professional storyteller. I now suspect he may have been fictional too. ‘I think you want to write,’ he said. ‘Perhaps,’ I said. ‘Would you like me to tell you how?’ ‘Please,’ I asked. ‘There are four rules,’ he explained. ‘Four?’ ‘All of them golden,’ he said. ‘First you don’t talk about it. Second, you park your bum on your seat. Third, you place paper on your desk. Forth, you pick up your pen.’ ‘Then?’ I asked. ‘Then?’ he said. ‘Then? Well, what do you think?’ I was silent. He looked at me with compassion. ‘You write,’ he said. (pp. 160-61).

Shadbolt’s inspirational influence at this point of his life may indeed have been fictional, as it seems Robert H. Neill has left nothing behind (nothing that this person can find anyway?)

Still not good enough reason for change.

In 1949, after the change in Government, Foss Shanahan, the Deputy Secretary of External Affairs, brought the secret meeting with Sir Percy Sillitoe in 1948 to the attention of Prime Minister Sidney Holland. And Holland, not unexpectedly, thought the idea might be timely. Alister McIntosh, the Secretary of External Affairs and Head of the Prime Minister’s Department was consulted, but was still unenthusiastic. There the matter lay as the industrial matters that the new Prime Minister had promised to deal with were occupying his mind.

Following the snap General Election of 1951 (when approval of Holland’s Government seemed more certain), Holland again discussed with Foss Shanahan Sir Percy Sillitoe’s visit to New Zealand in 1948, and his case put then that the destabilisation of western-style regimes had become the modus operandi of the communists so as to expand their blocks. By then Holland was in agreement that this indeed did seem the case.

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At Holland’s direction, an inter-departmental committee of government servants was set up to consider whether it was time that a more professional security service was set up as part of the bureaucracy of New Zealand. Extensive recommendations for such a service were drafted by Shanahan and Reuel Lochore (Head of Security in the Prime Minister’s department since 1949) and were presented to a committee assembled for discussion on 6 December 1951.

Attending this meeting was a representative of Britain’s MI5 and also an Intelligence officer from the Australian Security Intelligence organisation (ASIO) – formed in 1949. Also attending the meeting was Inspector Nalder, then heading the New Zealand Police Special Branch (James Cummings having retired in 1950). Nalder, in particular, was happy that the Police Special Branch might be disbanded as his less professional service’s activities were by then attracting embarrassing publicity. And they would continue to attract more. (Someone else can tell that story).

The recommendations, drafted by Shanahan and Lochore, were found to be broadly acceptable by the inter-departmental committee of government servants, as were the further recommendations of those others attending – one of which was the New Zealand Army’s Director of Military Intelligence, Lieutenant-Colonel Herbert Ellery Gilbert. This was communicated to Prime Minister Holland, and there the matter lay.

Michael Parker, in his book, The SIS, published (it could be said), with the blessing of the SIS in 1979 (though it must be added here that Michael Parker stresses that his book, ‘is not an authorised history of the service…’ p. 8.), makes much of a reluctance on the part of successive Prime Ministers and Members of the Prime Ministers Department for there to be any British involvement with any professional security service set up in New Zealand. And this he traces back to the wartime Security Intelligence Bureau ‘foisted’ on to New Zealand, and headed by a British Army Major, Kenneth Folkes, also foisted on to New Zealand early in 1941, and who had been returned, in late 1942, to whence he came from:

‘In the circumstances Holland’s decision to resist his advisory Committee on Security’s recommendations was extraordinary. The Prime Minister kept the reason to himself. But it does seem, at least in part, to have again been a heritage of the Folkes debacle. A source who knew some of the circumstances of the matter was quite blunt to the author that ‘the Australian Security Intelligence Organisation at this time was being run by the British.’ Hamblen who travelled from Melbourne for the Wellington meeting was also a Briton, when reasonably an Australian might have been expected. Holland may have feared that the British too would try to run a New Zealand service.’ (p. 20).

A spy in the Prime Minister’s Department?

In April 1954, Vladimir Petrov, a diplomat at the Soviet Embassy in Canberra, defected in Australia. Petrov revealed, amongst many things of interest to the Australian

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Government at that time, that he had been told that the Soviet Legation in Wellington had a contact in Prime Minister Holland’s Department in Wellington, and though he didn’t know the name, this contact had been in place for several years.

This news, when passed on via a personal telephone call from Australian Prime Minister Robert Menzies, was not received very well by Holland who confided with his two departmental heads, McIntosh and Shanahan, and with the Department’s Head of Security, Reuel Lochore. Together they proceeded to draw up a list for investigation. The list was comprehensive and excluded only those that had recently joined the Prime Minister’s Department. This list (which no doubt still exists), was then passed on to the Police’s Special Branch with instructions that an investigation be conducted discretely to see if any of those on the list might possibly be this Russian contact.

The investigation turned up no one especially, though eventually it was decided that Dr William Sutch, having returned to New Zealand in 1950, after a lengthy period in charge of New Zealand’s United Nations Office in New York, was the probably the contact Petrov had in mind.

Sutch, a public servant, was at that time an economics advisor to the Department of Industries and Commerce, and although he had had access to the Prime Minister’s Department in that he contributed at times to the decision-making process, he was not, however, a member of the Prime Minister’s department.

Prior to his return to New Zealand in 1950, Sutch had represented New Zealand for three years in New York, during a period when New Zealand wished to initiate some foreign policy objectives of its own. During this time he had been subject to wiretaps by the FBI. In 1949, the American authorities had asked that he be removed and an official from New Zealand had flown there to interview him about this. This official ended up recommending that Dr Sutch be left there to serve out his term, which he did.

Michael Parker, in his work The SIS (1979), has surmised that Sutch’s contact in New Zealand may have been Nikolai Ivanovich Burov, sent to New Zealand in 1949. He does not say how Sutch may have met Burov or if Burov had previously been posted in New York. Burov was if fact posted to New York from New Zealand, not the other way round, and his place was taken in New Zealand by George Sokolov who had not long been in New Zealand before he indicated to undercover agent George Fraser (two days before Petrov defected) that he also wished to defect.

George Fraser did pass this information on to Special Branch but Sokolov was not, for some reason, says Fraser, encouraged to defect (in Seeing Red: Undercover in 1950s New Zealand, 1995, p.89). Fraser also recalls that Burov was warned by someone that one of the persons that Special Branch had wished Fraser to introduce to Burov was also an Intelligence Officer (also in Seeing Red: Undercover in 1950s New Zealand, 1995, p.81). This could have caused problems for Fraser, but Burov surmised (Fraser also recalls), that the Intelligence Officer was probably just as interested in the comings and goings of Fraser as he was in Burov’s. (Whew).

There is a mention of Sutch in Seeing Red (1995) as well:

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‘A particular assignment was for me to attend a student congress in Curious Cove21 a summer camp in the Marlborough Sounds where socialist students were gathered for their annual talk-fest. Dr W.B. Sutch was scheduled to speak on the United Nations; and other speakers included. It was my undercover job to note in detail the main gist of the lecturers’ speeches. This was exhausting work because there was no note-taking by any of the students. I had to commit 90-minute spiels to memory and then consign them to pen and paper22 during the off-programme periods at the camp.’ (p.80). Parker also surmises (though this he calls a ‘more provocative thought’), that Sutch may have met the Cohen’s in New York, and that he may have also assisted them, when they were on the run in America in 1950 (from the FBI), as fall out following the Fuchs affair continued, to enter New Zealand.23 The Cohen’s surfaced in Paris in 1954 where

21 The first New Zealand Universities Student Congress at Curious Cove occurred in 1948 according to James Bertram in his Capes of China Slide Away: A Memoir of Peace and War 1910 –1980, though Marshall recalls it happening in 1949 (in Marshall’s first volume of his Memoirs, 1983, p.126), as he also attended. Bertram recalls that he ‘found [himself] a guest speaker, along with a conservative politician whose future then seemed unlimited, Major John Marshall’. (p.285).22 It’s interesting to surmise where Fraser might have written this down?23 When Stalin was told by Truman near the end of the war with Japan that the Americans planned the use of a new bomb many times more destructive than any used before, Stalin startled him, apparently, not by showing little concern, but by showing little interest. Emil Klaus Julius Fuchs was born in a West German village close to Darmstadt a few years before the First World War began. The family he was born into was Protestant - his father a Lutheran Pastor. At the University of Leipzig he studied mathematics and physics. Later, after his father was appointed Professor of Religious Science at the Teachers' Training College in Kiel, he continued studying at the University of Kiel, and there he joined (as did his father) the Social Democratic Party. After his father was incarcerated (briefly) by the Nazis, he joined the communist Party. The morning after the Reichstag was burned down (supposedly by a Communist, on 27 February 1933), he was making his way by train to Berlin - having been chosen by his branch of the party, to attend a Communists student’s conference there. After the conference he decided not to return home. He arrived in England later that same year - stating to immigration authorities that he was there to study physics at Bristol, which he did. He was registered as a refugee and given permission to stay for the customary amount of time. At the University of Bristol he was taken on as a research student by the German speaking Professor Mott. In 1937, having been awarded his Ph.D. in Mathematical Physics, he was then offered a research scholarship in Edinburgh. There he obtained a further degree, a Doctorate of Science in Theoretical physics, and was awarded, in 1939, a Carnegie Research Scholarship. In 1939 he also applied for English Naturalisation. With the advent of war though, all such applications were suspended, and in 1940 he was interned in England for a short time before being shipped with other internees to Canada. He was returned to England early in 1941 following the intervention of colleagues, in particular by Professor Born. Soon after his return he was offered work by the German-born Professor Peierls at Birmingham University. This work was connected with Atomic energy. In 1942 he applied for English naturalisation again and that was granted. It seems he established contact with the Russians as soon as he realised the purpose of his work. And between 1941 and 1943 he supplied the Russians with an outline of what it seemed possible to construct - that was, a new bomb many times more destructive than any used before. He also supplied the results of calculations of his own on the theory of the gaseous diffusion processes for separating isotopes of uranium, a product of which, U235, might be used in an atomic bomb. In 1943, as part of a British team, he departed England for New York to work with an American group engaged in the same work. The project became known as the Manhattan Project.

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they presented genuine New Zealand birth certificates and a marriage certificate in the name of Kroger at the New Zealand legation and so gained new identities. The ‘Kroger’s’ then travelled to Britain where they were arrested in 1961, charged with espionage there, and sentenced to be jailed for twenty years.

Apart from one or two ‘sumisations’ (if we could call them that) Parker does know what he is talking about. He gives a full account of the operation that led up to the arrest of Sutch, and runs us to the conclusion of the trial:

‘Thursday, 26 September 1974, was one of Wellington’s more miserable evenings. Rain was falling, stout showers slanted by the wind to whip in under umbrellas and drench trousers and stockings. Not a night to be out in.

However, in a tired south-western corner of the city where Holloway Road meets Aro Street beside a small, scruffy park with pohutukawas, some people were about. 8.35 p.m. A suspense novelist’s splendid pen seemed at work; only this was real life, with real people. And what people! Two senior Police detectives, several members of New Zealand’s secret service, two members of Russia’s secret service, a respected former top New Zealand public servant. Each had converged in a surreptitious way. A climactic moment in New Zealand law and criminal history was approaching.

A man was stepping from the passenger side of a Soviet Embassy car, his features, unusual for a Russian, un-Slavic, Dmitri Razgovorov, First Secretary at the Embassy, walked through the rain towards another man standing huddled in a doorway.

Suddenly the Russian startled, his approach interrupted. Detective Sergeant C.W. Lines introduced himself. Razgovorov, now a man in panic, stepped quickly past Lines and began to run down Aro Street. There, a senior member of the New Zealand Security Intelligence Services stepped in front of Razgovorov. The Russian halted.

Lines, now joined by Detective Chief Inspector A.W. Baker and another SIS officer, proceeded towards the Russian’s would-be consort. “What are you doing in this area?” he enquired. “What’s going on?” Lines repeated his question.

In New York his contact with the Russians was resumed by way of a meeting, pre-arranged, with a naturalised American citizen named Harry Gold. Subsequent meetings were arranged between themselves. Fuchs was posted to Los Alamos near the end of 1944, where the final assembly for testing of the Atomic bomb was being made. Early in 1945 he returned briefly to New York, contacted Gold, and handed him notes and sketches of everything he had seen there. Then late in 1945, at their last meeting, Fuchs gave Gold details of the bombs that had by then been dropped on Hiroshima and Nagasaki. The Cohen’s, connected to this business and able to be connected to Gold, went on the run after Gold was arrested after Fuchs, presented with evidence that he had been helping the Soviets, ‘surprisingly’ confessed to this also - on 13 January 1950 (see The World’s Greatest Spies & Spymasters, 1984, p.82).

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“I’m out for a walk. I have a bad heart and I’m out for a walk because of my condition.” Lines, Baker and the SIS officer looked at the rain. “What’s going on?” the man asked again. “What is the purpose of your meeting with the Russian Razgovorov?” Lines asked. “Meeting a Russian? Preposterous!” “It is alleged you have been meeting a member of the Russian staff at other times and in other places in Wellington,” Baker said to the man. “Preposterous!” he was to repeat the word in reply to more questions. Razgovorov was still standing in the sweeping rain down the road, his diplomatic immunity safeguarding him from the police, but being questioned and lectured by the senior SIS officer. Quickly the other man was taken away in a police car. His office and home were searched. A diary was taken away. He continued to deny strenuously any previous or intended meeting with the Russian. It was all preposterous, all lies. At 4a.m. he was arrested.

Later24 an incredulous country heard or read that Dr William Sutch, former secretary-economist to Finance Minister Walter Nash [and Gordon Coates] in the First labour government, former secretary-general of New Zealand’s United nations office in New York, former head of the department of Industries and Commerce, present chairman of the Queen Elizabeth II Arts Council, and economic consultant in private practice, has been charged in a Wellington magistrates court under the 1951 Official secrets Act, in effect with being a spy. It was the first time a criminal charge had been laid under this Act. The charge, to which Sutch was not required to plead, was that between 18 April and 26 September 1974 for a purpose prejudicial to the safety or interest of the State, he obtained information calculated, or that might be, directly or indirectly useful to an enemy.

Depositions would be taken four weeks hence. Sutch was allowed bail at $500 with a condition that he report daily by telephone25 to the police. He had to surrender his passport.

Almost immediately, political rumblings started. Attorney-General Dr Martyn Finlay,26 who had authorised the prosecution of Sutch, a man always close to the labour Party, described the Official Secrets Act as a restrictive, even oppressive Act.

24 Two days later.25 Dr Sutch was unwell.26 It was Attorney-General Dr Martyn Finlay that led the charge in the International court in the Hague against the French who were testing their Nuclear Weapons in the atmosphere of the Pacific. The Court agreed that they should stop, but the French said they would not. New Zealand then sent, in 1973, the frigates Otago and Canterbury into the French test zone, which, while this did not stop the tests, the resulting publicity ‘startled’ the French and they at least ceased testing their bombs in the atmosphere.

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Acting Prime Minister Mr Robert Tizard,27 who had never liked the SIS, said the possibility of revising the Act was likely to result from the case against Sutch. All this before any of the evidence had been presented. The Minister’s timing was, to use a favourite Sutch word, a bit preposterous. But their words, and the actual charge, did raise the question in people’s minds: just what was the Official Secrets Act?

Although this was the first charge laid in the twenty-three years since it had been put on the Statutes Book, the Act had if fact been in wide use. Almost every public servant (there were about 77,000 of them in 1974) has to sign a declaration under the Act not to disclose information from his government work to any unauthorised person. The Act itself, thirteen pages long, is something of a hotch-potch of security don’ts: spying; unlawful use of uniforms; forgery; personation; false documents; wrongful communication of information; interfering with police or persons on guard; harbouring spies.

Section three, Spying, reads: “If any person for any purpose prejudicial to the safety of the State or interests of the State,a) Approaches, inspects, passes over or is in the neighbourhood

of, or enters and prohibited place; orb) Makes any sketch, plan, model or note which is calculated to

be or might be or is intended to be directly or indirectly useful to an enemy; or

c) Obtains, collects, records, or publishes, or communicates to any other person any secret official code word or password, or sketch, plan, model, article, or note, or other document or information which is calculated to be or might be or is intended to be directly or indirectly useful to an enemy -

He commits an offence against this Act and shall be liable on conviction on indictment to imprisonment for a term not exceeding 14 years, or, in the case of a company or corporation, to a fine not exceeding £5000.”

Section Four, the actual section of the Act under which Sutch was charged,28 reads: “In any proceedings against a person for an offence against Section Three of this Act the fact that he has been in communication with, or attempted to communicate with, a foreign agent, whether within or outside New Zealand, shall be evidence that he has, for a purpose prejudicial to the safety or interest of the State, obtained or attempted to obtain information which is calculated to be or might be or is intended to be directly or indirectly useful to an enemy.

27 It was Labour MP ‘Bob’ Tizard that drove the first tractor up the steps of Parliament.28 Not at first according to the New Zealand Herald of Saturday 28 September 1974: “Sutch, aged 57, described as an economic consultant, was charged, that on or about April 18 and September 26 at Wellington, for a purpose prejudicial to the safety or interests of the State [that] he [actually] obtained information which was calculated to be or might be, or was intended to be, directly or indirectly useful to an enemy.’ (see above in main text after footnote 2).

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A person shall, unless he proves to the contrary, be deemed to have been in communication with a foreign agent if –He has, either within or outside New Zealand, visited the address of a foreign agent or consorted or associated with a foreign agent; orEither within or outside New Zealand, the name or address of or any other information regarding a foreign agent has been found in his possession, or has been obtained by him from any other person.”

This section of the Act goes on to say the expression ‘foreign agent’ includes any person who “is or has been or is reasonably suspected of being or having been employed by a foreign power, either directly or indirectly, for the purposes of committing an act, either within or outside New Zealand, prejudicial to the safety or interests of the State, or who has been or is reasonably suspected of having, either within or outside New Zealand, committed or attempted to commit such an act in the interests of a foreign power.”

Dr Sutch, no doubt, had been reading that passage, and suggesting ideas to his counsel on ways to combat the charge. Sutch had always been a man of ideas, and he spoke them. Some were controversial, some were fugacious,29 some made sense. An enigmatic man. It was easy in 1974 to cast the mind back to what had seemed to be his forced retirement in 1965 from his position of Secretary of Industries and Commerce. After all, he had only been 57 years old then, and the Public Service Association in September 1964 had said the Government was bringing pressure to bear on the State Services Commission to retire him.

And when he died, only seven months after his trial, other people expressed their ideas of the man. In one keen paragraph the former Secretary of Justice Dr J. L. Robson,30 writing in the New Zealand Listener in October 1975, would perhaps get as close as anyone would publicly to explaining the mind of Sutch: “A point with a flimsy factual base would be put by Sutch with such eloquence as to be irresistible, at least for the time being. A scrupulous regard for accuracy would have destroyed the poetic nature of his utterance, but, of course, this did not leave everyone amused.” Mr Muldoon in his 1977 autobiography Muldoon was to write that “having read the detail of the material that

29 Fugacious: Fleeting, evanescent, hard to capture or keep… (in any dictionary).30 John Lochiel Robson together with Jack Shallcrass edited and published a collection of essays entitled, Spirit of an age, in honour of Dr Sutch in 1975 (Shallcrass’ essay appears at the beginning of this work above footnote 1). It was Robson, as Secretary for Justice, who in 1960 also pushed hard for the setting up of a citizen’s appeal authority based on a Scandinavian example. This authority, the Office of the Ombudsman was established in 1962 with Sir Guy Powles (a former leading public servant - knighted in 1961) appointed as New Zealand’s first Ombudsman. Since then it has been the ‘task’ of the Office of the Ombudsman to investigate, when complaints are received, the ‘actions’ or ‘in-actions’ of government departments (of which the Security Intelligence Service is one) and also to make recommendations to the government. The powers of the Ombudsman have since been widened and now also include investigating the ‘actions’ or ‘in-actions’ of local government and their departments. He retired in 1977.

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is available to the NZSIS,31 and the full report of the Ombudsman on his investigation into the SIS I have not the slightest doubt that Sutch was in close touch with the representatives of the Soviet Union from at least the 1930s until the time of his death.”

Depositions were taken on 23-24 October. At their end Sutch formally pleaded not guilty to the Official Secrets Act charge. The presiding Magistrate found there was a case for Sutch to answer, and committed him for trial in the Supreme Court. Bail was renewed. National interest in the two-day hearing had been great. Here were officers of the Security Intelligence Service out from under cover, actual faces, voices and mannerisms, if not names. There was one thing missing from the prosecutions case: details of the information Sutch had passed to the Russians during his various meetings with them. But new evidence was promised for the Supreme Court trial.

The whole affair was becoming too embarrassing for the Russians, though. Razgovorov and the man who had driven him to the Sutch meetings, Vitaly Pertsev, who was listed as an Embassy superintendent, had been confined by Prime Minister Rowling to the Soviet Embassy since 26 September. Now they suddenly fled the country. (Another involved in the case, Boris Belousov, Second Secretary at the Embassy, also left the country.) The two Russians, Rowling said on 24 October 1974, had been “engaged in activities which are incompatible with their status as members of a foreign mission.”

The Supreme Court trial in Wellington began on 17 February 1975. From about 50 prospective jurors a jury was selected, after challenges to a number from both prosecution and defence counsel. After the trial it was to be alleged that “market researchers” had a list of potential Sutch jurors weeks before it was legally available, and that many on the list had been approached before the trial by persons claiming to represent unidentified market research groups.

From the bench Mr Justice Beattie, in wig and gown, looked down as Sutch again pleaded not guilty. The Crown prosecution team consisted of the Solicitor-General Mr Richard Savage and Mr D. P. Neazor, and the defence team of Mr Michael Bungay and Mr I. A. Grieg. On the press bench were no fewer than fourteen journalists. His Honour warned there were to be no photographs taken or sketches made of the Security Intelligence Service officers appearing as witnesses, and they were not to be named in any publication or broadcast.

31 The New Zealand Security Intelligence Service was known as The New Zealand Security Service from 1956 up until the 1969 NZSIS Act, which followed an enquiry into the ‘Godfrey affair’. Briefly, an agent by the name of Godfrey had been attending Auckland University during 1966 to study, and had also been enquiring of students about other students and their associations. This caused a ‘public fuss’ and brought the existence of this ‘secret service’ more out into the open. Prime Minister Holyoake later acknowledged the Service’s existence and following the 1969 NZSIS Act the NZSIS received its statutory recognition.

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Opening the Crown’s case, Mr Savage said the purpose of the Official Secrets Act was to protect the security of New Zealand. He explained what ‘enemies’ meant in the section of the Act under which Sutch was charged: “It is not to be supposed that New Zealand is so universally loved that we have no enemies.” The kind of information that might be useful to an enemy did not relate only to matters of defence. Information concerning the economic well-being of the country could be relevant, he said.

The first witness was a constable from Police Headquarters photography section with a series of photographs of areas where Sutch was alleged to have met Razgovorov. Then into the witness box came an attractive girl, in the employ of New Zealand Textiles and Woollen Mills Association and Sutch’s secretary. She produced a diary, which she said was in Sutch’s handwriting. It gave cryptic entries for Wellington meeting places, usually at 8.30 p.m., usually a Thursday: on 18 April, 23 May,32 20 June,33 25 July,34 28 August35 and 26 September 1974.36 To Mr Bungay she agreed that Sutch did much private economic work. And, yes, he did take left-over milk at the office home with him at night, she agreed further.

The first Security Intelligence Service officer was code-named Mr S. His fellow officer witnesses were to descend through the rest of the alphabet (though skipping over U. It would have raised some smiles, ‘now then Mr U’...). Savage in his opening statement had referred to a letter Sutch had sent to the Attorney-General [Martyn Finlay] three weeks after his arrest. After his initial denials he had in that letter admitted some of his meetings with the Russian. He had been approached early in 1974 at some function by a Russian whose name he did not know, and who said he wanted to speak to him about the Zionist movement in New Zealand, Sutch had written. Now in slow, stolid details these meetings between Sutch and Razgovorov were described to the court by SIS officers. Service officers, unlike policemen, are inexperienced in giving Court evidence and were laborious in their accounts of movements and shadowings.

For two days judges and jury were taken in their minds up and down back-street footpaths of Wellington, in and out of taxis, up the cable car, through red traffic lights – while following a Russian Embassy car – into and out of garage doorways. They were told that the service had watched Razgovorov, when it was necessary, since he had entered New Zealand in January 1974. These night meetings between Sutch and the Russian were usually not of any length. Razgovorov was revealed to have spoken to Sutch on 25 July in a carport in Glen Road, Kelburn, departed

32 Thursday - five weeks from 18 April.33 Thursday – four weeks from 23 May.34 Thursday - five weeks from 20 June.35 Wednesday – five weeks from 25 July and three days before Kirk died.36 Thursday - four weeks from 28 August.

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briefly to talk to another Soviet diplomat in a car parked nearby, who had then driven away to the Soviet Embassy, Razgovorov returning to Sutch for further talk.

At the 28 August meeting, in Hopper Street, Sutch was seen by Mr Y while with Razgovorov to raise his right knee and balance on it a briefcase, which he was carrying, for about 30 seconds. The two parted company after about two minutes. Mr Y said he was not able to see if Sutch did anything with the briefcase other then rest it on his knee. The defence was to tell the Court Sutch was steadying a partly filled bottle of milk he had taken home from work. Razgovorov had walked, than trotted back to his car37 from that 28 August meeting and driven off at a fairly brisk pace, the prosecution said.

Bungay in his cross-examination probed for discrepancies between SIS officer’s words now and their evidence last October in the Magistrates Court during depositions. Here and there he did find a difference, but not to a degree to embarrass the prosecutions case. He received “No” to a question whether electronic listening devices were concealed in any of the neighbourhoods where Sutch and the Russian were to meet. Nor were cameras used that could take photographs at night.

For the many people up and down the country reading the

Newspaper’s reports of the trial evidence there seemed something missing from the drama: a history of the man Sutch that would somehow link him with these weird events – or was there none? Had these clandestine meetings in the dark really been just to talk about Jewish activism? The Security Intelligence Service officers were not to deal with past activities. That would have to wait until Professor Keith Sinclair, professor of history at Auckland University, published his 1976 biography of Walter Nash.38

37 Weather as well?38 Dr Sutch was only ever influential when he was in the company of Walter Nash - a very influential person himself. On the inside of the cover of Professor Keith Sinclair’s biography, Walter Nash (1976), it says that: ‘WALTER NASH (1882-1968) was a member of the New Zealand parliament for almost forty years, Minister of Finance for fourteen years [1935-49], Leader of the Opposition for nine years, and Prime Minister for three [1957-60]. He was among the most influential of the group who from 1935 made the New Zealand welfare state as it still largely exists. He was one of the few political leaders to be known internationally. Nash was a compulsive collector of paper, keeping every report, every letter, every memo remotely bearing on his life and activities. His papers make the most complete source for the life of any New Zealand politician as well as for political events of the century.

Keith Sinclair traces Walter Nash’s development from his youth in Kidderminster and Birmingham, through his years as a young immigrant businessman in Wellington and New Plymouth. He shows how Nash’s idealism was fed by his commitment to the Anglican Church, liberally interpreted with the aid of the Christian Socialists, of Ruskin and Tolstoy. He shows, after Nash has attained office, this idealism and determination to build a more just society grappling with the practical problems of finance, balance of payments, trade, war, and international relations.

Besides being by far the best account of New Zealand politics in the last half century, this book throws continual light on a man whose enthusiasm, drive, and personal quirks aroused admiration laced with exasperation in those who worked with him. It is a major work and, as would be expected from the

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Professor Sinclair had access to all of Nash’s many personal papers. Amongst these papers were several Security Service advices and recommendations which, within ministerial guidelines, should have been returned by Nash to the Service after his perusal. The Prime Minister, inveterately acquisitive, had in fact kept them, and thus years later exposed his friend William Sutch. The Security Intelligence Service now requested the return of the Sutch security papers to it, and duly received them. It also requested excision from the book of those few passages which related facts contained in the security papers. To their credit both Sinclair and the publisher refused, although one suspects the Service didn’t push the matter too hard.

The three most important revelations about Sutch in Sinclair’s book were: In 1937 Sutch, as secretary-economist to Finance Minister Nash, accompanied Nash to a London meeting of the Committee of Imperial Defence; there material on security in the pacific, the subject of discussions at the meeting, was leaked to a British Communist newspaper. Sir Maurice Hankey, Secretary of the Committee and Secretary-General of the Imperial Conference, said grave suspicion fell on Sutch. (It is my information that the phrase “grave suspicion” which Sir Maurice, one of the Premier statesman39 of this century, used of Sutch was the diplomatic way of identifying before those present the New Zealander as the culprit. In broader perspective, the conference discussed various plans that were in force and proposals that were before it to give greater security to Pacific nations. New Zealand, obviously, was vitally concerned in this. It was just two years to the outbreak of War. The Fascist and Communist powers, Nazi Germany, Japan and the Soviet Union were potential enemies, the first two more so than the third. It is an interesting conjecture which of these Sutch intended publication of these defence details to aid. That it was a Communist newspaper may not be relevant here, for no other British

author, highly readable.’39 Maurice Hankey was born in Biarritz (an Atlantic coastal town on the border of France and Spain - near San Sebastian and in Spain) in 1877, and was educated at Rugby School before receiving a commission into the Royal Marine Artillery in 1895. He remained in the Royal Marine Artillery until 1901 when he then became involved in naval intelligence - eventually rising to become Secretary of the Navy. In 1908 Hankey was then appointed Assistant Secretary to the Committee of Imperial Defence - established in 1902 by then Prime Minister Arthur Balfour, who later became a firm friend of Hankeys’. The purpose of the Committee of Imperial Defence was to co-ordinate strategy and defence planning throughout the Dominions, and although it ‘signally’ failed in this capacity this was said to have been no fault of Hankeys’. In 1912 Hankey was made Secretary of the Committee of Imperial Defence – always chaired by the Prime Minister of the day. It is said that each Prime Minister ‘came to realise and then depend upon Hankey's capacity for the necessary minutiae of Cabinet government, not to mention his outstanding organisational talents’. Described as a ‘man of ideas’ Hankey was also enthusiastic about and instrumental in developing the tank in 1916. Despite his retirement in 1938 he was recalled to serve in cabinet as a Minister without portfolio at the outbreak of World War Two. Then, when Winston Churchill became Prime Minister in 1940, Hankey was appointed by his friend and former colleague to be Paymaster-General (1941-1942). He died aged 86 in 1963. (see First World War. com - Who's Who - Maurice Hankey.).

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newspaper would have published secret plans that would endanger the security of the Dominion.)

In the late 1940s Sutch was a member of the New Zealand delegation to the new United Nations Organisation in New York and there were Federal Bureau of Investigation reports that he had contacts and meetings with Communists. (It is my information that the contacts Sutch had in New York in the late 1940s with Communist agents were sustained ones. Sutch was for three years, 1947-50, a New Zealand representative to the United Nations, was in fact in charge of our U.N. office. Western strategies and plans were on his desk. Who made the first approach, Sutch or Soviet secret police operating in the U.N. under diplomatic cover, is not known. The Soviets would have taken careful note of Sutch’s 1937 personal endeavour. The New Zealander now held a key international post. It is further my information that for some time in New York there was definitely an illegal FBI telephone ‘tap’ on Sutch, and that Sutch’s name was recorded in the foreign agents registration section of the Justice Department. In this section were filed FBI reports on investigations of espionage in the United States.)

Nash when he became Prime Minister at the end of 1957 was informed by the Security Service that the National Government had very recently blocked Sutch’s promotion to head of the department of Industries and Commerce because the United States had said it would regard New Zealand’s security as suspect. Nash, however, appointed Sutch head and did not discuss with Minister of Industries and Commerce Philip Holloway, or raise in cabinet, the advice of the Security Service.

Now detective Senior Sergeant Lines entered the witness box. Minds were cast back to the October depositions and the promise of new evidence about information Sutch may have passed to the Russians. After recounting Sutch’s interrogation and arrest – and that Sutch had denied, after long thought, he was “on the hook” with the Russians – Lines agreed in response to a question from Bungay that after Sutch’s arrest extensive enquiries had been made in New Zealand and abroad. Had some of these enquiries been trying to produce some evidence to show what information the accused could have had in his possession which could have been useful to other powers? The enquiries were something along those lines, Mr Lines responded to Bungay.

Detective Chief Inspector Baker detailed the 26 September showdown, and the search of Sutch’s home and office. The prosecution’s case rested.

On his counsel’s advice Sutch did not take the witness stand in his own defence. So the Hon. Philip Holloway, Minister of Industries and Commerce when Sutch was appointed Secretary to the department, came forward to say there had never been any question of Sutch’s loyalty to New Zealand. The Ombudsman, Sir

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Guy Powles, present under subpoena, said much the same thing. Ms Shirley Smith, the accused’s wife, became the second witness to tell the court Sutch brought home left-over milk from the office.

Friday 21 February was the last day of the trial. Savage in his final address to the jury said it was “of the greatest importance to the country’s independence, integrity and security that any of its enemies should not be able to obtain information useful to them and prejudicial and harmful to us. That is why there are laws against spies and spying.” Section Four of the Official Secrets Act said, in effect, that communication with a foreign agent would be evidence of obtaining information which might be useful to an enemy. “If it is shown that there has been communication with a foreign agent, then that fact is evidence of a crime being committed.” Four of the meetings between Sutch and the Russians were of a clandestine and surreptitious nature. They were just not compatible with an innocent explanation, Savage stressed. Sutch after his apprehension had told the Police “monumental lies”. At the 25 July rendezvous Razgovorov had broken off conversation with Sutch to converse with another Russian in a diplomatic car. “If you have unlawful information you arrange to have it taken away in safety,” Savage concluded.

Bungay in his closing speech pointed out that ten years had elapsed since Sutch was head of the Department of Industries and Commerce. Why had the Crown not called evidence about what information could be obtained from there? “I suggest the answer is that they tried and failed, and are therefore inviting you to make a deduction.” Bungay said if the accused did obtain information, where was that evidence, what was the information, where did he get it from? “How could anyone say, without knowing its character, what it was? Doesn’t the trial stop there, really, in the practical sense?”

Mr Justice Beattie told the jury the case was an important one, the first of its kind [and the last] the country had known. Carefully he went over the evidence, and through section Four of the Official Secrets Act. Shortly before 2 p.m. the jury retired.

The twelve jurors spent more than seven hours deliberating. Then the foreman stood up to announce: “Not guilty”. (pp.142-154).

Parker added in his book, The SIS (1979), that:

‘The true facts of Soviet history since 191740 are of course never admitted to the Soviet people, and every endeavour is made to conceal them. Even the Russian regime could not survive the admission that it is what it does. Truth, therefore, is the great enemy, an enemy easily bested when the dissembler has all

40 Since the October Revolution.

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the organs of communication in his own hands. We in the West, however, have the privilege of a free press, and the Soviet Government must practise cunning and chicanery to have the same ‘facts’ of home consumption portrayed in the Western democracies.’ (p.173).

An unfortunate name.

That the right hand always knew what the left was doing wasn’t always the case. And Marshall recalls that he only became involved in the formation of New Zealand’s security service when Sid Holland asked him if he knew anything about ‘security’ - to which Marshall, by then Minister of Justice and Attorney General in Holland’s government, says that he replied ‘not much’.(in Volume One of his Memoirs, 1983, p.242).

Marshall was then set to work with Sam Barnett (Secretary for Justice) and Alister McIntosh (Head of the Prime Minister’s Department and Secretary of External Affairs) so as to rectify this. Marshall says they soon found that they didn’t have far to go as an inter-departmental committee of government servants had already produced comprehensive recommendations for a professional security intelligence service in 1951 – the work of Shanahan41 and Lochore.

Using this work as a basis for their own, Marshall, Barnett and McIntosh presented their recommendations to cabinet (date not mentioned by Marshall):

‘We recommended that a small independent security service should be established, accountable only to the Prime Minister. The service should neither seen, nor heard, nor publicly identified. Its expenditure should be buried in the Justice Department estimates.42 The staff should be highly qualified, and academically trained, and before being appointed they should be subjected to a rigorous investigation as to their integrity, loyalty, reliability and judgement.’ (p.243). This time Holland decided to proceed, and by Direction of Government, the New Zealand Security Service (NZSS) came into being on 28 November 1956, with Sam Barnett as first interim head, and interim head also of Special Branch, while new staff was being sought for this more professional service.

Marshall does not mention Petrov at all, so it may well have been that he was not privy to the fact that an investigation had been carried out by the Special Branch to enquire into whether or not the Russians did indeed have a contact in the Prime Minister’s Department. Instead he mentions problems that had developed concerning the Police in general, and that Sam Barnett had had to tidy a few matters up…

Marshall also found that he did not have to look far for a Head for the new service, as one of those, he had noted, that had also made up that first inter-departmental committee

41 Shanahan had, by then, been posted overseas – to Singapore.42 This was recorded as Prison Officer overtime.

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on security and intelligence in 1951 had been the New Zealand Army’s Director of Military Intelligence, Lieutenant-Colonel Herbert Ellery Gilbert – by then Brigadier Gilbert, and at that time located in London.

Marshall and Gilbert had first met near the end of the war in Italy. Gilbert was recalled to New Zealand by Marshall, asked if he would like to head the new service, and then when he had agreed, he returned to London for induction into all matters concerning security by MI5. Left in charge of the new security service during that interim period was Reuel Lochore who, with Foss Shanahan, had drafted the original recommendations for the service in 1951.

Reuel Lochore was openly anti-British and some thought that some of this could be put down to residual sympathy for the ordinary folk of Germany. At least that is the reason given for his clashing with Gilbert on his return from Britain in 1957, from where, Gilbert had decided, some of the staff for the new service would also originate. Lochore was very much against this – of the opinion that only New Zealanders should staff the new service. Michael Parker, in The SIS, comments on the outcome of what he calls a clash but which could also have been described as a ‘struggle’:

‘Lochore, although only temporary head, may have left the service sooner than he might otherwise have done.’ (p. 46)

For Lochore, starting from scratch again was also not advisable, and that is also one of the reasons why he did not easily give up control to Gilbert. There is no mention anywhere of Lochore putting forwards alternate staff (New Zealanders already active on his behalf and also on Special Branch’s behalf as well) for the new service either, though he did do this. No mention anywhere, either, of one of those put forwards by Lochore (possibly more than one as well, but we don’t know if this was so) receiving an anonymous letter shortly after an interview threatening public exposure by way of a broadsheet if they didn’t desist from ? as well.43 There is mention though, that Lochore, from 1951, when he first envisioned such a service, had wished to lead it.

Not a lot has been written about Lochore or about his credentials. And the little that has been written about him has sometimes defended him, but more often attacked him. More on a positive note has been written about his wife, Dorothy, whom Lochore met following her return to New Zealand from study in Italy in 1939, and married early in 1940.

Dorothy Ida Davies was born at River Bank, Wanganui, in 1899. She was the seventh of eight children and the only daughter of her English born parents - David and Martha Davies. Dorothy had a solid musical background beginning from the age of four when

43 This person, a young and gifted linguist, was passed on to Lochore by Nicholas Danilow, probably, as we know that he knew them both well. Lochore was replaced as Languages Master at Scott’s College by Nicholas Danilow (born Riga, Latvia), who arrived in New Zealand (via Vienna, then Britain), at the beginning of 1939. From 1942 Danilow also lectured part-time in the Department of Modern languages at Victoria University College, being then and for the next three years in sole charge of teaching German. In 1945 he introduced lectures in Russian at Stage I and extended the course to Stage II in 1949 and to Stage III in 1951. He lectured full-time from 1956, was made an associate professor in 1964, and retired in 1967.

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her passion for music was noted. Dorothy attended Wanganui Girl’s College (from 1915 to1918) and Sophia Redwood, the schools well known music ‘mistress’, encouraged this interest. In 1924, Dorothy gained a place at the New South Wales State Conservatorium of Music in Sydney and completed their five-year course on chamber music in four years. At graduation she was awarded the prestigious Yvonne Charvin prize, and also the conservatorium’s teaching diploma.

Back in New Zealand, in 1928, Dorothy was appointed musical librarian and pianist with the Christchurch Broadcasting Trio, live on station 3YA four nights a week. In 1931, she travelled to London to study at the Royal College of Music, and on completion of her studies, in 1933, was named an associate of the College. From there she joined Artur Schnabel and his wife Therese Behr at their home at Tremenzo, on Lake Como, in Italy, to study and to play. And when the Schnabel’s felt forced, in late 1938 by growing anti-Semitism, to leave Italy, Dorothy encouraged them to tour down under, and so ended up, after touring with them in Australia, back in New Zealand herself in 1939.

By 1939, Reuel Lochore had gained employment with the Government as Officer in Charge of Aliens. This position, which lasted until 1946, saw Lochore responsible, during the war years, for the surveillance of all immigrants from countries aligned to Germany. He also had responsibility for the vetting of all non-British immigrants applying for New Zealand citizenship during that period as well. And he also assisted the police to investigate potential fifth columnist activity of which there were numerous reports. Prior to 1939 Lochore had been employed as a teacher at Scott’s College, Wellington, following his return to New Zealand from study in Germany in 1936. Reuel Anson Lochore was born in Stratford, Taranaki, in 1903. His father was a Methodist minister and a teacher of the deaf. One of Reuel’s first cousins, through his mother’s side of the family, was Rewi Alley - this might go someway towards explaining both of their unusual first names. From an early age Reuel did well academically – this despite the family, due to his father’s calling, being moved around a lot. Finally, feeling settled at Frank Milner’s Waitaki Boy’s High School, Reuel began to excel. In his final year there, in1920, he was made dux of the college and was also granted the Earl Meath Cup for essay of the year, competed for ‘empire-wide’. The trophy was duly presented to him at the school by the Governor-General, the Earl of Jellicoe, who made a special trip there to do so.

Granted a Junior National scholarship, Reuel went from Waitaki to Auckland where he enrolled as an Arts student at Auckland University College in 1921. There he attended lectures in Philosophy, Psychology, English, French, and Latin, and graduated with a Batchelor of Arts degree in 1923 with a first class pass in each of these subjects. Along with these first class passes Reuel was also awarded another scholarship for outstanding success in English language and literature. From Auckland, following a brief period teaching, Reuel next enrolled, in 1925, as a Masters student at Victoria University, in Wellington. And in 1926 he graduated from Victoria, a Master of Arts, with First Class Honours in French.

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By then Lochore had decided his vocation was teaching and this he did between 1927 and September1930, at Wellesley College, in Wellington – up until he then decided to travel to Germany to further his studies. In Germany, Reuel studied first at the Institut fur Auslander (the Institute for Foreigners) in Berlin; next at the Institut der Volkerpadagogik (the Institute for International Education) in Mainz; and then from 1931, at the University of Bonn, from where he graduated, in 1935, after having been awarded a Doctorate by the Philosophical Faculty there.

Lochore then returned to New Zealand where he taught languages (German, French and Latin) at Scott’s College, Wellington, from early 1936 up until the end of 1938, when he then gained employment with the government as Officer in Charge of Aliens. In that position Lochore’s interest in languages was further stimulated and by 1946, when he was offered another sensitive government position, he was by then fluent in Italian, as well as his French and German, and could also translate most European languages (including Russian) into readable English. On the strength of this, and of his work during the war, he was then, between 1946 and 1949, employed as Translator for the Government and also as the government’s Naturalisation Officer.

Then, when the first National Government, under Holland, came into office in 1949, Lochore was made Officer in Charge of Security in the Prime Ministers Department by Holland. In that position, Lochore was to be responsible for the vetting and surveillance of all members of the Government’s various departments and agencies. We can surmise that this was a measure thought necessary by Holland, as the infrastructure of Government present when National first took office, had been built up during Labour’s prior fourteen year period.

There is no mention anywhere of how Lochore went about his work when he was Head of Security in the Prime Minister’s Department, but it seems reasonable to surmise that he may have been feared. He was meant to report to the Deputy Head of the Prime Minister’s Department, Foss Shanahan, or failing that, to the Head of the Prime Minister’s Department, Alister McIntosh, but sometimes he reported directly to Prime Minister Holland himself.

There was one New Zealand diplomat sacked during Lochore’s period in charge of security in the Prime Minister’s department, and there was the forced resignation of two others. Others, one of them Sutch, about whom there was suspicion of, Lochore gave the benefit of the doubt, and did not recommend that they be asked to resign. That Sutch was allowed to continue with his career after Petrov’s defection, and Menzies’ subsequent phone call to Prime Minister Holland, suggests that Lochore’s approach to his work was at least rigorous. It also says something for Sutch, and perhaps for Holland as well - as the Americans were not the only ones that had pointed the finger at Sutch prior to then.

In October 1936, Sutch, as Secretary-Economist to Finance Minister Nash (he had formerly been Secretary-Economist to Coates), had accompanied Nash to Britain. Nash had hoped to persuade the British to enter into bulk-trading agreements with New Zealand, so as to protect, if he could, New Zealand farmers, from future over-exposure

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to world market conditions that might again lead to countrywide depression. By all reports, Nash encountered condescension and even hostility as regards this matter, but he persevered, calling on whomever would see him and at whatever time they would agree to. Suffice to say, so far as trade negotiations of any substance went, Nash ended up with quite a bit of time on his hands, as did those that accompanied him.

Keith Sinclair, in his biography, Walter Nash (1976) recalls that:

‘The trade discussions concluded without any general agreement, whether bilateral or revising Ottawa.’ (p.149).

Sinclair also recalls that Prime Minister Savage’s conclusion, at the end of negotiations (some of which he attended with Nash), was that the encouragement of secondary industry in New Zealand was something that would just have to be got on with:

‘[After] trade negotiations Savage made a blunt, simple summing up of the situation. The New Zealand population ‘must be able to earn its living, either in primary industries or in secondary industries. If New Zealand’s production of primary goods were to be restricted by levies or quotas, New Zealand must embark upon secondary industries or find other markets for its primary goods. It was now obvious to labour ministers, as it had been to Coates, that the British market was limited. New Zealand was being thrust into economic development and independence. A world war was soon to intervene, preventing market diversification, though encouraging industrialization, but in the long run New Zealand had to pursue both the options that Savage mentioned.’ (p.148).

On the visit as a whole, Sinclair, in Walter Nash (1976), went on to say that:

‘[Any] account of Nash’s trade negotiations gives no impression of the range of activities of his staff and himself on one of the most prolonged of New Zealand ministerial mission, certainly in this [20th] century. Dr Sutch helped to investigate the sugar beet industry, tyre manufacturing, council housing, dairy produce marketing, and so on. A research officer, Mr Harold Innes, went to England separately, on a half secret mission, at Nash’s request. One of his tasks was to spend long hours checking records for evidence of linked directories between British companies trading in New Zealand, and between these and American or New Zealand companies. This was one of Nash’s old interests. He wanted to find out far companies spoke with the voice of monopoly or cartel. He had a splendid memory and the information Innes gleaned was very useful.’ (p.149).

Sutch may also have idled some of his time away at this task though if he did he may have been more conspicuous. Later, when he had more time on his hands, he would write a book entitled, Takeover New Zealand (1972), which delighted no one, and he also produced a booklet in 1973 entitled, Who Owns New Zealand? The genesis of these particular publications may have been Sutch finding himself in London at times, and

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with large amounts of time on his hands as well. Its further genesis may even have been the death of Nash in 1968. There was only one more publication after the booklet, Who Owns New Zealand? (published in 1973), and that was Women with a cause written by Dr Sutch to mark 80 years since women first got the vote in New Zealand - first published in 1973, and re-run in 1974.44 Altogether there are the 1000 ‘items’ published and attributable to Dr Sutch, ‘some of which contain personal reminiscences.’45

Sinclair, in Walter Nash (1976), continues on this theme, and on the overseas mission as a whole: ‘Mr Innes recalled one of his minister’s striking characteristics, and astonishing ability to turn from the important to the trivial without any sign of noticing. He was shocked at the price charged by Moss Bros. For the ‘glad rags’ that Savage and he had to hire for formal occasions, and told Innes to check that company’s records. Innes told him of their great profits in recent years and Nash said, ‘Mr Innes, it confirms my worst fears.’(pp.149-50).

In April of 1937 Nash and his officials also visited Berlin and Moscow, where he also tried to secure a few trade agreements. German officials agreed to buy some butter (not much) in return for access at a similar level to New Zealand for German products, and said they might also be interested in importing fruit. Russian representatives, thanked them for coming, said that they had no need for the food that New Zealand produced, but that they might be interested in some wool, and some hides, if that was of interest.

From Moscow, Nash’s party next travelled to Copenhagen, then to Paris and then back to England to attend the Imperial Conference to be held mid-May to mid-June 1937. Before the Conference began Nash also attended (on 12 May) the Coronation of the King’s brother (George V1) - following the abdication of Edward V111, in favour of his relationship with the divorced American, Wallis Warfield, better known as Mrs Simpson.46

As regards protocol, Sinclair, in Walter Nash (1976), notes the following that may be of relative interest to followers of the present New Zealand Prime Minister’s fashion sense:

44 One of those that assisted with this work was, rather interestingly, Sue Kedgley - a ‘Green’ MP now.45 See Brian Easton’s Paper, Trying to understand Dr Sutch, given at the Stout Research Centre Seminar Series, Wednesday 2 September 1998 at http://www.eastonbh.ac.nz/?p=49 . 46 On 20 January 1936 Britain's King (1910-1936), George V died at age 70. Attributed to George V was the suggestion that: ‘Any man who is not a socialist before he is thirty has no heart, and any man who is a socialist after he is thirty has no head.’

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‘Pressed by Nash and persuaded by C.A Berendsen,47 the head of the Prime Minister’s Department, Savage came to London for the coronation and the Imperial Conference which followed. Nash wrote to him several times about what he should wear. The King agreed to relax the rules about dress for gentlemen from abroad, while still expressing his wish that uniform, court dress, or evening clothes with knee breeches should be worn. Nash proposed to wear ‘ordinary dress.’ (p.145).

The mere fact that Nash had travelled to Germany when he did became of interest to his political foes when he arrived back in New Zealand whom accused him of trying to enter into a foreign trade agreement with Germany detrimental to Britain. And was not his visit to Moscow also evidence of his communism?

Nash hadn’t been that impressed with the results of those visits himself, nor with the results of his time spent in Britain either! But he comforted himself that he had at least

47 Carl Berendsen (later Sir Carl), was born at Woollahra, New South Wales, on 16 August 1890. He was the only child of Jurgen Berendsen, a Swedish immigrant, and his Australian born wife, Fannie Asher - the daughter of a Jewish businessman who had been in business in Wellington in the 1860s. In 1900 the Berendsen’s moved back to New Zealand. Berendsen did well at school and was dux of Gore District High School in 1905. At the end of 1905 he sat and passed the Junior Civil Service Examination and began a Cadetship with the Department of Education in Wellington in February the following year. Later he attended Victoria College part time and graduated LLB in 1914. He gained his MA in Law in 1916. In 1914 he was part of the New Zealand expeditionary force that was ‘hastily’ raised so as to relieve Germany of its part of Samoa. He was discharged from that force in April 1915, and returned to the Department of Education, remaining there until May 1916 when he was then transferred to the Department of Labour. In November of 1917 he was promoted to Chief Clerk, and later was made the Deputy Registrar of Industrial Unions. By the time of those appointments Berendsen had also been called on for more military service. At first he served as an Instructor at Trentham Military Camp, and so he was able to continue his courtship of his former Department of Education colleague, Nellie Ellis Brown. They married in Wellington in December 1917, and in October 1918 Berendsen was posted overseas though he arrived in France after war ended 11am on 11 November 1918. Early in 1919 he was then ‘attached’ to the Office of the High Commissioner in London for three months to assist with the General Election of 1919, and with the Licensing polls that were also conducted amongst the New Zealand troops awaiting embarkation for home. Berendsen embarked for home in June 1919 and resumed his Public Service Career in Wellington in August 1919. In 1926 he sought an opportunity to transfer to the newly created Prime Minister's Department, and in June 1926 he took up this new position as Imperial Affairs Officer unsure just what was expected of him - except that it soon became clear that he had to accompany the Prime Minister, Gordon Coates, to the 1926 Imperial Conference held that year in London. His role was not clarified until early in 1927 when it then became clear that he was ‘henceforth responsible for overseeing and co-ordinating all international matters within the purview of the Prime Minister, and all correspondence with the Governor-General and the High Commissioner in London’. He also had to keep the Prime Minister in touch with the ‘larger aspects' of Departmental Administration, for which he had regular meetings with the Permanent Heads of the relevant Departments. And he had to attend Imperial Conferences. In 1935 Berendsen’s job description changed to that of Head of the Prime Minister's Department - a change that he said ‘made no difference whatever' to his duties or functions. In 1943 he was appointed New Zealand’s first High Commissioner to Australia. His first diplomatic posting overseas was soon followed by another – to Washington in 1944. In 1949, the incoming National government was content for him to stay on in Washington and he remained at his post there until he retired, aged 61, in January 1952. He died at Dunedin on 12 September 1973 several weeks after suffering a stroke.

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made some sort of start; had gained experience; and had made himself known - which indeed he had!

And as for Sutch, the first (and very lasting), dent in his reputation followed on from that trip. Sinclair, in Walter Nash (1976), explains why:

‘While Savage was in London he and Nash attended meetings of the Committee of Imperial Defence, as the latter had earlier. There, as at the Imperial Conference, they discussed the security of the Pacific, threatened by Japanese militarism. Someone leaked some material from the Committee of Imperial Defence to a Communist newspaper and after an enquiry Sir Maurice Hankey, secretary of that committee and also Secretary-general of the imperial conference, said that grave suspicion fell on Sutch. What evidence there was for that conclusion is not known. Sutch had walked across Russia in 1932. While in England on Nash’s staff he had taken part in a march in favour of the Spanish republicans. He came to be regarded with much suspicion in New Zealand, too, by conservatives and anti-communists like Peter Fraser – though he seems never to have been a communist himself.’ (p.148).

***

By 1971 Lochore was retired and living in Auckland. He was also, by then, beginning to focus on his former boss, Alister McIntosh, not yet going so far as to suggest that it had been McIntosh that had been the Russian ‘contact’ in the Prime Ministers department back in 1954, but he was working up to it none the less.

Alister Donald Miles McIntosh was born in Picton in 1906. He attended Marlborough College, Blenheim between 1920 and 1924, leaving there with the first section of a BA degree, which he later completed part time at Victoria University College. In 1930 he was also awarded an MA after the completion of a thesis on Marlborough’s political history,

McIntosh first entered the public service in 1925 as a cadet in the library of the Department of Labour in Wellington. Then, in 1926 he joined the Legislative Department as an assistant librarian in the General Assembly Library. Following the completion of his thesis, he applied for and was awarded a fellowship by the Carnegie Corporation of New York and in 1932, having been granted a years leave, he studied library development and archive procedure in the United States and Canada. He returned to New Zealand in July 1933, having also spent several months visiting libraries and archives in Britain. In 1934 he married Doris Hutchinson Pow, another history graduate and librarian, in Wellington.

In 1935, Carl Berendsen, officially by then, Head of the Prime Minister’s Department (appointed so following the election that year of the first Labour Government), seconded McIntosh to his department as reference officer. And in 1936 he was formally transferred to the Prime Minister’s Department - becoming, in effect, Deputy to the head of the Prime Minister’s department.

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McIntosh remained in that position until 1943, when Berendsen was appointed High Commissioner for New Zealand to Canberra. Before his departure Berendsen recommended that McIntosh succeed him as Secretary of the War Cabinet, which he did. Added to that McIntosh was also made Secretary of the new Department of External Affairs, and then in October 1945 he was formerly appointed Permanent Head of the Prime Minister’s Department.

Described as having the ‘absolute confidence’ of Prime Minister Peter Fraser, McIntosh joined a New Zealand delegation that in 1945 travelled to a conference in to the San Francisco, from which eventually would emerge the United Nations Organisation. The following year (1946) he was sent by Fraser to Paris to attend the peace conference there, and after that, in 1947, was sent to Canberra and took part in Commonwealth discussions regarding the Japanese peace settlement. He was then a member of the New Zealand delegation to the United Nations General Assembly in 1948.

McIntosh was, immediately after the Second World War, reluctant to accept the notion that the Soviet Union was set on any more of an expansionist course than it had been before the war. Indeed, at the meetings and conferences that he attended on behalf of New Zealand post war, he often questioned the motives of the American and British representatives attending as regards policy being advocated by them so as to contain the Russians. By 1949, though, after Fraser’s return from the Commonwealth Prime Minister’s conference in 1948, McIntosh no longer seemed so sure of the position he had held before, and came in time to be regarded ‘more favourably’ by the Americans, though continued to be regarded less so by the British.

When McIntosh was nominated by New Zealand as a candidate for the position of Commonwealth Secretary General in 1965, he withdrew before the ballot on the grounds of poor health – it apparently also being ‘evident’ that the British would appose his appointment on security grounds. Then in 1966, he was appointed as New Zealand’s first ambassador to Italy where he served for 3½-years.

Described as senior adviser to four Prime Ministers, McIntosh is also described as New Zealand’s most influential public servant for more than twenty years – from 1945 until 1966. The only time his load ‘greatly lessened’ was during the administrative period of the first National Government (1949-54), when The Rt. Hon. Frederick Widdowson Doidge took on the External Affairs Portfolio. But the rub there was that he still had to travel (of which he was reportedly not fond) during that period with Doidge and with other ministers. He accompanied Doidge to the Commonwealth Foreign Ministers’ Conference in Colombo in January 1950; attended further Commonwealth Prime Minister’s meetings overseas; and also attended the conference that considered Korea and Indo-China held in Geneva 1954.

In 1973 the Kirk government further recognised McIntosh’s services by adding the title KCMG (he was knighted) to his CMG granted in 1957. Recognised thus, the only credit McIntosh had ever taken upon himself during his career of public service was for the effort he had put in after the war ended as regards the creation of a diplomatic service

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for New Zealand – this in the face (he reportedly once said in an unguarded moment) of often ‘unsympathetic’ political masters from whom he had to ‘wrest’ resources.

Late in 1973, the Kirk government also appointed McIntosh as Chairman of the Broadcasting Council of New Zealand for a ‘difficult’ eighteen-month period – the only length of time he would agree to. It was during this period, also, that colour television was first introduced into New Zealand, and also when a second television channel began broadcasting.

In 1977 Alister McIntosh’s health deteriorated, and he died in Wellington, on 30 November 1978.48

***

In an article published in the March 1991 issue of Auckland’s Metro magazine, historian Michael King outlined the background of a man who became his friend, answered charges that the man who went on to become ‘one of New Zealand’s most distinguished civil servants and – at the height of his career – Ambassador to the Federal Republic of Germany’, may have been a Nazi, and outlined what he referred to as ‘the course (or perhaps, the symptoms), of his friend’s mental deterioration.’(p.115).

It is doubtful that the article would have been written at all if it hadn’t been for the publication of a book the year before, the author of which was Fred Turnovsky, a refugee form Czechoslovakia, who reached New Zealand via Britain in 1940.

Lochore, by then, was resident in the North Haven Continuing Care Hospital on the Whangaparoa Peninsula, a short drive now, north of Auckland. King describes Lochore as by then,

‘...unaware of the identity of family and friends who call on him [though] he enjoys companionship. One visitor, a cousin, just sits silently alongside his bed, and he likes that. This is the reason I continue to come. This and the fact that nearly 20 years earlier this man and his wife 49 made me welcome in their home only a few minutes drive from where he now lies. For more than a decade they gave me hospitality, personal warmth and professional encouragement. I became close to them, I grew immensely fond of them.’ (p.116).

Lochore lasted several more months after the publication of King’s article (of which he also would have been unaware of, of course). An obituary to Lochore published in the New Zealand Herald, 23 August 1991, was headed:

‘Death of former diplomat

48 For more on McIntosh see: McGibbon, Ian. 'McIntosh, Alister Donald Miles 1906 - 1978'.  Dictionary of New Zealand Biography, updated 11 December 2002. http://www.dnzb.govt.nz/dnzb/Find_Quick.asp?PersonEssay=5M13 49 Dorothy died four years earlier – at Whangaparoa on 11 July 1987. At a memorial service held for in Wellington, former students played Schubert and Beethoven sonatas.

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Dr Reuel Lochore, New Zealand’s first ambassador to West Germany, has died aged 88.Born in Stratford, Taranaki, Dr Lochore gained academic distinction in the 1930s when he travelled to Germany and was awarded a doctorate in history by the University of Bonn.During that time he became fluent in German and several other European languages.

His language skills were put to the test during the Second World War when the New Zealand Government put him in charge of surveillance of non-British immigrants. In the late 1950s he began a diplomatic career, which culminated in his three-year appointment as ambassador to West Germany from 1966 to 1969.

In recent years, Dr Lochore was accused of having Nazi sympathies, although ill health prevented him from answering his critics. He died in Whangaparoa after a long illness.’(author, King perhaps?).

In Turnovsky, Fifty Years in New Zealand (1990) Turnovsky (in so far as part of the book concentrated on Lochore) at first rails against his treatment by the man when he applied, in 1946, for New Zealand citizenship; describes Lochore as either a Nazi sympathiser or extremely naïve; then, finally, settles for describing him as typical of ‘his ilk’!

Turnovsky sets out, that in 1946, with the general election in sight, the Labour government was actively encouraging naturalisation. The requirement for citizenship then was residence of five years, and this was expected to affect more than a 1000 refuges, the large majority of whom Labour expected would vote for them. Turnovsky sets out that this ‘faith was not misplaced’.

‘At a time when left and right wing still retained their traditional meaning, the conservatives were associated with nationalism and racist prejudices, whereas socialism bore the mantle of internationalism and tolerance.’(p.84).

For Turnovsky, though, all did not go well following his application. To begin with, it seemed his application was being held up. Then, when finally his application was acknowledged, and when he attended for the prescribed interview with the Naturalisation branch of the Department of Internal Affairs, he was interrogated instead:

‘When the day came, the man across the table seemed an innocuous bureaucrat asking innocuous questions; behind him sat a shadowy figure who at first said nothing but soon took over the questioning.’ (p.85).

Lochore (though Turnovsky didn’t know his name them) started into Turnovsky in such a way that Turnovsky soon realised that the man knew a lot about his private life. In questioning, that for Turnovsky, seemed to last for an ‘eternity, until I was told I could go’, Turnovsky was pressed as to whether he had indeed belonged to the Czechoslovak Social democrat Party as he had said he had, and whether or not he had been a

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Communist instead. Turnovsky had been sixteen when Hitler came to power in Germany in 1933, and had joined the youth wing of the German-speaking section of the Social Democratic Party and had risen in the executive. This wing, he had claimed, had been involved in unsuccessful attempts to get Czech Democrats to try to persuade French and British politicians to stand up to Hitler. He had been tipped off that he was on a Gestapo list when Hitler invaded Czechoslovakia in March 1939, and had fled to London.

Following his interview, Turnovsky felt he had been made a ‘special case’, and waited anxiously for ‘some time’ for his naturalisation to be approved. Amongst other things that he wondered, he wondered if he had in some way been denounced? He does not, though, with benefit of hindsight, take that into consideration. Rather he latches in his book onto a book written post war by his interrogator and published in 1951. In From Europe to New Zealand, Lochore had ventured, in 1951, his opinions as to which groups of people, as immigrants, might fit in better in New Zealand. So far as Lochore was concerned then, and he made this plain in his book,

‘...the next best [immigrants to the English were the Scandinavians, and other] Nordic races, such as the German and Dutch – perhaps Austrians and Swiss at a pinch.’ (p.91).

Turnovsky writes:

‘My reason for raising it [this book] from oblivion and for devoting much of this chapter to it is not on account of its merits, but for the insights it offers into some widely shared attitudes of New Zealanders. Some outrageous statements with strong ethnic, or to use the more commonplace term, racist overtones contained in the book were never challenged by those in authority or by the public at large. On the contrary, the official imprimatur the book had received invested Lochore’s views with an aura of authenticity.’ (p.89).

Turnovsky sets out his case well, delves deep into New Zealand’s historical past, makes comparisons and draws conclusions that are disquieting! So far as Lochore is concerned he also delves deep. Derived from the original manuscript of From Europe to New Zealand (1951), which had been deposited in the National Archives by Alister McIntosh in 1946, and included in Turnovsky’s book, are what Turnovsky describes as a ‘few pearls’ - one of which is particularly damning of Lochore but had been edited out – perhaps even by himself?

First:

‘Nobody can deny that Germany is a country par excellence... Hitler’s political achievement until 1940 appeared so brilliant...the Nazi only wished to become Herrenvolk like the English...The German is not a sadist by nature but by circumstances...After the Scandinavians, Germany is our nearest kinsman...’ (p.93).

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Worse:

‘We must not admit Jewish aliens en masse but only on an individual basis...Their number must have an upper limit...no more than half a per cent of the population...The worst thing about the Jewish people is... that they cringe and fawn when they are weak, and bully and exploit when they have power...’ (pp.93-4)50

A review of Turnovsky’s book entitled, Opposed views blend into one, was published in the New Zealand Herald on 9 June 1990, but seems to miss Turnovsky’s point. Of course Turnovsky was getting personal in so far as Lochore was concerned, but not so personal, perhaps, as the reviewer seems to think. The book was not only about Lochore. We must remember that so far as Turnovsky was concerned, Lochore, what ever else he was, was also for Turnovsky, typical of his ‘ilk’ – his

‘...ilk [having an] adamant faith in British superiority [leading to] their insistence on a homogenous British population [this in contrast to Australia whose ‘principal concern’ after the war, had been] to populate a country that had proved vulnerable to armed invasion, and [where] they weren’t able to afford refinements such as whether immigrants came from northern or southern Europe...’(p.95).

The review closes (as does the book), with this by Turnovsky:

‘I and a sprinkling of continental Europeans are credited with having made an imprint on the state of our society, and I am prepared to believe that this is so. But how much more vibrant, lively energetic and enterprising a country this would be if the door had been opened more generously when thousands were crying out for a new home and we refused admittance.’ (from the review in the New Zealand Herald, 9 June, 1990).

It should be added here, and this is also set out in the book, though not referred to in the review, that after the war Turnovsky learned that his father, whom he hadn’t been able to persuade to leave Czechoslovakia soon enough, had died together with his mother in a concentration camp in 1942. Further, when family in New York had tried to arrange passage for his parents to New York in 1941, he had been unable to help due to New Zealand Exchange Control Regulations which he discovered were unbending insofar as the chief cashier of the Reserve Bank was concerned. Worse, he got a lecture.

For the reviewer, ‘Opposites’ blended ‘into one’, in that:

50 Michael King also mentions this in his Penguin History of New Zealand (2003): ‘Unlike its worst manifestations in Europe, anti-Semitism in New Zealand tended to be covert and subtle… It was even on one occasion voiced by officials responsible for the administration of policies on immigration and the settlement of ‘aliens’. One such official was to write in 1946 that the ‘worst thing about [Jews] is that they cringe and fawn when they are weak and bully and exploit when they have power… Views of this kind did not significantly diminish until the decades after World War II when New Zealand became more pluralistic and less prone to uninformed and pejorative stereotyping.’ (p.369-370).

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‘In time [in the book] Turnovsky’s anger with Lochore blunted to the extent that he no longer saw Lochore’s opinions as outstandingly vile, but only in keeping with the times and typical of Anglo-Saxon arrogance. And so, with that judgement, Turnovsky and Lochore blend into one, both comforting themselves by having a crack at lesser breeds.’

***

Turnovsky’s book was not just about Lochore…Turnovsky also knew Dr Sutch (and met Ian Milner while on a trip back to Czechoslovakia as well), and devotes some of his book to him (Sutch), having met him shortly after his arrival in New Zealand in 1940:

‘William Ball Sutch was one of a handful of prominent New Zealanders to whom I was carrying an introduction given to me by Ormond Wilson 51 before I left London. I called on him soon after my arrival in New Zealand. He was an advisor to the minister of finance, Walter Nash, and had an office in Parliament buildings. Further along the corridor was George Fraser.52 Not far away was the office of Harold Innes, director of milk marketing... Bill Sutch was the only one among this rather select group of left-wingers who remained in government service until retirement. He invited Lotte and me to his home, a rare occurrence among our new acquaintances in high office during those early days of our life in New Zealand. His was the first house designed in a modern style we had visited, clearly intended to express - and impress - the originality of the man who lived in it. After that we kept in fairly regular contact, and I found that my conversations with Bill did more for my understanding of my new homeland than with most people. He introduced me to his slim Penguin book The Quest for Security in New Zealand, published in 1942. In it he traced the origins of the early settlers of the colony, largely belonging to the Lumpenproletariat,53 the paupers among the working class

51 In 1935 George Hamish Ormond Wilson stood for Labour in the strongly conservative electorate of Rangitikei; He was the youngest Labour party candidate elected. In 1938 he stood again in Rangitikei and at that election was defeated – by 300 votes. He then travelled to Europe via America and sent reports back on places he visited and persons he met to the Christchurch journal Tomorrow. He met Turnovsky in England where he also met his first wife, Margery Mace, ‘a dark beauty’ and also the producer of a programme he prepared about his travels (including to the Soviet Union) for the BBC. Margery died early in 1944 while giving birth to their second child – the child dying also. Distraught, Wilson returned to New Zealand bringing with him their young daughter, and taking the risk of travelling during wartime by sea. Back in New Zealand he met, by chance, his first love Rosamond again. He husband, John, had also died - killed in action overseas in 1942, the father also of 3 children. In 1946 Ormond and Rosamond married and in the same year Wilson also stood for Labour again - for the seat of Palmerston North. Successful he then lost his seat again in 1949 when Labour also lost power.52 Not the undercover agent George Fraser George Fraser mentioned earlier in this work – in main text before footnote 21.53 This is not an expression Sutch uses in Quest…, and he wouldn’t have used it either, for in Marxian theory the Lumpenproletariat is the absolute and small lower order of society: “the dangerous class, the social scum, that passively rotting mass thrown off by the lower orders of society… ripe for bribery by

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of England and parts of Scotland, as well as from pockets of other parts of the British Isles. These were intermingled with elements of gentry, landed as well as city-dwelling, intended to reproduce the ideal population mix, according to the perception of Edward Gibbon Wakefield and the New Zealand Company, and with the blessing of the motherland.’ (p.117).

Early in 1950, Turnovsky and his wife travelled to New York on business and to catch up with,

reactionary intrigues”. (see anything on Marx or in this instance The Thought of Karl Marx, David McLellan, McMillan Press, London 1980, p.46). If it was there though, then that would mean that maybe Sutch didn’t know his Marxian theory quite as well as his detractors thought – or even quite as well as his friends thought? There is though, in Quest…reference to an observation of an English street scene by a ‘conservative’ newspaper that Marx is said to have quoted from. This from Sutch on the ‘English Poor’ and their alternatives: ‘For the poor there were charity and the poorhouse. Apart from the squire’s house and the church, the poorhouse was the typical building of the English countryside. Life in the poorhouse had to be more unpleasant than the most unpleasant way of earning a living outside [So that any living arrangement after that experience would be presumed luxury one might suppose]. This was one of the principles of poor law administration*[see below]. The other two principles were – no relief to the able-bodied outside the poorhouse and the separation of husband and wife to prevent child-bearing. “When all else failed,” states a writer in Early Victorian England, “there was parish relief or the dreaded workhouse, not only for the slacker, the malingerer and the drunkard, but for those who had lived decent hard-working lives, and whose only crime was the poverty which unemployment, sickness, or old age made them powerless to avert. This coming of the workhouse, poorhouse, or Bastille, as it was known, was a cruel thing to decent people, who exchanged liberty and all they knew of home and of loving companionship for a harsh discipline, or worse, a brutal tyranny, squalor, and maybe semi-starvation.” For these people, 12,000 miles of buffeting in a sailing ship bound for New Zealand was a minor hardship. Nor could any better picture be painted of the sixties. The following comment, quoted by Marx [Marx lived in London and was buried there in 1883] from a conservative newspaper of the time (the Standard, of 5th April, 1866) is not untypical. “A frightful spectacle was to be seen yesterday in one part of the metropolis. Although the unemployed thousands of the East End did not parade with their black flags en masse, the human torrent was imposing enough. Let us remember what these people suffer. They are dying of hunger. That is the simple and terrible fact. There are 40,000 of them. In our presence, in one quarter of this wonderful metropolis, are packed – next door to the most enormous accumulation of wealth the world ever saw – cheek by jowl with this are 40,000 helpless, starving people. These people are now breaking in on other quarters; always half-starving, they cry their misery in our ears, they cry to heaven, they tell us from their miserable dwellings, that it is impossible for them to find work, and useless for them to beg. The local ratepayers themselves are driven by the parochial charges to the verge of pauperism.” This was a time when concurrent with an increased aggregation of farm holdings there was a decrease in the number of middle-class farmers and a worsening of the position of the agricultural labourer. He was worse off even than his predecessor in 1770-80: “The peasant has again become serf” (Thorold Rogers, A History of Agriculture and Prices in England, Vol. 1, p.693) and a serf worse clothed and worse fed. In 1863, there was an official enquiry into the food and conditions of men condemned to transportation and penal servitude. The Commissioners reported, “From an elaborate comparison between the diet of paupers in workhouses and of free labourers in the same country… it certainly appears that the former are much better fed than either of the two other classes.” In the same year the Sixth Report on Public Health recorded that the English agricultural labourer received only one-quarter as much milk, and half as much bread as the Irish. The poor Irish farmer was “incomparably more humane than the rich English.”… The response by labourers to the advertisements of the immigration agents of colonial countries can therefore be well understood.’ (from The Quest for security in New Zealand, pp.12-13).

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‘Lotte’s numerous aunts, uncles and cousins, who made me feel at home, and over-fed me on delicious continental delicacies of which I had been deprived for a decade.’(p.155).

They also decided to catch up with their friend Bill Sutch, who was at that time was still New Zealand’s representative at the United Nations in New York. So as to make some arrangement to meet, Turnovsky telephoned Sutch, whom ‘immediately’ complained that his phone was ‘tapped’ and that their conversation was being listened to. Turnovsky sets out that he was puzzled on two counts:

Poor Law Reform in 1834: A Poor Law Commission was set up in 1833 by British Prime Minister Charles Grey (Earl Grey) to re-examine the Poor Law system in Britain (in place since 1601). In their report published in 1834, the Commission made several recommendations to Parliament. As a result, the Poor Law Amendment Act (1834) was passed. The act stated that: (a) no able-bodied person was to receive money or other help from the Poor Law authorities except in a workhouse; (b) conditions in workhouses were to be made very harsh to discourage people from wanting to receive help; (c) workhouses were to be built in every parish or, if parishes were too small, in unions of parishes; (d) ratepayers in each parish or union had to elect a Board of Guardians to supervise the workhouse, to collect the Poor Rate and to send reports to the Central Poor Law Commission; (e) the three man Central Poor Law Commission would be appointed by the government and would be responsible for supervising the Amendment Act throughout the country.Friend of the People?Charles Grey (Earl Grey – after whom the tea is named) was born 13 March 1764. At the age of twenty-two, Grey (the son of an important British military commander, Sir Charles Grey), became the Member for Parliament for Northumberland. Although his father was a staunch Tory, Grey soon became a follower of Charles Fox, the leader of the Radical Whigs in the House of Commons. (From the late 17th century, the term Whig had been used to describe those opposed to the religious policies of Charles II. By the 19th century their rivals in Parliament, the Tories, were the supporters of the established church and the traditional political structure. The Whigs, in contrast to the Tories, favoured reform in favour of landowners and merchants. Eventually members of this party came to call themselves Liberals (Reformers). Grey was not a supporter of universal suffrage (votes for all – expanded for men only in 1867), but he did feel that there was a strong need to improve the parliamentary system in Britain (to widen the type of representation). In April 1792, Grey joined with a group of pro-reform Whigs to form the Friends of the People. The main objective of this ‘society’ was to obtain "a more equal representation of the people in Parliament"; and "to secure to the people a more frequent exercise of their right of electing their representatives". Charles Fox, the Leader of the Radical Whigs, was opposed to the formation of this group, as he feared it would lead to a split in the Whig Party. In 1792, Grey introduced a petition in favour of constitutional reform. He argued that the reform of the parliamentary system would ‘remove public complaints’. He stressed that the Friends of the People would not become involved in any activities that would ‘promote public disturbances’, but wanted change. In the debate that followed, Charles Fox , although he had refused to join the Friends of the People, supported Grey's proposals. When the vote was taken though, Grey's proposals were defeated. In 1793, Grey introduced a Parliamentary Reform Bill. This time he argued that one of the basic principles established by the Glorious Revolution of 1688 was the freedom of elections to the House of Commons. Grey added that ‘a man ought not to be governed by laws, in the framing of which he had not a voice, either in person or by his representative, and that he ought not to be made to pay any tax to which he should not have consented in the same way.’ Grey attacked William Pitt, the Prime Minister, for the way that he exploited the present system. He pointed out that Pitt had created thirty new Peers who nominated or indirectly influenced the return at election of forty Members of Parliament. When the vote was taken, Grey's proposals were defeated.

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‘[First], why should Bill talk about this bugging on the phone, instead of waiting until we were face to face? Secondly, why should the Americans bother about surveillance of a New Zealand diplomat? Surely they had more sensitive fish to fry? I visited Bill and his wife Shirley a few nights later, and could see that Bill, at least, was not enjoying his stay in New York very much. He sounded almost as though he suffered from a persecution complex...Bill Sutch was certainly one of the most enigmatic personalities among prominent New Zealanders, and perhaps it is for this reason that, to my knowledge, nobody has attempted to write his biography. But when it gets written, as surely it must, it will make fascinating reading about a man who certainly left his mark on New Zealand.’ (p.115)

***

A year later, after Turnovsky’s book had been published (in 1990), in the March 1991 issue of Metro, historian Michael King speaks up for his friend, Reuel Lochore, outlines the course of his life, and also outlines the ‘course’ of his friend’s mental deterioration:

‘In 1956 Reuel Lochore suffered the first major setback of his later career and one that was to gnaw at him for the next three decades. His recommendations for the setting up of the Security Intelligence service were not adopted in the form in which he presented them to Sid Holland and cabinet (he wanted a non-military agency staffed entirely by New Zealand public servants and headed by himself). Instead, the service was established on lines proposed by the Head of MI5, Sir Roger Hollis,54included several former British security agents selected by Hollis, and

Members of the Friends of the People now realised they had no chance of persuading the House of Commons to accept Parliamentary Reform and the group disbanded. In 1807 Grey's father died, and he inherited his father's title and moved to the House of Lords. Although he was no longer in the House of Commons, Grey continued to play an active role in politics. In 1830 he spoke again on the need for Parliamentary reform. The Duke of Wellington, the Prime Minister and Leader of the Tories in Parliament, replied that the "existing system of representation was as near perfection as possible". This, grey said, made it clear that the Tories would be unwilling to change the electoral system and that if people wanted reform they had to give their support to the Whigs. In 1830, The Duke of Wellington's Government was defeated in a vote in the House of Commons, and the new King, William IV - more sympathetic to reform than his predecessor – asked Grey to form the next Government. As soon as Grey became Prime Minister he also formed a cabinet committee to produce a plan for Parliamentary reform - details of which were announced by himself the following year. This time a Reform Bill of his was passed by the House of Commons (by a majority of one hundred and thirty-six), but, in the House of Lords, the bill was defeated by forty-one votes. This defeat resulted in Grey calling a General Election – after which the Whigs had a larger majority than before in the House of Commons. And in 1832 Grey tried again. Again though, the House of Lords refused to pass his Bills. Grey now appealed to the King, William IV, for help, and the King, in answer to Grey's request, agreed to create a large number of new Peers from amongst those known to be Whig supporters. When the Lords heard of this, they said they would agreed to some reform of the existing system. Not satisfied with that, Grey then called another election - the outcome of that which was that Grey gained a very large majority. The Whigs then introduced and passed a series of reforming measures, all of which passed in the House of Lords. These included the 1833 Factory Act, and the 1834 Poor Law Amendment Act (which ensured, of course, that people wished to work in these factories). Satisfied, Grey retired in 1835, and he died 17 July 1845 (the mid point of the life of Charles Dickens - 1812-70).

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was headed by Brigadier Bill Gilbert. Lochore believed subsequently that this had allowed Hollis, suspected of being a KGB agent, to place Soviet moles in the senior ranks of the New Zealand security system. He came to believe also that a senior New Zealand civil servant [McIntosh] had engineered this outcome.

As a consolation prize, Alister McIntosh offered him a role in the expanding Diplomatic Service and Lochore rapidly became one of the department’s experts on Asia and served successively in Bangkok, Singapore, Kuala Lumpur, Delhi, Jakarta, and finally Bonn.’ (p.118)

Described by King as a ‘disappointment’ Lochore had wished to remain on as Ambassador in Bonn beyond when he had reached the mandatory retirement age in 1968 of sixty-five years, but this was not agreed to:

‘He argued with George Laking (McIntosh’s successor) and Holyoake (Prime Minister and Minister of External Affairs) that he had been a diplomat for only 11 years, that he was just getting into his stride in Germany, and that the German authorities had indicated strongly that they hoped he would remain in Bonn. All to no avail. He was recalled and, in 1969, retired. His disappointment was exacerbated by the fact that when he applied for the newly created full-time directorship of the institute of International Affairs, he was passed over in favour of Bruce Brown, a diplomat 27 years his junior. This juxtaposition of events sowed seeds that would germinate poisonously in his mind... The first crisis, a further encounter with the Institute of International Affairs, was unfolding at about the time I met him. Reuel had had a long association with that body. He had joined it and first addressed its members in 1935. The institute had had sufficient confidence in his judgement in 1951 to co-publish his book on immigration. He was a close friend of the President, Sir Guy Powles. The length and strength of these associations had made the rejection of his application for the directorship in 1968 all the more disappointing. In 1970, two Cambodian delegations – one parliamentary, one student – visited New Zealand and Lochore tried to arrange institute-sponsored meetings for both in Auckland and Wellington. When these offers came to nothing, he decided that the institutes lack of interest was an ‘act of censorship’ on the part of what was by now the Department of Foreign Affairs. Senior members of Foreign Affairs, he believed, did not support the political factions represented by the delegations and were communicating their disapproval through institute policy via Bruce Brown who was on secondment from the department.

54 Hollis, later Sir Roger, was appointed Director-General of MI5 in Britain in 1956. He remained in that position until 1965.

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Shortly afterwards, in 1971, Lochore submitted to the institute for publication a manuscript on Vietnamese expansion in South East Asia. It was rejected. The same year the Cambodian Foreign Minister Koun Wick visited New Zealand and Lochore was prevented by official escorts from speaking to him at a public function in Auckland. These events convinced him that he had been blacklisted by the institute and by his old department. But Lochore took matters further. He examined the publications of the institute since the time of Bruce Brown’s appointment and judged that their common denominator was their acceptability to the Department of Foreign Affairs and their compatibility with the policies of the Peking-aligned New Zealand Communist Party. From this he deduced that the department was under communist control (and he eventually traced this back to the recruitment policies of Sir Alister McIntosh); as was the Institute of International Affairs through the department’s control of its directors. After a series of clashes with the institutes Auckland committee arising from his insistence on this scenario, Lochore eventually withdrew his membership.’ (pp.119-20).

There were of course, other setbacks - setbacks that led in the end to mental calamity, then collapse for Lochore. Some of the company Lochore kept didn’t help either - rather this company encouraged him and travelled quite happily down the road of conspiracy theory with him. The most developed of Lochore’s theories that King outlines emerged in 1982 and was presented to the Commerce and Energy Committee as part of a Credo (a media watchdog group) submission on the Broadcasting Amendment Bill: ‘This extraordinary document claimed that the ‘founder leader’ of the KGB in New Zealand was Lochore’s old boss, Sir Alister McIntosh, who had died in 1978. From 1946, according to Lochore, McIntosh had brought a series of KGB agents into the Prime Minister’s Department and External Affairs, beginning with Paddy Costello, who had been first secretary in the New Zealand Legation in Moscow...After McIntosh had built up his network, Lochore continued, he turned his attention to the infiltration of the New Zealand broadcasting services.’ (p.122).

So far as the ‘course’, rather than the ‘symptoms’, of Lochore’s mental deterioration are concerned, there are other points of conjunction as well!

The first had been the deal struck through intermediaries by Kim Philby (in Moscow) for the return of the Cohens/Krogers to the Soviet Union. This exchange was mooted by Philby after Lochore began his term in Bonn and was completed before he left. This became quite big news in both the English and Western German press, there being claims that the person offered in exchange, Gerald Brooke, was more or less innocently handing out anti-communist literature and was ‘grabbed’… in order to exchange him

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for the Cohen’s/Kroger’s. Further, there were reports that Brooke was being mistreated in prison, as indeed Philby claimed the Cohen’s/Kroger’s were also.55

We must remember that even now it still hasn’t been settled as to whether or not the Cohen’s/Kroger’s were resident in New Zealand at any time between their disappearance from America in 1950 and when they next surfaced in Paris in 1954, where they presented genuine New Zealand birth certificates and a marriage certificate in the name of Kroger at the New Zealand legation and so gained new identities there with the connivance, it is claimed, of Paddy Costello.56 We might place an emphasise on the ‘genuine’ here because although it came to be believed that it was a member of the New Zealand Legation, Paddy Costello, that had ‘assisted’ the Cohen’s/Kroger’s, it is also conceded that, at the time of application, the documentation would also have been further checked at New Zealand’s Department of Internal Affairs in Wellington – from whence such documentation is also obtained.

It does seem though, that Costello was a spy. The following article appeared in The New Zealand Herald 20 September 1999:

‘NZ envoy top spy for KGB: academic.

Wellington – New Zealand diplomat Paddy Costello was one of the KGB’s top 10 agents during the early part of the Cold War, British academic Christopher Andrew said yesterday. Confirming what had been suspected by British and New Zealand security services for many years, Mr Andrew said Desmond Patrick Costello, known as Paddy, was “a rather important spy” for the Soviet Union and was highly rated at the beginning of the 1950s. “The Paris station of the KGB rated him as one of the top 10 leading ones in early part of the Cold War,” Mr Andrew said. Costello approved the issuing of NZ passports to Morris and Lona Cohen under the name Helen and Peter Kroger during his time as first secretary in the Paris embassy.57 The Cohens, fleeing from America while under suspicion for their role in passing on atomic secrets to the Soviet Union, produced NZ birth certificates to get passports. They went on to become important spies in Britain, as part of the Portland naval spy ring, again smuggling information to Moscow. As a result of this, Costello was suspected by the British Government of being a spy and pressure was put on NZ to sack him from the diplomatic service. He left in 1955, going on to become professor of Russian studies at Victoria University in Manchester. He died in 1964.

55 There is an interview with Morris Cohen at http://www.pbs.org/redfiles/kgb/deep/interv/k_int_morris_cohen.htm in which he states that at that time he had one hundred boils. 56 It does not seem though, from the aforementioned interview, that the Cohen’s were ever in New Zealand?57 This has since been disputed in James McNeish’s, Dance of the peacocks (2003), which claims that Costello was not in Paris at that time.

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Mr Andrew, who works at Cambridge University, co-authored The Mitrokhin Archives, a history of KGB activity in Europe and North America. This has brought to light an astonishing array of spies who were previously unknown, including one woman who is now a British grandmother. Another volume, on KGB activity in the rest of the world, is planned for publication in two years time. That volume will contain details of files on KGB activities in NZ which Mr Andrew says were “considerable.”’ – NZPA.58

Even if Lochore didn’t take much notice of the press (and that seems unlikely in so far as that case was concerned) he may have been further taken aback by the controversy that arose later over Hollis. In 1981 (the year before ‘the most developed of Lochore’s theories…emerged’ - see before), British Prime Minister Margaret Thatcher stated in the House of Commons that the rumours as regards the ‘loyalty’ of Sir Roger Henry Hollis were unfounded. Further, Thatcher stated, that the suspicion that Sir Roger had ‘worked’ for the Russians had been ‘fully investigated’ in the 1970s.

Prime Minister Thatcher’s statement preceded (but only just) the publication of a book by Chapman Pincher, entitled, Their Trade is Treachery (1981). To this day Chapman Pincher still remains the main protagonist of the ‘school of thought’ that suggests that Sir Roger Hollis, now deceased (he died in 1973), was a Russian agent. In large part, Pincher claims, ‘in-house informants’ inspired him towards this point of view.

The first part of the ‘case’ for the protagonists of this school of thought, goes back to the beginnings of Hollis’s career, when after two years at Oxford he decided to travel and work rather than finish his degree. First he travelled to Malaya, where he worked for the British American Tobacco Company, which then sent him next to work for them in Shanghai. Finally, ill with tuberculosis, the British American Tobacco Company sent him for treatment to Switzerland, and after successful treatment he returned to England. In Shanghai, at the same time that Hollis was working there, were some fairly dedicated Soviet agents also at work there. One of them was Ruth Kuczynnski, who via Switzerland, and under the assumed name of Ursula Beurton, travelled next to Britain and settled at Oxford at the same time as Hollis was working near there during the war.

In 1938, Hollis had applied to join the British Secret Intelligence Service but was rejected. He was more successful when he applied next to MI5, and he eventually rose through the ranks to become Director General of MI5 between 1956 and 1965.

The rest of the ‘case’ against Hollis concerns Hollis’s ‘inexplicable lack of application at times’, and comes from the ‘in-house informants’ that Pincher claims ‘inspired him’.

In 1945, for example, Hollis was given the task of debriefing for British Intelligence Igor Gouzenko59 in Canada. This task should, apparently, have been assigned to Philby,

58 No mention of Sutch so far... no sign yet, either, of this second book? In fact it has been years now.59 Igor Gouzenko (1919-1982) was cipher clerk to the Soviet military attaché in Ottawa in September 1945, when he defected with copies of cables, which indicated that there was an extensive Soviet

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as Head of the appropriate MI6 section, but he was in Turkey for a time after Gouzenko’s defection - apparently making sure, it was realised later, that he was not exposed by another defector, Konstantin Volkov (a senior NKVD officer), there.60 During his debriefing by Hollis, Gouzenko was surprised, he told investigators later, that Hollis had not pressed him as regards his report of a talk in Moscow that amongst other things had revealed that the KGB had a British agent codenamed ‘Elli’ ‘highly placed’ in British Intelligence.

Insiders also claimed to Pincher, that Hollis had not, during his tenure as Director General of MI5, and following the Profumo scandal, attached enough significance to the involvement of the Soviet Naval Attaché, Ivanov, and had been in no hurry to inform the Prime minister, Harold McMillan – stating when asked why not, that the sex lives of Cabinet Ministers were not part of their concern.

Under Hollis’s tenure as Director General of MI5, his service did not have a good record of spy catching and perhaps that is also why some of them talked to Pincher later. For insight into Russian Intelligence gathering efforts, the service had depended heavily during Hollis’s tenure upon defectors and upon the Americans to whom the defectors mostly defected.

Worse was to come for the service and for Hollis. In 1963, alerted by his Soviet case officer, Yuri Modin, Philby took flight and landed in Moscow. Only five senior MI5 persons, including Hollis, were privy to the case that was developing against Philby and they were all, after an internal investigation, cleared of suspicion? Someone though, had alerted Modin?

Even the most convinced of the protagonists of the school of thought that saw Hollis as a Russian Agent apparently accept one more haunting possibility. This is that Russian intelligence experts, as expert, no doubt, at sowing doubt as any other intelligence service, may well have set up false trails – trails that led towards Hollis and away from another.

Sutch in the second Labour Government.

The second Labour government was elected 12 December 1957, and from the start they were up against it. This from Sir John Marshall, National’s Justice spokesman then, from Volume One of his Memoirs (1983), Chapter XVIII, first section, In and Out of Opposition:

espionage network operating by the end of the war in Canada. His defection led directly to the identification of Alan Nunn May (a British physicist working in Canada) and to Kathleen Willsher (the Registrar at the British High Commission in Canada), as Soviet agents, and he provided the first evidence of the Soviets having been successful in gaining access to the atom bomb secrets. This evidence was presented to a Canadian Royal Commission formed following his defection to investigate the extent of clandestine Soviet activity in Canada at that time.60 What Volkov had on offer, apparently (and this for cash), was a list containing the names of Soviet spies in Britain, and to begin with he gave a British Embassy official in Istanbul a list of the departments in which they worked. This list then ‘landed’ on Philby’s desk at MI6 headquarters in London (Philby being Head of Soviet Counterintelligence for MI6 then). Philby then arranged to meet with Volkov in Turkey; then delayed his arrival in Turkey for the meeting by two days. By the time he did arrive this would-be defector was nowhere to be found? (in Peter Wrights, Spycatcher, 1987, p.238).

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‘I arrived back from the United States on 1 June, 1958, and parliament assembled ten days later. It was to be a grim and hectic session, dominated by an unremitting and acrimonious debate on the sorry state of the economy, on who was to blame, and what should be done about it. It began at once in the Address in Reply to the Speech from the Throne.

Then came the 1958 Budget, which has gone down in history as the Black Budget. The Minister of Finance, Mr Nordmeyer (now Sir Arnold) certainly had problems. The country’s economy had suffered several severe shocks. Export prices for dairy produce and wool had fallen steeply. Importers, anticipating both a shortage of overseas funds and a return of a Labour Government with the prospect of import controls, had gone on a buying spree which reduced our declining overseas exchange reserves to the point where, on the 1st of January, 1958, there was only enough left to pay for six weeks’ imports. The Labour Government charged us with having failed to intervene to restrain this outflow of funds, but the downward trend had begun only a short time before the election and reached its peak after the election.

Halfway through the election campaign the Secretary of the Treasury and the Governor of the Reserve Bank had called on me. I was the only Minister in Wellington. They felt they had to tell someone in the Government, even the Minister for Justice61 that our overseas funds were falling fast. Undoubtedly, but for the election, we would have acted then, to introduce some form of exchange control. Walter Nash [the incoming Labour Leader] was later to concede that the position then was ‘not sufficient to warrant alarm – although ample to warrant immediate attention’.

I had explained to the worried officials what they knew anyway, that action of that kind was a cabinet matter requiring the making of regulations, and a meeting of the executive council. In the middle of the election campaign, with Ministers scattered through the country, and with their minds concentrated on winning the election, there was no chance of the question, not then, of crisis proportions, being considered, until after the election. I did not add that no Government would jeopardise its chances of winning an election by raising alarm and consternation just before the electors went to vote. We would deal with the problem after winning the election.

We lost the election. In the following month the outflow of funds did reach crisis proportions, and the new Labour Government introduced comprehensive import controls on 1 January

61 Also Deputy Leader of the National Party by then - having defeated the Minister of Finance, Jack Watts, for the post, and appointed Wednesday 2 October several weeks before the election campaign began - Holland having stepped aside in favour of Holyoake as Parliamentary Leader of National in August 1957.

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1958. The election was a major cause of the exchange crisis, and a major impediment to the taking of remedial measures. We had to carry our share of the blame, although we defended our actions vigorously.

The next shock to the economy was a self-inflicted wound by the new Government. They deprived themselves of £21 million by giving the £100 tax rebate. On top of all this the Labour cabinet decided that they had to implement, in their first year in office, most of the expensive election promises the party had made, including increase in age benefits, universal superannuation, and child allowances. To do all this, taxation had to be increased by £27.5 million. ‘Aye, there’s the rub.’ They had given away £21 million in February and they took it back and more in June, increasing the rates of personal income tax which Walter Nash, in the election campaign, had said a Labour Government would not do.

This was the blackest part of the Black Budget. Income tax was increased across the board, but more steeply on single taxpayers. Mr Nordmeyer rubbed salt in their wounds by saying ‘ that many of our young people have more money than is good for them’. The unpopular tax on dividends was imposed for the first time and still remains – demonstrating that it is easier to impose taxes than to remove them. This was backed up by an excess retention tax. Duties on cigarettes, tobacco, cigars, beer and spirits were doubled, as was the sales tax on motor vehicles.

There is no doubt that the Labour Government lost the 1960 election on 26 June 1958. The public reaction ranged from disappointment and half-hearted defence on the part of the loyal Labour supporters, to shock, disillusionment, resentment, anger and outrage, in varying degrees, from other sections of the community. One lonely economist described the budget as tough but justifiable, and Arnold Nordmeyer had the backing of his advisors in the Treasury and the Reserve Bank, who do not have to stand for election; but his cabinet colleagues, apart from the Prime Minister, were not involved in any detailed way in its preparation, and the Labour Caucus heard the sad story, for the first time, half an hour before the House met on Budget night.

The debate on the 1958 Budget, together with the associated motion of no confidence, occupied the time of the House from 26 June to 25 July, and filled 444 pages of Hansard, with much tedious repetition, at the end of which the protagonists were of the same opinion still. But the swinging voters who had put the Labour Party in were swinging back to us, and in the next two years, we did not allow them to forget the Black Budget.

As the years have passed and a more detached assessment has been made, there has been an inclination to say that Nordmeyer was economically right, but politically wrong. Having re-read my

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speech in Hansard in which, as the deputy leader of the opposition, I summed up at the end of that marathon debate, the case against the 1958 budget, I cannot be quite so benevolent; but I can sympathise with Mr Nordmeyer. He was the victim of the Labour Party’s extravagant election manifesto which, no doubt with some pressure from his colleagues, he felt bound to honour in his first budget. This was politically unnecessary and economically unjustifiable. He had three years in which to carry out those promises. The £100 rebate which contributed to their electoral victory, in the end, contributed to their electoral defeat. He recovered the money, but the labour Government itself never recovered from that policy of ‘put and take’, as we labelled it. As I outlined in concluding the debate for the Opposition, there were other policies involving reduced or deferred Government expenditure, more borrowing and lower taxation, which would have revived the economy, but by then the damage to the country and the Labour Party had been done.’(pp.277-279).

In so far as Labour’s ‘put and take’, as National put it, Keith Sinclair, in his, A History of New Zealand (1988, but first published in 1959), quotes a political scientist (he doesn’t say whom) as regards the run up to that particular (1957) General Election:

‘A political scientist has described the election in these words: ‘there was no intricacy or subtlety about what the parties were doing. They were conducting an auction for the electors’ votes. The Labour Party’s final bid was engagingly direct – “Do you want a £100 or not?”’ Labour offered this rebate when Pay-as-you-earn income tax was introduced. National, by contrast, offered only a £75 rebate. In this election of promises the voters decided that Labour’s were worth two seats more than National’s.’(p.293).

Another political scientist is acknowledged in Sinclair’s A History of New Zealand (1988) following a comment by Sinclair on New Zealand’s traditional run on funds at election times:

‘There were balances of payments difficulties of varying severity at the time of each election from 1946 to 1966. A political scientist, R.M. Chapman, sombrely wrote that ‘politicians had correctly concluded that the voters demanded more than economic effort had earned.’ In each election year, ignoring evidence of declining overseas earnings, successive governments catered to this demand by lowering taxes and especially by permitting an import spree, despite repeated warnings from their economic advisors. National Governments were the worst offenders only perhaps because they had more opportunities.’(p.297).

***

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Sutch does not find his way into the first volume of Marshall’s Memoirs (1983), but he did find himself very involved with the second Labour Government. Sinclair, in A History of New Zealand, (1988), had this to say about the Nash Government:

‘The Nash Government was responsible for some noteworthy policies. Its principal drive was to speed up industrialisation. What was needed, the Government proclaimed, in the words of Dr W.B. Sutch, the country’s leading economic nationalist and head of the Department of Industries and Commerce, was ‘Manufacturing in Depth’. The aim was to make the country less dependent on imports – a return to the ‘insulation’ policy of 1935. Negotiations were begun – or continued – to set up a number of major industries, including a steel-rolling mill, glass works, a gin distillery, an oil refinery and an aluminium industry. For the last of these the Government was to sell very cheap power from a huge hydro-electric project at Lakes Manapouri and Te Anau. Almost at once protests began from conservationists against raising the level of the lakes. This was the first sign of what was to become a major environmental protest movement. Nash also took steps to set up a cotton mill in Nelson. There was widespread public criticism at this proposal, which guaranteed to an English company a major share of the New Zealand market. The next government cancelled the contract.

The Nash Government introduced equal pay for equal work, regardless of sex, in the public service. It abolished compulsory military training. Families were enabled to ‘capitalize’ the family benefit payments for children in a lump sum to pay a deposit on a house or pay off a mortgage. This step, plus new three per cent housing loans, greatly increased the prospects of the not-so-wealthy purchasing a house. But it was not to be forgiven for the draconian policies of 1958.

In the 1960 election Nash travelled about repeating, ‘You’ve never been so well-off in New Zealand as you are today’, ‘everyone, everywhere will again be better off.’ The message was the same as Harold Macmillan’s winning slogan of the previous year; ‘You’ve never had it so good.’ But the Government was thrown out. It lost seven seats. National won forty-six to Labour’s thirty-four.’ (p.295).

***

Bruce Jesson, another person who became interested in who owned what in New Zealand, has paid tribute in his work, Behind The Mirror Glass: The growth of wealth and power in New Zealand in the eighties (1987) to the second Labour Government’s attempt to industrialise, and also to Sutch in particular:

‘New Zealand in the post-war era went through a process of passive industrialisation. A regime of import controls and exchange controls existed, to cope with balance of payments problems, and behind this barrier a range of secondary industry

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developed in an uncoordinated way. The goods produced by this protected secondary industry cost more than imports would have. Farmers consistently opposed the protection of local industry, arguing that they were being forced to subsidise manufacturers and workers. National Governments ruled for thirty of the forty years from 1945, and their cabinets always contained large numbers of farmers. Yet the system of import controls continued for most of this period, as if from necessity rather than choice.

It was only in the period of the second Labour Government that a deliberate effort was made to industrialise New Zealand. Phil Holloway was Minister of Industries and Commerce, Dr Bill Sutch the Secretary, and between 1957 and 1960 they signed eleven secret agreements with overseas companies to establish industries in New Zealand. Among them, were the Marsden point Refinery, New Zealand Steel, Comalco – and the notorious Nelson Cotton Mill. These were Think Big-type agreements, and they granted these companies certain privileges to set up business in New Zealand. Thus the Nelson Cotton Mill was a straightforward case of a British textile firm, Smith and Nephew, which was being edged out of its market by Japanese competition, being obligingly offered a guaranteed share of that market at a guaranteed price if they could set up a factory in New Zealand.

Sutch was the organising genius behind all this, being a passionate believer in the need for industrialisation. Yet in a sense his policies were still passive. They required the active participation of overseas companies that had hitherto been supplying the finished product. The role of the Government was to guarantee these overseas companies the local market, through import controls and government contracts.

Sutch’s position was positively peculiar. His appointment had been opposed by the Security Intelligence Service, because of his contacts with the Russians at the United Nations just after the war. It was true that Sutch was, if not a communist, what used to be known as a fellow traveller.62 During the thirties and forties there was a circle of young intellectuals, many of them in the Public Service, who were interested in things like social justice and who were close to the Communist Party. They all broke with the Communist Party in the fifties and some were to become quite prominent.

Sutch was part of this circle and he never disguised his sympathy for the left. In his later books especially there are sympathetic favourable references to the USSR, to the Communist Party, to militant trade unionism, even a quotation from Trotsky63 to indicate where he stood. Yet he was also one of the

62 The Russian word for "fellow traveller" is Sputnik. 63 Trotsky, who established the Soviet newspaper Pravda (Truth) in 1912, was killed in Mexico City with an ice pick on or about 20 August 1940 while in exile in Mexico from where he continued to oppose Stalin whom he proposed was only a half-hearted Communist. A notable quote from Trotsky as regards

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most influential men of his generation. In the thirties he was an advisor to Coates and Nash, at the time when the Reserve Bank was created and import and exchange controls introduced. And he became New Zealand delegate to British Commonwealth conferences and United Nations agencies, Secretary of the Department of Industries and Commerce, and consultant to New Zealand steel and the Wool Board.

As well as being influential, Sutch was outspoken – and in some circles unpopular. He was never a faceless bureaucrat in the British tradition, but as secretary of Industries and Commerce publicised his views on the industrialisation of New Zealand. Sutch’s vision was of an independent economy based – like Switzerland or the countries of Scandinavia – on the skills and knowledge of its people. It was an appropriate message for the sixties, the decade of the declining relationship with Britain. But National was re-elected in 1960, representing a conservative and rural constituency, and Sutch was compulsorily retired, the Government even changing the law64 to make it possible. Sutch was the object of enormous hostility by the National Party, sections of the Labour Party, and the SIS. At the end of his life he was unsuccessfully prosecuted by the SIS for communicating with a foreign (Russian) agent.

Sutch’s contemporary importance is that he publicised ideas regarding the colonial basis of the New Zealand economy that had been commonplace in the labour Party since the depression. He was too much of a nationalist to fit comfortably into thee political and business milieu of the fifties and sixties, and became a leading critic of what he saw as National’s colonial policies. But because he was the most extreme advocate of breaking with the farming-colonial economy, Sutch became identified with an era of New Zealand’s economic development, the growth of secondary industry in the decades after the Second World War. Sutch has become a target for the right-wing reformers of the eighties, who tend to credit him with the regulated and protected economy. This is actually unfair, because Sutch was critical of all post-war governments, except for the second Labour Government. They had all used import controls – but defensively, to protect overseas exchange, not as the basis of a policy of industrialisation. As a result, manufacturing had developed in a haphazard manner.’(p.42-44).

The second National Government.

Fabians goes like this: “Workers must at all costs be shown these self-satisfied pedants, drivelling eclectics, sentimental careerists and liveried footmen of the bourgeoisie in their true colours. To show them up for what they are means to discredit them beyond repair. To discredit them means rendering a supreme service to historical progress. The day that the British proletariat cleanses itself of the spiritual abomination of Fabianism, mankind, especially in Europe, will increase its stature by a head.” (From Leon Trotsky writing’s on The Fabian 'theory' of socialism. No date available but see after footnote 8 before Notes @ http://marxists.anu.edu.au/archive/trotsky/works/britain/ch04.htm.)64 The State Services Act 1962 picking up the recommendations of the McCarthy Commission, established a multi-member Commission comprising a Chairman and Commissioners in place of the sole Public Service Commissioner.

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Elected again, and with a majority of twelve seats, National, led by Keith Jacka Holyoake and Deputy Leader John Marshall, would also govern for the next for twelve years (up until 1972), when the third Labour Government, led by Norman Kirk and then by his Deputy Leader and Finance Minister, Bill Rowling, would interrupt National rule, but again only for three years.

In so far as the economy was concerned, National, during that twelve-year period, again bolstered the traditional industries, and the second Labour Government’s efforts at stimulating industry were put aside so long as farming remained buoyant.65 During that period little effort was put in to developing new products or into finding new markets, except that trade with Japan – a country whose depth of post-war industrialisation is evident on New Zealand roads every day - was expanded; and in 1965 the New Zealand-Australia Free Trade Agreement (NAFTA) was entered into – aimed at an expansion of trans-Tasman trade. It wasn’t until 1967 that the alarm bells really began to ring66 when Britain finally made its intentions to join with the European Economic Community (EEC) ‘clearer’.

In 1967, the New Zealand economy also suffered its largest deficit since the Great Depression of the 1930s. This balance of payments deficit was also larger, and noticeably so, than that of 1958 – the deficit that preceded Nordmeyer’s ‘Black Budget’. And in 1967, Robert Muldoon, the National Member for Tamiki since 1960, became National’s new Minister of Finance – replacing Harry Lake who died 21 February 1967 of a heart attack. Holyoake, interestingly, at first tried to add Finance to Marshall’s (he also had heart problems) list of responsibilities, but he managed to decline.

Britain’s intention to join with the European Economic Community had in fact been clearly signalled before 1967, and Marshall, in Volume One of his Memoirs (1983) does acknowledge this:

‘The first danger signals began flashing in 1957 [when the EEC was formed], when the question of Britain’s future trading relations with Europe was raised at the Commonwealth Prime Minister’s Conference in London. New Zealand was represented by the Minister of External Affairs (Tom – later Sir Thomas – Macdonald) in the absence of the Prime Minister [Sid Holland], who was ill.

In reporting back to Parliament, Tom Macdonald quoted the British Prime Minister (Harold Macmillan) as saying: “We in Britain have friendly and cooperative relations with many counties. We have a special relationship with countries in Europe which we hope to strengthen and extend. But on one thing we are all agreed: if there should at any time be a conflict between the calls upon us, there is no doubt where we stand; the Commonwealth comes first in our hearts and minds.

65 This according to Tom Brooking, at least, in his Milestones: Turning points in New Zealand history, 1988, p.184.66 Ibid., p.184.

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These were reassuring words, but the facts of life as they developed over the next few years were less reassuring. The New Zealand Labour government then in office was alert to the threat to our trade in agricultural products, and took appropriate diplomatic action to make our position known, not only in Britain but also in the emerging European Economic Community, whose common agriculture policy was then beginning to cast its grim shadow before it.

During that time Britain, torn between the Commonwealth and the Community, sat uncertainly on the doorstep, making brave efforts to build its own trade with the smaller European countries, and watching its trade with the Commonwealth decline. The writing was on the wall which surrounded Fortress Europe, but I little knew then how deeply I was to become involved in the long battle for our survival that was still to come.’ (pp.283-84).

Marshall seems most definitely to have been overworked during the twelve-year period of the second National Government (from 1960-72), and his health suffered due to this. When National was re-elected in 1960, he was given numerous responsibilities. Not only did he then become Deputy Prime Minister, but he also was appointed Attorney General and Minister of Justice; Minister of Industries and Commerce; Minister of Customs; Minister of Overseas trade and Immigration. As Minister of Industries and Commerce, Marshall, apparently, found it hard to accept the advice of the Secretary for Industries and Commerce – one W. B. Sutch and also the advice of one of the assistant secretaries J. P. Lewin. They had both been strongly supportive of the outgoing Labour government and of its industrialisation policies. Late in 1964, following thirty years of Public Service (and a law change), the State Services Commission insisted that Sutch retire at age fifty-eight rather than at the mandatory age of sixty.

Lewin, a controversial figure himself, had gained notoriety when during his time as President of the Public Services Association (from 1946 – 1951), a satchel belonging to Cecil Holmes, a PSA activist at the New Zealand National Film Unit, was stolen from Holmes’s car at Parliament buildings in 1948. The satchel, when it turned up, contained not only correspondence with Lewin, but also contained Cecil Holmes’s Communist Party Membership Card. This, after a newspaper made this public knowledge, had led to Lewin being reprimanded by the Public Service Association and to him eventually stepping down from that position. He saw out his career of Public Service, however, retiring finally in 1974 after a period as government statistician, from 1969 to 1973, and as Head of the Department of Trade and Industry from then until his retirement.

Apart from Marshall’s responsibilities, which were added to more than lessened at times, Marshall travelled often during the 1960s to Europe, where he put considerable effort and energy into seeking assurances from Britain and the Governments of the six foundation members of the European Economic Community, that ‘special’ arrangements would be made so far as New Zealand’s ‘traditional’ trade with Britain

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was concerned should Britain join the European Economic Community – which it finally did in 1973.

These entreaties made little difference, but Marshall did gain New Zealand some time. In 1971, prior to the final agreement being signed, he persuaded the British negotiators to insist on a five-year transition period, subject to review, for New Zealand’s traditional exports to Britain.67

Not only did Marshall survive that difficult period though (which included a difficult stint as Minister of Labour, a stint he described as ‘A sentence of hard labour’ (in Volume Two of his Memoirs, 1989), but he also succeeded Holyoake as Prime Minister and Leader of the National Party on 7 February 1972 - defeating Finance Minister Robert Muldoon, the only other contender for the position, who then became Deputy Prime Minister.

Muldoon was very effective on television, and there was, at that time, only one television channel. Barry Gustafson, in his work, his way: a biography of Robert Muldoon (2000), has this to say about Muldoon’s handling of the financial crisis in 1967; his budget of 1969; and his rise, during that period, not only in the estimation of his peers and the public, but also his rise in the estimation of Prime Minister Keith Holyoake:

‘By 1967, when Muldoon took over the [finance] portfolio, the times were changing. During the 1966 election campaign Muldoon had denied repeatedly that there was an economic crisis but in less than three weeks after the election wool prices collapsed. By April 1967 he was warning his Tamiki electorate AGM that New Zealand was ‘facing the worst balance of payments position in 30 years.’ The 1967 wool price drop was not a temporary setback, which would be followed after a short time by a recovery in world agricultural commodity prices and New Zealand’s terms of trade. Instead, except for a brief high in 1972 and 1973, the terms of trade have remained below their level of the 1950s and 1960s, generating structural problems which were to bedevil Muldoon’s and his successors’ economic management. As a World Bank report [sought by the National Government in 1967] in 1968 on New Zealand’s economy concluded:

“During the last two years New Zealand has been undergoing a difficult period characterised by a large deficit on current account...The present balance of payments difficulties reflects the basic weakness of New Zealand: she is a high-income country over-dependent on exports of a small number of primary products...now facing prospects of a long-term price turndown...

67 At the conclusion of these negotiations the situation so far as New Zealand was affected (greatly), was that there would be continued access to the British market for Lamb subject to a new twenty per cent duty and for butter and cheese continued access for five years and after that continued access for eighty per cent of New Zealand’s butter, and for twenty percent of New Zealand’s cheese. Combined, earnings from these products amounted then to ninety-five per cent of New Zealand’s income from which ‘the imports essential for our domestic industries and for maintaining our standard of living’ were paid for. (from Volume Two of Marshall’s Memoirs, 1989, p.67).

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Only if the industrial sector becomes internationally competitive can the dependence of the balance of payments on a few agricultural commodities be reduced.”The long-term deterioration of New Zealand’s terms of trade would be exacerbated by the entry of Britain into the European Economic Community68and the oil shocks of the 1970s. Muldoon came into a crisis situation and despite some initial apparent success never got out of it.

On becoming Minister of Finance, Muldoon...started talking about ‘flexible economic policies’ and ‘fine-tuning’, by which he meant that problems in the economy should be addressed as they emerged, not dealt with altogether subsequently in an annual budget. He did this by introducing the practise of ‘mini-budgets’. Muldoon’s use of mini-budgets also meant that he always seemed to be on TV introducing, explaining and defending government policy. The first mini-budget was delivered on Thursday 4 May 1967. Muldoon moved to dampen down economic activity by increasing a range of indirect taxes and government charges. Some incentives were given to exporters and the fishing and tourism industries. By these means, it was possible to produce a less dramatic budget in June. Muldoon’s mini-budgets and economic fine-tuning by regulation were not welcomed by all National Party supporters, some of whom feared what a Labour Minister of Finance might do with such ‘arbitrary powers’ which could breach the prerogative of Parliament.

Muldoon’s first budget was presented to Parliament on 22 June 1967. In the eyes of at least one leading economist, Frank Holmes, that budget was ‘blacker than Nordmeyer’s Black Budget of 1958’ and Muldoon’s firm tackling of the balance of payments crisis was followed by a substantial devaluation which effected ‘the most successful short-term use of the exchange rate of the post-war era’. In this budget Muldoon claimed that he was cutting the increase in government expenditure for 1967-68 to about 2 per cent, compared to about 9 per cent the previous year. He also identified clearly the specific economic problems facing the Government: an economic slow-down; a growth in unemployment; a drop in exports, especially wool, and of export receipts; a significant increase in the cost of invisibles; a run-down in the building industry; a credit squeeze; and a hold-up in government spending. He was quite prepared to share this depressing scenario not only in confidence with caucus but also openly in an effort to educate and influence public opinion.’(p.92-94).

Gustafson continues on this theme, and points to still unacknowledged facets of Muldoon’s character:

‘Whereas Muldoon’s 1967 Budget had been the shortest since 1951, his 1969 Budget, which included recommendations from the National Development Conference [an initiative of Marshall’s in

68 In 1973 - and in 1973 New Zealand’s population also passed the three million mark.

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1968] and a review of monetary policy, was the longest in twenty years, taking an hour and forty minutes to read. In the 1969 Budget debate Labour’s former leader Nordmeyer,69 who was retiring at the election later that year, contrasted the Budget with his infamous ‘Black Budget’ of 1958. Nordmeyer pointed out that while the 1967-68 recession was in terms of the drop in wool receipts the worst since the war, some $63 million on the previous year, in the 1957-58 year New Zealand exports fell in every commodity except timber by a combined total of almost $93 million. Imports had also risen sharply in 1958 compared to a fall in 1967 and public debt rose only $22 million in 1957-60 under Labour compared to $182 million in 1963-66 under National. It was a very telling attack on National and in an untypically gracious gesture when Nordmeyer concluded Muldoon crossed the floor and shook Nordmeyer’s hand.’ (p.96).

Muldoon may well have respected Sutch as well. Gustafson, in his work, his way: a biography of Robert Muldoon (2000) points out that:

‘Ironically there were some significant similarities between Muldoon’s approach to economics and those of the more Marxist influenced Sutch. To both, the social ends were more important than the economic instruments used to obtain them. Both saw the insulation of a dependent economy and the maintenance of full employment as the priorities. They were quite prepared to use import controls, import substitution, government planning and intervention, exchange controls, and subsidised farming and manufacturing to achieve those goals’. (p.192). They were both, though, according to Gustafson, also persons who over rated themselves in terms of their economic abilities! Despite that one is still left wondering how they both might have ended up being rated had they both stepped into, at the outset of their respective careers, less of a mess? In fact one could go further, and just as easily say that yes, Muldoon was of the same mind as Sutch – in that New Zealand needed to industrialize/diversify before it was too late. And that New Zealand needed to (so far as Sutch was concerned), or should have (so far as Muldoon ended up thinking), done so during the period when New Zealand was earning enough from its ‘traditional’ exports to pay for it (at the point when National first came to power – in 1949). When Muldoon went for it later with his ‘think big’ programme it was debt that got the better of him.

On the rise of Muldoon, not only in the estimation of his peers and of the public, but also in the estimation of Prime Minister Keith Holyoake, Gustafson, in, his way: a biography of Robert Muldoon (2000) has this to say:

‘National entered the 1969 election worried that inflation, unemployment, the fact that they had been in power for nine years, questions about Holyoake’s possible retirement, and a much more confident Labour leader in Kirk would make winning a

69 Nordmeyer had, contrary to Nash’s wishes, succeeded Nash 26 February 1963. He was succeeded in turn by Norman Kirk on 9 December 1965.

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fourth term very difficult. Their fears were heightened by Holyoake’s poor performance on television. Early in the campaign public attention seemed to be centred on the leaders Holyoake and Kirk, to the former’s clear disadvantage. Kirk, for example, assisted by a rowdy and hostile anti-National audience demolished Holyoake in a nationally televised question and answer session at Victoria University, Wellington. Holyoake also lost control during his opening address of the campaign in Christchurch, though he consoled himself that votes would be gained for national from the reaction of the spectacle of an unruly rabble trying to prevent the prime Minister talking to the people. National, nevertheless, decided to down play the contrast between Holyoake and Kirk and allowed Muldoon to play a more prominent role. Muldoon was determined that labour would not win the election by default and astutely diverted attention away from the leadership issue. He arranged for Treasury to calculate how much Labour’s election promises would cost and enticed Kirk into retaliating. However, Kirk rejected Muldoon’s invitation to debate on television, partly because he wanted to be compared publicly with Holyoake, not Muldoon, and partly because Labour’s own secret estimate of its election promises was even greater than Muldoon’s. Before long, most labour MPs were concentrating their fire not on the Prime Minister but on the Minister of Finance and on Muldoon’s handling of the economy and belligerent personality. That enabled Muldoon to point out clearly that Kirk was prepared to attack him at every opportunity but would not debate with him face to face. Kirk continued to state that he was only prepared to meet National’s leader, Holyoake. Other labour MPs were less reluctant than Kirk to face up to Muldoon on television or radio, but invariably the results were disastrous for labour. On 21 November, a week before polling day, for example, there was a televised debate on the current affairs programme Gallery. Muldoon and labour’s Dr Martyn Finlay ended a confrontation, which had been dominated by Muldoon, shouting at each other. The cameras remained on Muldoon who kept talking while Finlay was screaming, sometimes inaudibly, off-camera and the chairman, Dr Brian Edwards, was trying vainly to gain control of the situation. While it was not an edifying spectacle, it was gripping television and highlighted Muldoon’s fearsome and arrogant strength in debate. Holyoake desperately wanted to win the 1969 election, not least because he would be the first Prime Minister of New Zealand since Seddon to win clearly four elections in a row. But he had serious doubts that he would win and many others – national and Labour politicians, and journalists and academic commentators – also believed that labour would become the Government.

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During the last fortnight and possibly the last week, however, Labour’s potential victory slipped away. National’s superior grassroots organisation helped it to hang on narrowly to a number of key marginals, and labour’s image was not enhanced by a highly publicised and unpopular seamen’s strike during the campaign. Many commentators credited Muldoon’s effective appearances on television as being the deciding factor, and certainly the polls revealed that voters saw him as New Zealand’s most effective politician ahead of Holyoake, Marshall and Kirk. Holyoake was relieved and delighted by the result, which gave national 45 per cent of the vote to labour’s 44 per cent and Social Credit’s 9. National took 45 seats to Labours 39, a majority of 6 compared to National’s 8-seat majority over the 35 Labour MPs and 1 Social Crediter elected three years before. Muldoon retained Tamiki, more than doubling his majority to 6088 and increasing his percentage of the vote from 55.4 per cent in 1966 to 65.1 per cent in 1969. At his first cabinet meeting following the election Holyoake told his colleagues, “We’ve won’ fellows, and we can thank one fellow – Muldoon. From that time on Holyoake clearly regarded his Finance Minister as a potential successor to the party’s leadership and an alternative to his long-time deputy, Marshall.’ (p.112-14).

Holyoake retired earlier on in 1972, and Marshall, his deputy, succeeded him and led the National Party at the next general election held later that year (on 8 December 1972). National’s slogan was Man-for-man (this meant both Marshall and Muldoon), the strongest team. National lost – Labour gaining fifty-five seats to Nationals thirty-two. Marshall retired (aged 63), at the 1975 General election having been replaced as leader by Muldoon when it was put to the vote by caucus on the 4 July (American Independence day) 1974. At that next general election, held on 12 December 1975, National gained fifty-five seats to Labour’s thirty-two – the exact reverse of 72. Muldoon formed the next Government.

In retirement Marshall was also kept busy, becoming:

‘A consultant partner at the law firm of Buddle, Anderson, Kent, and a visiting fellow in public policy at Victoria University of Wellington. His honorariums for his university work were used to fund a Prime Ministers’ Prize in Public Policy Studies and the Sir John Marshall Scholarship for the top first-year student in political science. He also joined the boards of several companies, including the Norwich Union Life Insurance Society, Hallenstein Brothers, the National Bank and Fletcher Holdings.

He [also] became patron, president or trustee of over 60 cultural, community or charitable organisations, many of them Christian. While he was a figurehead of some, he became active

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in others, notably as patron of World Vision New Zealand and president of the Bible Society in New Zealand.’70

Marshall died of a heart attack in Britain on 30 August 1988, while on his way to Budapest to give an address at the World Conference of the United Bible Societies.

Shortly before his death, Marshall had completed the second volume of his Memoirs, published in 1989. Other work by Marshall that has been published is:

Adventures of Dr. Duffer / illustrations, Errol McLeary. 1978.Dr Duffer and the lost city / illustrations Errol McLeary. 1979.Dr Duffer and the treasure hunt / John Marshall; illustrations Errol McLeary. 1980.Dr Duffer's outback adventures / John Marshall; illustrations, Errol McLeary. 1981.

The adventures of Dr Duffer had their origins in a series of stories that Marshall wrote and read on radio during the 1930s - at the invitation of Aunt Molly, who ran the children’s session on 2YA in Wellington.

***

While Gustafson’s work, his way: a biography of Robert Muldoon (2000), concentrates in the main on the rise and fall of ‘Rob’ Muldoon, there is also, contained therein, a version of the fall of Sutch:

‘Although never a member of the Communist Party, Sutch made no secret of his interest in and admiration for the Soviet Union, which he visited on three occasions in 1932, 1937, and 1946. The British, from 1937, and the Americans, from 1947, were suspicious of Sutch as a security risk and in 1958 the Nash Government, which appointed him Secretary of Industries and Commerce, gave the United States Government a written assurance that no classified material of US Government origin would be made available to Sutch or to his department. Sutch retired in 1965. Between April and July 1974 routine SIS surveillance of D.A. Razgovorov, the First Secretary of the Soviet Embassy and a career KGB intelligence officer, identified regular night-time meetings between Razgovorov and Sutch. After consulting the Solicitor-General, the SIS advised Prime Minister Kirk on 2 August 1974 not to prosecute Sutch but to seek an explanation from him for his contacts with Razgovorov and to declare Razgovorov and two other Soviet diplomats involved persona non grata. Instead Kirk instructed the SIS to continue the surveillance and to establish what information or government contacts Sutch still had access to. Kirk also authorised phone taps and bugging of Sutch’s office by the SIS. Kirk died on 31 August and on 13 September his successor Rowling, with whom Kirk had previously discussed the matter, was

70 See Gustafson, Barry. 'Marshall, John Ross 1912 - 1988'.  Dictionary of New Zealand Biography, updated 4 April 2003. http://www.dnzb.govt.nz/dnzb/Find_Quick.asp?PersonEssay=5M36

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fully briefed. With Rowling’s approval it was decided that the police should intervene at the next meeting between Sutch and Razgovorov with a view to identifying what material, if any, Sutch was passing to the Soviets. On the night of 26 September the police interrupted a meeting at Holloway Road but Razgovorov claimed diplomatic immunity; another Soviet Embassy member, V.F. Pertsev, drove off in his car with the material handed over by Sutch and delivered it to Alexei Makarov the second in charge of the Soviet Embassy; and Sutch, although he denied that he had been regularly meeting Razgovorov, was formally charged under the Official Secrets Act. The Attorney-General, Dr Martyn Finlay, reluctantly agreed to Sutch being prosecuted and a trial by jury was conducted in the Wellington Supreme Court 17-21 February 1975. Sutch was found not guilty and following his acquittal there was considerable public criticism of the SIS, which led to Rowling deciding to review the Official Secrets Act and also on 8 August 1975 to set up an inquiry into the SIS conducted by the Chief Ombudsmen Sir Guy Powles. Powles submitted his report to Prime Minister Muldoon on 6 May 1976. It contained ten findings and 28 recommendations71 and led to the drafting later in the year of a Security Intelligence Amendment Bill and in 1978 the establishment of a committee chaired by Sir Alan Danks to consider freedom of information. The SIS bill was largely written by Galvin, who chaired the Security Officials Committee, and Millen, who was its secretary. Many people on the left of politics were very sceptical about the prosecution of Sutch and suspicious about the role of the SIS in spying on left-wing academics, unionists and peace activists.72

That antagonism had been aggravated by the apparent role of at least some SIS personnel in a campaign to discredit key figures in the Labour Government prior to the 1975 election. The SIS, for example, was implicated in the leaking of police job sheets regarding interviews with a Labour MP who was the Labour Party’s senior vice-president, Gerald O’Brien. The material was clearly intended to embarrass the Labour Government, but although a Security Intelligence Officer was forced to resign, he always denied that he had given the information to a businessman who was a former acquaintance in the Territorial Army. The businessman passed the information to Rowling73instead of using it – as probably had been originally intended – to embarrass the Labour Government. Subsequent suggestions that the leaked documents were part of a National Party plot to discredit labour were denied totally and angrily by Muldoon.’ (pp.192-93).71 One of Sir Guy Powles recommendations (though this made by way of a Finding), was that the NZSIS desist from assisting the newspaper Truth (Pravda, in Russian) with its news gathering activities. (see Finding on page 71 of the Report by Sir Guy Powles into the Security Intelligence Service, Government Printer (1976).72 Kirk had been concerned about this as well, and ‘for some years’ had advocated for the appointment of an overseer for the SIS. (in Margaret Hayward’s, Diary of the Kirk Years, 1981, p.127).73 Rowling, formerly a professional Army officer himself, was simply handed this ‘material’ by this person after he approached Rowling on the tarmac at Auckland International Airport – on 15 July 1975.

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And in her Diary of the Kirk Years (1981), Margaret Hayward, Norman Kirk’s Secretary from March 1968 until he died while in office on 31 August 1974, there is another version of the events of Friday 2 August 1974, one which leaves one shifting slightly differently on ones seat:

‘Friday, 2 August 1974. Brigadier Gilbert has been to see Mr K74 about “something serious in New Zealand’. After he left, Mr K looked as stern as I’ve ever seen him. Brigadier Gilbert had told him about a sinister figure who had been concerning the Security Intelligence Service for years. A “Mr Big” – who was Dr William Ball Sutch.

I couldn’t believe it. But it seems from his own absolute certainty that they have told Mr K enough to convince him completely. He told me that for more than 20 years the SIS had suspected Dr Sutch of being a spy. Even worse, Mr K seems to feel, is what Brigadier Gilbert has said about the activities of Dr Sutch and another New Zealander in refugee relief during the war, and the means by which they had acquired substantial assets. Although Dr Sutch lets people think he is a man who can’t afford a car,75 he is in fact living a double life and is very rich. Brigadier Gilbert has also told Mr K it is only Dr Sutch’s “incredible arrogance that occasionally lets his mask slip”. I can understand why Mr K is telling me all this. Although I haven’t had lunch with Dr Sutch for some time he is circumspectly warning me against doing so again.

Mr K used to be gentle with Dr Sutch. When I’d asked why he was so patient with him he had explained that he was an elderly man “who can’t have much money, no future but an old age pension, and has only his reputation to cling to”. He had excused Dr Sutch’s arrogance by saying he wore it like a threadbare cloak. Now he is furious. I think it’s an incredible accusation to bring against a famous economist, writer, and social reformer. And it seems a very conveniently timed revelation. I didn’t point that out, though, because the SIS has obviously produced enough evidence to banish any doubts Mr K may have had.

But why, if the Security Intelligence service has known about Mr Sutch for years, has it waited until now to take action?

Is it because the people there know that Mr K is unhappy about the way they tapped phones76while assuring him they were not? The way they rarely brief him, although as Minister in Charge he has to take final responsibility for their actions?

74 Kirk.75 Sutch did not drive. As does not, apparently, the new Pope, Benedict XVI. 76 This, Kirk suspected, had actually happened to him – see Diary of the Kirk Years (1981).

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The way they vetoed his suggestion that a person of good standing be appointed to oversee the Security Intelligence Service and protect the rights of the individual?

Perhaps they are anxious to keep Mr K from introducing safeguards, or having their activities monitored.

Perhaps this is their way of trying to convince Mr K that a strong, unimpeded Security Intelligence Service is essential to our security. That indeed New Zealand does have reds under many beds.

Yesterday Mr K walked the two hundred yards or so to Kelvin Chambers in the Terrace to see his surgeon, Mr McIlwaine. He came back limping, but happy. Mr McIlwaine was delighted with the way his legs have healed after the varicose vein operation.

He also inspected Mr K’s ingrown toenail, split down the middle and took the ingrown half off. It’s good Mr K’s had it done professionally instead of hacking away at it with a pocket knife as he did whenever it gave trouble in his days in Opposition.’ (p.282-83).

From that day, Norman Kirk, aged 51, had only thirty days of life left. And Sutch, following Kirk’s death on 31 August 1974, had only twenty-six days left before his apprehension meeting Razgovorov. He then died on the anniversary of when his arrest was first publicised, on 28 September 1975.

Marshall and his last word on Muldoon:

One of those who reviewed Volume One of Marshall’s Memoirs (1983), was, rather interestingly, R.D. Muldoon, who in a review published in the New Zealand Times, 2 October 1983, and entitled Gentleman Jack looks back, says that he, like others, expected more from Marshall:

‘I awaited this book with interest. I knew much of the story of Jack Marshall’s early life and followed his career closely from our first meeting in war-time Italy, through our National Party association from my return to New Zealand in 1947 up until my entry into Parliament in 1960. From then on our association was much closer. The book took a long time to write and I rather expected something like the outstanding biography of Walter Nash written by Keith Sinclair a few years ago, covering events with much detail, quotations, extracts from archives and material published for the first time. Unfortunately this book is more in the style of my own books, a personal memoir designed for entertainment rather than detailed historical record. As entertainment it will appeal to the elderly, but to the young much of the earlier material will lack interest, and,

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indeed, appear irrelevant to anything they are interested in. Even for my generation Jack’s childhood and youth were far from typical, and I think it played a major role in creating the type of politician he became. The intelligent young man from an affluent Presbyterian home who went to university at a time when most kids did not even go to secondary school, who indulged in pacifism till the grand tour of Europe opened his eyes, who called himself a liberal but ended up as darling of the Tories,77 inevitably became “Gentleman Jack Marshall” on the political scene. The book is the story of that progress. What it lacks is the bite of a more aggressive character. Things came to Jack, and he always waited, quietly confident that they would come as they always had. Sometimes he was mistaken, and that is why this book and its successor cannot tell of the Marshall years. There were the Holland years and the Holyoake years and maybe one day the Muldoon years, but there was only one part of a Marshall year, and that a year that I am sure Jack would rather forget. Even though Jack writes of himself as a reformer as Minister of Justice, the great reformer of modern New Zealand politics was Ralph Hanan, among other things the architect of the ending of capital punishment, which “liberal” Jack Marshall continued to advocate. Tough young Rob in his first year in Parliament voted with Ralph on that one, as did Duncan McIntyre. All the National members of the 1960 vintage who voted against capital punishment, with the exception of Esme Tombleson, were returned servicemen. We had seen enough killing. Two matters deserve specific comment. Jack comes out against national superannuation for the fallacious reason that it cannot be sustained in the future. That political cliché has been exploded. The demographic forecasts are well offset by projected economic development and growth, and the impact of new high technology. When Lance Adams-Schneider, Frank Gill, George Gair and I with some outside actuarial assistance put national superannuation together in opposition prior to the 1975 election the whole National caucus supported it without dissent. Jack Marshall was a member of that caucus. I have checked this recollection with Lance Adams-Schneider who confirms it. The second matter is the reference to the decline of participatory democracy. Caucus old timers know that today’s Government caucus is more open and free flowing than either Keith Holyoake’s or Jack Marshall’s. In Keith’s day certain senior ministers, and Jack was one, strongly resented caucus

77 Does Muldoon mean the British Tories/Conservatives Party? Methinks so.

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interference with their proposals, and the Nelson cotton mill fiasco was a direct result of Jack’s failure to heed junior backbench opinion. Keith Holyoake instituted the system of ministers clearing backbench Parliamentary questions before they were asked. Norman Shelton was the easiest. He let us ask anything but the effect of a damaging answer was on our own head. Jack Marshall was the toughest. He approved none but the easy ones. To a former colleague this book is certainly Jack Marshall as I have known him for nearly 40 years, intelligent, soft spoken, “Gentleman Jack”, a man widely respected by the public. It even brings out the reason for the lack of that spark of leadership that would have made him a successful Prime Minister.’

***

In Volume Two of Marshall’s Memoirs (published the year after his death, in 1989), Marshall offers, amongst other insights, a ‘pithy’ analysis of Muldoon – and ‘pithy’ it was indeed. On the inside of the front cover we are told that: ‘THIS IS THE KEENLY-AWAITED second volume of the memoirs of the late Sir John Marshall, covering the more turbulent years of his life from December 1960, when he was deputy to Prime Minister Keith Holyoake, until his death in August 1988.

Known to political friends alike as “Gentleman Jack”, Sir John’s life and career were marked by an unswerving courtesy and devotion to tolerance and propriety, as well as an elegance in style and manner which is reflected in his writing.

He is remembered especially for the stubborn, but always polite, manner in which he negotiated New Zealand’s continuing trade links with Britain when that country was joining the European Economic Community – it was said of him that he “could charm birds off boughs”. Here Sir John writes about those years of critical diplomacy with fascinating insight.

Here, too, for the first time, are his perspectives on his period as Prime Minister of New Zealand – and his overthrow by Robert Muldoon, on which he had hitherto remained silent and on whose character he offers a pithy analysis.

Sir John brings the perspective of a true statesman to his memoirs and writes frankly about the events and personalities [Sutch included] of his many years as one of his country’s most experienced and senior politicians. His book will fascinate readers of all ages and political persuasions.’

Referred to by Muldoon above, the Nelson Cotton Mill - of which Jesson in his work, Behind The Mirror Glass: The growth of wealth and power in New Zealand in the

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eighties (1987), says Sutch was the ‘organising genius’ of, amongst other ‘Think Big-type agreements’, most notably the Marsden Point Refinery, New Zealand Steel and Comalco) - was also, according to Marshall in the second volume of his Memoir, (1989): both the ‘test case for the steady expansion of industry’, and also ‘the debacle which finally brought to a head all the issues for and against industrial development’. (p.14).

Briefly, the Mill was to be located in Nelson, and would produce, amongst other cotton goods, also the cotton meat wraps for the ‘millions’ of lamb carcases that New Zealand then exported – and at a guaranteed price per wrap produced to begin with. In 1960 Nash asked one of the companies (there had been two) that had been interested in setting up a mill in New Zealand (Smith and Nephew) if they would like to submit a proposal again.

For the people of Nelson, apart from the jobs that would be created, there was another aspect of the project that was particularly attractive to them - namely, the construction of a railway link with the South Island’s main trunk line, this so as to facilitate delivery of the mill’s products. Somewhat isolated at the foot of the Tasman Bay and surrounded by mountain barriers the people of Nelson had long called for this link.

Despite these calls National had not only ignored Nelson during its first period in Government (1949-1957), but they had also ensured that Nelson’s small local railway system was demolished. Not without protest though, one of those being Sonja Davies (nee Dempsey) who sat across the line – an action well remembered as is Sonja herself Edgar Neale, Nelson’s National M P there since 1946, was defeated over this at the election of 1954 and up until when Marshall put pen to paper again during the mid to late 80s, Labour still retained the seat.

Looking back Marshall interpreted the fall in imports from Britain - down from sixty per cent of all of New Zealand’s imports in 1950; to forty-three per cent in 1960 – as the main reason that Smith and Nephew was interested in establishing a mill in Nelson in the first place. And he interpreted Labour’s main interest in establishing the mill as having been to ensure that they retained the seat of Nelson, which they did in any case up until National MP Nick Smith finally managed to wrest the seat from Labour in 1996.

Gustafson, in his work, his way: a biography of Robert Muldoon (2000) recalls that the conflict over the cotton mill also presaged another – as evidenced, perhaps, by Muldoon’s unkind review above:

‘The conflict over the cotton mill reflected a much more serious basic difference of opinion within cabinet and caucus over industrialisation policy. One side’s views were summed up by Shand who in a speech in Auckland argued: “The time has come when sick industries must die78and not be maintained by artificial means...it will be a happy day when industry is sufficiently competitive and there is no longer a welfare state for industries. The other view was expressed by Marshall, who as

78 That particular industry hadn’t yet begun.

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Minister of Industries and commerce told Parliament: ‘I would take the very opposite view and say that sick industries should be nursed back to health. Marshall also took the view in caucus that ‘the agreement had been signed and that’s the end of it’. Muldoon became annoyed79 not just over the issue ‘but that type of ministerial attitude to backbenchers’.

In their campaign against the cotton mill, against other secret industrial agreements made by the previous Labour government, and against the general industrialisation policy advocated by Dr W. B. Sutch, the Marxist-influenced Secretary of Industries and Commerce, the backbench National MPs were given support and encouragement by Federated Farmers, the Constitutional Society, various manufacturers and importers with vested interests, and the economist B. P. Philpott of Lincoln College. They were all opposed to what they argued was another protected uneconomic industry which would result in higher prices and less variety of choice.

On 4 October 1961 during an adjournment debate Walker finally raised the matter in Parliament with a question which Muldoon had drafted. Marshall replied and Muldoon then spoke. He said that, although Marshall’s reply was ‘not entirely satisfactory’ and small manufacturer’s were worried, ‘it would not be proper’ for the Government to repudiate the contract. By that time, however, the party organisation was bitterly divided over the issue, with Eric Holland claiming that it was a ‘trial of strength between the party and the minister’ and another Dominion Executive member warning Holyoake in a letter that ‘the cotton mill is threatening to tear the party asunder’ and suggesting that Marshall should perhaps resign.

The battle raged with a number of bitter caucus meetings between October 1961 and January 1962, culminating in two days of debate on the 11 and 12 January. Every MP was then asked to state where they stood and by this time Muldoon was firmly in the camp opposed to the mill. Holyoake finally declared that he personally would close it down the next day but that the cabinet would discuss the issue taking into account the caucus opinions and would make a decision. When caucus adjourned shortly thereafter for lunch, the backbench group celebrated their anticipated victory over drinks. Cabinet met at 7 p.m. the same night and the agreement was cancelled, the British Company was paid £500,000 in compensation, and neither the mill nor the railway extension were built.’(p.76-77).

In Volume Two of Marshall’s Memoirs (1989), Marshall offers the opinion that, essentially, it was out of character for the National Party to select Rob Muldoon as its Leader in the first place. In mid 1984 Muldoon had called a snap election and National had lost. And at the next general election held in 1987 National had lost even more

79 Muldoon had only just been elected – in 1960 in the seat of Tamiki; whereas Marshall had been a Member of Parliament for thirteen years.

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ground – reflecting to some a shift in consensus (in general agreement amongst the population); and to others, a continuing backlash against the ‘Muldoon years’:

The plain fact which is now widely recognised is that Robert David Muldoon is in the National Party but not of the National Party. In his early days and indeed until he became leader he complied with the party line, if not with the party style of behaviour. He was not intellectually committed to the National Party philosophy or principles as I was. In his book My Way (1981) he says: “Jack Marshall, who was good at this kind of thing, wrote a pamphlet on What the National Party Stands For”.80

He went on to state his own view by saying, “In some ways I think the National Party can better be described in the negative – that is to say, it caters for all those people who do not find themselves comfortable in the other parties.” What those words mean is anyone’s guess. It later transpired that for Robert Muldoon the words meant pragmatic interventionism. Gradually, as Muldoon gained increasing dominance within the party and gathered power in his own hands, he became his own man, following the party line when it suited his purpose but taking his own personal pragmatic position when he saw a political advantage in going his own way. The appeal then was to “the ordinary bloke” who wanted “a fair go”. The party became “a broad spectrum party” which in Muldoon’s words meant having “among its members many shades of political opinion and many views on any particular subject”. (p.224-25).

Marshall also lamented the passing of Kirk, but not quite in the gracious way that Holyoake did:

‘In the pursuit of his objective [of leading the party, Muldoon] concentrated on one area of leadership where he believed I was vulnerable. That was whether I could go into the House and on the election platform match Kirk’s debating style with its aggression, personal abuse, snide innuendoes, half truths, distorted arguments and exaggerated claims for his party. Muldoon was right. I could not beat Kirk at that style of political debate. So he and his supporters concentrated on that argument that he cold beat Kirk and win the 1975 election and I could not, they claimed do that.

The irony of it was that three months later [after Marshall was replaced as leader] Kirk was dead and his successor, Bill Rowling, was more in my style.’ (p.216).

On Kirk’s arrival to the point where he was able to form a Government, Marshall had this to say in Volume Two of his Memoirs (1989):

80 This was in 1954 when Muldoon stood for National for the seat of Mt Albert. (Helen Clarke’s seat from 1981-?).

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‘By 1972 the Labour Party were beginning to look like an alternative government and Norman Kirk was beginning to look like a possible Prime Minister. The metamorphosis from a fat ungainly man with shabby clothes and uncombed hair into a slimmer figure with well-made suits and a tidy appearance helped to improve his image...’ (p.180).

On Kirk’s arrival into parliament and at a remembrance ceremony held on the first anniversary of Kirk’s death at Waimate on Sunday 32 August 1975, Margaret Hayward, in her Diary of the Kirk Years (1981), recalled that Holyoake had this to say of Kirk:

‘It was Sir Keith Holyoake who gave the ceremony its impact and emotion. While everyone was speaking he had been jotting down a few notes on the back of his order of service – just as Mr K used to do.

On behalf of the Opposition, he spoke in his booming way of the years he and Norman Kirk had sat facing each other in the House, that never before or again would he see a man develop as Mr K had done. It had been amazing to sit there and watch him learn; to see that he never made the same mistake twice but kept on developing, improving so much that the original Norman Kirk was hardly recognisable.

The real tragedy, Sir Keith said, was that at his death he still had not attained his full stature. He still had his greatest years in front of him. Sir Keith bent and placed a carnation on the grave.’(p.317)

***

Gustafson, in his way: a biography of Robert Muldoon (2000), has also commented on the parliamentary style of both Kirk and Muldoon:

‘The Labour leader Kirk and Muldoon did not like each other but they did respect each other’s political abilities and strength. Neither was afraid to attack the other. Following his 1972 election victory, for example, Kirk with heavy sarcasm publicly baited Muldoon by saying that there were two people mainly responsible for Labour’s 1972 election landslide and that modesty compelled him to admit that Muldoon was more responsible for it than he was. According to one Labour MP, Kirk was strangely excited by the change of National’s leadership from Marshall to Muldoon. He told the Labour caucus it would improve National’s performance in the House and appeared to be looking forward to debating with Muldoon. But then Kirk died suddenly.’ (p.155).

And on Muldoon’s tendency towards seeking out the view of the ‘ordinary bloke’, Gustafson also comments (and he also quotes Jack Shallcrass, whose tribute to Sutch appeared at the very beginning of this work):

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‘Muldoon and his rival Shand81 were similar in that they chose not to make decisions simply behind closed doors but took issues out into the public arena and were willing to debate them openly and persuade public opinion via the media. One perceptive contemporary observer, who identified and analysed this development, was the Wellington academic Jack Shallcrass, a senior lecturer in Education at Victoria University and formerly deputy principal of the Wellington teacher’s College, who noted early 1969 that Shand and Muldoon seem to me to be raising issues in public and inviting reply in a way that is quite unusual. One need not agree with them (and I seldom agree with RDM) to recognise that they are probing sensitive spots and clarifying issues in a way that is unusual in NZ in the modern era. Of course they understate as well as select for political purposes but this seems incidental to the main issue. We’re just not used to politicians trying to define issues and stimulate public debate.

In a more detailed paper, Shallcrass argued that, with the growth of bureaucracy, the choice facing society and particularly politicians was either ‘to hand over power to the elites or to revitalise the democratic processes...by encouraging and leading the widest possible public debate on all the public issues’. Shallcrass concluded that Muldoon did the latter and was ‘resisting the temptation to take more decisions after cabinet rather than after parliamentary discussions and by taking issues to the people especially through the mass media.’ (p.100-01).

It should be added here though, that just as there were comments like these floating around about Muldoon at that time, there was also real concern being expressed at the same time about what might happen if Muldoon had the free reign that he eventually got – his personality being so forceful.

The last word here therefore, should perhaps go to the Marshall - one of those also worried about Muldoon’s forceful personality (and in fact by Kirk’s as well). In Volume Two of his Memoirs (1989), Marshall has left this record of what he witnessed the first time Kirk and Muldoon stood directly opposite each other in the House:

‘On Tuesday 9 July [1974] when the house assembled and Rob Muldoon appeared for the first time as Leader of the Opposition, Norman Kirk, the Prime Minister, was obviously waiting for him. On the first item of business Kirk was deliberately provocative and Muldoon was quick to reply in kind. They were quickly engaged in a web of insults and personal abuse to the

81 Tom Shand had been National’s Minister for Labour (a tough portfolio and one that also nearly got the better of Marshall as well), since 1960, and was Muldoon’s rival for the Finance portfolio in 1969. He was though unwell in 1969, and he died on 11 December – just ten days after the general election. Marshall said that in agreeing (after Shand died), to take on the ‘most demanding, frustrating and thankless job in cabinet [that] it did not occur to [him] at the time [though later] friends said that it was obvious to them that Keith [Holyoake] deliberately overloaded me so that I would not have time to lobby for the leadership’. (in Volume Two of Marshall’s Memoirs, 1989, p.115).

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consternation of the speaker but to the obvious fascination of both sides of the house.’ (p.224).

We might also muse here, that if Kirk had survived, he might have kept Muldoon honest (as the saying goes), and vice versa. And that politics in New Zealand may have soon assumed that more interesting rambunctious nature that so transfixed Marshall when the Kirk and Muldoon first stood opposite each other in the House. That rambunctious-ness that so characterises Australian politics if you like, where they call each other all sorts of interesting things - like Bonsai (little Bush) for instance, for John Howard, Australia’s Liberal Party Leader and Prime Minister since March 1996. Norman Kirk’s nickname, back then, was ‘Big Norm’ - immortalised by Ebony, released by Polydor, still played occasionally on radio).82

McMarshall and his last word on Sutch:

Sutch was also the odd man out, according to Marshall, and what’s more, at least ‘he knew it’, says Marshall in Volume Two of his Memoirs (1989).

Matters with Sutch came to a head in 1964 following Marshall’s return to New Zealand following a near fatal heart attack in March of that year in Teheran. Marshall spent seven weeks in hospital in Teheran before going on to London where he spent further time in hospital. He made a ‘slow recuperative return to New Zealand through England and the United States, staying with friends on the way’. On his return to New Zealand, parliamentary colleagues took over some of Marshall’s ‘heavy’ work load and the staff of his Industries and Commerce department (of which Sutch was the Head) were instructed by Marshall, ‘to curb their verbosity’ when making reports to him and to make their reports and correspondence with him ‘more concise, if possible confining them to one page or, for long reports, to provide a summary’. (p.141).

In 1961, Marshall recalls in Volume Two of his Memoirs (1989), that when he first had dealings with Sutch (appointed Permanent Head of the Department of Industries and Commerce by Nash in 1958)83 he thought of him as:

‘In a class by himself: highly intelligent, very able, positive, imaginative, enthusiastic, dogmatic, arrogant, provocative,

82 On Kirk’s passing, Muldoon had this to say: ‘On 31 August Hugh Watt and I, with our wives, were attending the China Society Ball in Auckland when the news came through that Norman Kirk had died. He had entered hospital a little earlier for what was described as a rest following his almost continual illness during the year. At no stage had it ever been revealed that his illnesses were serious. I have seldom been so severely shocked at the death of a man, and the news was a great shock to Hugh Watt as well. From the time I came into the House as a backbencher Norman Kirk and I were natural opponents and at each level, as we rose up through our respective Parties, we clashed time and time again. I watched him closely, as he watched me. I believe I understood his strengths and his weaknesses. I esteemed his many qualities of energy, ability and political acumen. He would have been a more powerful opponent in 1975 and it is ironic that it was to combat his strengths in an election campaign, as much as for anything, that I was elected Leader such a short time before his death. I said these things and more in the Obituary Debate on the Tuesday following his death, and I found myself depressed for several weeks after his passing.’ (From Muldoon, by Muldoon, 1977, p.96). 83 Sutch’s promotion to Head of the Department of Industries and Commerce had previously been blocked by National, ‘because the American’s said that they would regard New Zealand’s security as suspect’. (in Sinclair’s Walter Nash, 1976, p.342).

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controversial, devious, politically suspect and not to be trusted. On this occasion he was enthusiastic about the future of the department. There were great opportunities ahead. ‘You can be the greatest Minister of Industries and Commerce the country has ever had,’ he said. He meant, but did not add, if I followed his advice. I smiled and made no comment. As time passed, and as his advice and my decisions diverged, he was not a little disappointed in his new Minister.’(p.13).

Sutch was to be further disappointed:

‘Towards the end of 1964 the problem with Sutch came to a head. He had always had an uneasy relationship with the business community, many of whom were suspicious of his socialist tendencies. Similarly, his association with other department heads and senior economic advisors led to differences of opinion on which Sutch would seldom concede that he might be wrong. His differences with me as his Minister on certain areas of basic policy also meant that I was not able to accept his advice on those matters.

He was, sadly, the odd man out. All this had long been known to the State Services Commission,84 his employer, and when the time arrived when they could require his early retirement in terms of the State Services Act, they asked for his resignation. After much argument Sutch agreed to resign.

The Public Service Association then came into the act and alleged that I had directed the Commission to take that action in breech of the State Services Act. They brought a private prosecution against me. The case was heard in the Wellington Magistrates Court before Harry Rosen SM and I was represented by Dick Wild, the Solicitor-General.85 The Chairman of the State Services Commission, Allan Atkinson, gave evidence that the decision to retire Dr Sutch was made by the Commission and by them alone. I had been consulted and informed but not asked to decide the issue. The case was dismissed.86

84 Actually only recently formed.85 Golfing buddy also - after Marshall, needing to exercise, suffered his near fatal heart attack in Teheran in March of 1964.86 Political developments of note at the end of 1964:The defeat in Britain of Harold Macmillan’s Conservative Government in the British General Elections (held in October 1964), which saw the election of a Labour government again, led by Harold Wilson. And in November 1964 Lyndon B. Johnson was elected President of the United States. Large scale bombing of North Vietnam started shortly thereafter and during 1965 U.S. troop levels in South Vietnam increased from ‘about 16,000 to 185,000’. The immediate justification for the bombing was an attack, on 6 February 1965, on a US Army Barracks in Plieku, South Vietnam, during which nine Americans were killed and five US aircraft were destroyed. There is a speech entitled Peace Without Conquest, given by Lyndon B. Johnson on 7 April 1965, at http://www.historyplace.com/unitedstates/vietnam/johnson-hopkins.htm & more on ‘Operation Rolling Thunder’ said to be necessary so as to discourage the North Vietnamese @ http://en.wikipedia.org/wiki/Operation_Rolling_Thunder New Zealand was also soon subscribing to a ‘Communist Domino theory’ - as outlined first by Dwight Eisenhower on 7 April 1954 & @ http://coursesa.matrix.msu.edu/~hst306/documents/domino.html if you are interested - as evidenced from this excerpt from a New Zealand Defence White Paper considered by

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William Ball Sutch was undoubtedly the most controversial public servant of his time, and perhaps of all time. He was born in England in 1907, but his family immigrated to New Zealand when he was a young child and settled in the Wellington suburb of Brooklyn, where my parents also lived at that time.87The Sutch family, like most British immigrants, were determined to build a better life in our free and open society. They were active in the Methodist Church, where young Sutch was a lay-preacher. They were avid for education.

Against this background, Bill Sutch blossomed. He graduated from Victoria University College as a Master of Arts and a Bachelor of Commerce, majoring in economics. He became a school teacher,88 then went to America and gained a doctorate from Columbia University, New York. He then travelled to Europe and in 1932 he made a long journey across Russia.89

Cabinet in 1965: ‘To demonstrate that the Communists will not be allowed a military victory will be of the utmost importance to the future peace and stability of the whole area. In this sense the present conflict in Vietnam seems likely to be a turning point, one way or the other, in the history of Asia, with all the implications this has for New Zealand’s future security… If the world can demonstrate that it can hold the line in Vietnam against expansion under the guise of ‘a war of national liberation’, as it demonstrated in Korea that it could hold the line against overt attack, a new possibility may open for the peace and stability of Asia.’ (cited in Richard Kennaway’s, New Zealand Foreign Policy: 1951 – 1971, 1972, p.73-74). (Though first asked by the U.S. to commit troops to Vietnam at the end of 1964, Britian, under Harold Wilson (1964-70; 1974-76), would never agree to this. New Zealand, in 1964, did agree to this - and sent 25 army engineers there. By late 1967 New Zealand’s troop commitment in Vietnam had risen to 600 and was maintained at that level until numbers were cut back during 1970 and 1971. Kirk ordered the complete withdrawal of NZ troops from Vietnam after Labour became government in 1972; as did the newly elected Australian Labor Prime Minister, Gough Whitlam, that same year).87 William Ball Sutch was born in Southport, Lancashire, England, on 27 June 1907, and was eight months old when his family migrated to Wellington. His parents were both quiet and determined persons - his father a carpenter and his mother a dressmaker. John Ross Marshall was born in Wellington on 5 March 1912 – his father an accountant from Scotland, and his mother, New Zealand born, of no specific occupation. His Grandmother, Ross, was also a little political herself - in that she was an active member and leader in New Zealand of the Women’s Christian Temperance Union (WCTU); early proponents, also, of women’s rights in New Zealand (and a stern lot they were also…).88 In Nelson.89 This is mischievous as Sutch always said that he travelled considerably further than this. On the back cover of Dr Sutch’s ‘slim Penguin volume’, The Quest for Security in New Zealand (1942), it says this about the author and about his travels: ‘THE AUTHOR DR. W. B. SUTCH was born in Southport, Lancashire; brought up and educated mainly in New Zealand. He is well known there as a lecturer, broadcaster and writer on New Zealand contemporary social and economic problems. As a university student he conformed to a well-known New Zealand pattern, namely, working in vacations at such jobs as farm labourer, grocery assistant, building labourer. Started earning a living as a secondary school teacher [in Nelson]; was awarded a research fellowship in economics at Columbia University and was in New York in 1931-32. Has travelled in various ways and by devious means round Europe. Went alone up the coast of Norway round Hammerfest and began a trip across Lapland with Kirkenes as a stating point. Thereafter travelled from Helsingfors, Leningrad, Moscow, Tashkent, Samarkand, Bokhara, Termez, over the Hindu Kush Mountains to Kabul in Afghanistan through the

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In 1933, at the age of 26, he was back in New Zealand. He was appointed as an advisory economist in the office of the Minister of Finance, where he remained until 1940 and thereafter with other government departments until the end of the war in 1945. Then he joined the United Nations Relief and Rehabilitation Agency (UNRRA) and for the next two years travelled widely through the war-torn areas of South East Asia, the Soviet Union and Europe. In 1947 he went to New York as Secretary-General of the New Zealand delegation at the United Nations, returning to New Zealand in 1951 to become, successively, economist to the Department of Industries and Commerce, assistant secretary in 1956 and permanent head in 1958. There he was in 1960 when I became his Minister and there he remained until his retirement at the end of 1964.

On paper this may read like the normal progression of an able public servant, but there was nothing normal about this remarkable man. He was an enigma. On the surface he appeared to be an alert, positive, active, dedicated public servant, serving his political masters with eager enthusiasm and giving advice which was constructive, creative and persuasive; but those who penetrated the façade, as I did during the years he was with me, found a strange, frustrated, arrogant, secretive man with a brilliant quicksilver mind, facile, ingenious, crafty, devious, deceitful.

To try and understand the equivocal nature of this perplexing man and to untangle the mixed motives which led him to think and act as he did, one needs to know something of his background. In the early 1930s the world was in the turmoil of the Great Depression. Sutch was a student in the United States of America, the vortex of that capitalist catastrophe. At Columbia University in New York he was exposed to the general disillusionment with the capitalist system which was rife among young intellectuals at that time. He went there with the faith of a Methodist lay-preacher and left as a convert to the ideology of socialism. He was undoubtedly surrounded by others of like mind and was perceived (like others at Cambridge University at the same time) to be worth cultivating for future use – worth even sending on a tour of the Soviet Union, the Marxist alternative society which he later referred to as the “success of the Russian revolution”.90

towns of the Ganges and Calcutta. He is the author of many articles in periodicals in New Zealand, Australia, England and the United States. His books include Price-fixing in New Zealand, Recent Economic Changes in New Zealand, and Poverty and progress in New Zealand.’ We might also add here, and we will come to more on this soon (from Turnovsky), that Sutch’s health, in his later life, suffered in a way that tends to support his claim about his OE. Sutch also, in Afghanistan, contracted malaria (see Easton, Brian. 'Sutch, William Ball 1907 - 1975'.  Dictionary of New Zealand Biography: updated 22 June 2007. http://www.dnzb.govt.nz/dnzb/Find_Quick.asp?PersonEssay=5S54 90 One needn’t doubt this to still ask: in what; to whom and when?

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He returned to New Zealand committed to promoting the building of a better society based on a radical socialist model. For the rest of his life he was on the one hand a dilettantish fellow traveller and in the other, superficially, a servant of a capitalist state. There are grounds for believing, in the light of later events, that he was also, from that time on, a mole – which, in the language of security intelligence, means a person who operates underground, out of sight and out of mind, in the murky world of espionage. But it would be unwise to make a mountain out of this molehill since the evidence so far available is sparse and circumstantial until the final conclusive revelations during his trial in 1975.

Back in New Zealand he found all members of his family unemployed. He himself was without a job. In spite of his high academic qualifications, he remained out of work for some time until he found employment with the conservative Minister of Finance, Downie Stewart, and his successor, Gordon Coates,91 for whom he later professed a great admiration [in Margaret Hayward’s Diary of the Kirk years, 1981, p.249] and whose biography he began to write but never finished. In 1934 Sutch was involved in forming the Wellington Fabian Society.92It was an

91 From the age of seven, up until age sixteen (1919-28), Marshall lived with his family at Whangarei in the electorate of Kaipara – the electorate of Coates, then the Minister of Railways. A rail link to the area was finally completed in 1925.92 Brian Easton cites this from Marshall and comments: “Marshall wrote in his second volume ‘In 1934 Sutch was involved in forming the Wellington Fabian Society. It was an incongruous situation in which he was expected to advise his ministers [sic, at the time he was an adviser to Gordon Coates only], how they could revive the capitalist economy when he himself believed that the capitalist system had failed and that socialism was the answer.’ (p.144) No source is given. I have located two. Twenty years earlier Sutch wrote in The Quest for Security in New Zealand: 1840-1966 that ‘In February 1934 a Wellington Fabian Society was formed with the sole purpose of inviting George Bernard Shaw to give a public address. The moving spirit was R.M. Campbell (the writer assisted). Both of us were on the staff of J.G. Coates, who we told of our actions; and Peter Fraser readily cooperated.’ Campbell, who was a decade older that Sutch and later became Public Service Commissioner, also gives an account in The Auckland Weekly News (29 August 1956) which confirms Sutch. Shaw’s Wellington address was typically Fabian, arguing that a capitalist economy should be incrementally transformed into a socialist one. Indeed, the most severe imbalance in Marshall’s account of Sutch is his crude portrayal of all socialism as a unity, confusing the revolutionaries with the evolutionaries, and its complete lack of awareness that (evolutionary) British socialism comes primarily from Christian dissenters, particularly the Methodist tradition which Sutch grew up in, and which he honoured to the end of his life.” (From Marshall and Sutch – see at http://www.eastonbh.ac.nz/?p=77 )

***The Fabian Society was a British organisation founded in 1884 to promote evolutionary socialism. The Fabians, (founder members included Beatrice (Potter) Webb and George Bernard Shaw), rejected Marxism for advocating violent class struggle, and instead worked towards the creation of a more representative political party - the Labour Party. A Social Economist, Beatrice (Potter) Webb (1858-1943) was a prodigious scholar, publishing 11 books by herself, and co-authoring about 20 more with her husband, Sidney Webb. As well as being a co-founder of the Fabian movement (with the support of her husband), she was instrumental in the founding and development of the London School of Economics and Political Science - one of the pre-eminent institutions of higher learning in Britain. Her greatest influence it is said though, was on Poor Law reform and the subsequent creation of the British Welfare State. Between 1905 and 1909, she served on the Royal Commission for Poor Law Reform and Relieving of Distress. She was the impetus behind its Minority Report (1909), which, more than any other document, influenced much of the social reform in the 20th

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incongruous situation in which he was expected to advise his ministers how they could revive the capitalist economy when he himself believed that the capitalist system had failed and that socialism was the answer.

On the change of government in 1935 he continued as economic advisor to the new Minister of Finance, Walter Nash. In 1937 Nash went on a ten-month trip to Europe, the USSR and the USA. He took Sutch with him. While in London they attended the Committee on Imperial defence, where Sutch had access to secret Commonwealth defence information.

Some of this information was published in a pro-communist periodical called The Week.93 The official inquiry which followed produced evidence that Sutch had clandestine contacts with leading officials of the British Communist Party - including their General Secretary, Harry Pollett 94 – and with a left-wing journalist. While the evidence identified Sutch as the probable culprit, it fell short of direct evidence that he had passed on secret information.

On the same visit to London, Sutch joined in a street march in support of the republican side95in the Spanish civil war, which in itself proved nothing more than his left-wing sympathies.

In the absence of positive proof of a breach of security, Nash kept Sutch on as his adviser. But from that time on successive British Governments supplied secret information to successive New Zealand Governments with the proviso that Sutch must not have access to it. On his return to New Zealand, Sutch was involved with the Spanish Medical Aid Committee, a group which included a number of Communist Party members and whose activities were more concerned with Soviet propaganda than the sending of medical aid.

Century, and formed much of the basis for the reforms of the Clement Attlee led Labour Government (1945-1951). George Bernard Shaw (1856-1950) born, he said, ‘into something close to genteel poverty’ in Dublin, Ireland, became a noted 20th century British figure as a dramatist, literary critic and socialist spokesman. A noted freethinker he was an early defender of women's rights, and also an advocate of equality of income. Pygmalion (1913), considered his most successful work for the theatre, depicted a cockney girl’s transformation into a lady by a speech professor, and was the basis for the 1956 musical My Fair Lady. His most notable non-fiction work is considered to be The Intelligent Woman’s guide to Socialism and Capitalism (1928). In 1925, after being awarded the Nobel Prize for Literature, Shaw accepted the honour but refused the money. Sutch, at the end of his life, also reflected on the transformation of women’s lives (in NZ), in Women with a cause / [by] W. B. Sutch. (1973; 1974).93 The Week was published in London from 29 March 1933 until 15 Jan.1941, and was, like The Daily Worker suppressed by Government Order between 15 January 1941 and 23 October 1942 when it was then allowed to publish again.94 Pollitt!95 The elected Government’s side.

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In 1940, Sutch wrote a book on the social and economic development of New Zealand for the centennial series of historical publications. The Prime Minister, Peter Fraser, read the manuscript, and refused to allow it to be published. It had too much of a Marxist flavour for him. Sutch, to his credit, had the courage and independence, or perhaps it was arrogance, to stand by his own slanted interpretation of our history. He sent the manuscript to England, where it was published by Penguin under the title The Quest for Security in New Zealand.96 He wrote a second edition, brought up to 1966, following his retirement. It is, indeed, a biased and bitter version of our nation’s story.97

Sutch’s political involvement during that period of the 1930s and 1940s has been revealed in his own words, in the taped comments made by him not long before his death in 1975, and published in The Scrim-Lee Papers. He was, he said, “a very active member of the Labour Party”, accepting that “the capitalist system had failed” and that socialism was the answer. He was highly critical of Fraser and Nash (and of the modern Labour Party) for their abandonment of socialist principles. He described himself as “the odd man out” because his concept of socialism was “at least non-capitalism”, and so, to his regret, and in spite of the first Labour Governments “mandate for radical change”, New Zealand still remained a “capitalist country”. He was at least consistent in his socialist views right to the end.

His term as Secretary-general of the New Zealand delegation to the United Nations between 1947 and 1951 brought Sutch into close contact with the representatives of all the other members of the United Nations, but the Americans thought that Sutch’s contacts with the Russians and with associated communists and fellow travellers was much too close. These contacts were carefully observed and well documented, but again, hard evidence of espionage did not come to the surface. But from that time on, successive United States governments supplied secret information to successive New Zealand governments with the proviso that Sutch must not have access to it.

Back in New Zealand, from 1951 and for the rest of his official life, Sutch remained under suspicion and passive surveillance. Perhaps because he was aware of this, he himself maintained a passive political position, no longer “a very active member of the labour Party” and carefully discreet in his political contacts and comments. A security check, not long before his retirement in 1964, did reveal visits to the home of

96 The outcome of Fraser banning publication of this manuscript was ‘not quite what Fraser intended as by courtesy of the Prime Minister’s secretary, Sutch sent the first manuscript to England in Fraser’s luggage…’ (in Sinclair’s Walter Nash, 1976, p.208).97 After publication in 1942, the first edition of, The Quest for Security in New Zealand (appearing as a Penguin Special) sold 100,000 copies (mentioned by Shallcrass in his introductory piece to this work – above footnote 1)

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a member of the Communist Party, but no more than that. Some people, from time to time, alleged that Sutch was a communist, but there was no positive proof to support the charge, and he might have ended his days with a reputation as a distinguished public servant, dedicated to the advancement of the national interest as he saw it, but for the final act of folly which, at last, gave the hard evidence of his communist sympathies and, in more ways than one, exposed his double life.

On the night of 18 April 1974, members of the Security Intelligence Service, who had been following the movements of Razgovorov, a KGB agent masquerading as a diplomat with the Soviet Embassy, saw him make contact with a man in a quiet suburban street in Wellington. They identified this man as William Ball Sutch. They then, to use the jargon of the service, put a tail on him. They kept him under observation for the next five months during which time a series of clandestine meetings took place between Sutch and his Russian contact under cover of darkness, at out-of-the-way places in and around Wellington, with both parties taking elaborate precautions to avoid suspicion and prevent detection.

On the evening of 26 September 1974, Sutch met Razgovorov at a dark spot in an unfrequented byway called Holloway Road. The police and security men, who by then had prior knowledge of the meeting, were waiting out of sight nearby. They observed the movements and the meeting of the two men. At what they deemed to be the right moment the police approached both men. The Russian ran off but was stopped. He claimed diplomatic immunity and after some discussion he was allowed to go. He left the country a few days later “on leave”, but he never came back. Sutch was arrested and charged with an offence under the Official Secrets Act 1951.98

98 Marshall does not mention here, nor in either volume of his Memoirs (1983 & 1989), that it was his Government that had introduced this Act after their victory following the snap election that Holland called in 1951 – having become convinced, somehow, that the industrial stoppages, which had also dogged the Labour Government, were in fact part of a Communist plot aimed at limiting New Zealand’s involvement in the Korean war. Evidence for this was said to have “appeared in anonymous waterside workers’ strike pamphlets” (see Sinclair’s, Walter Nash, p.288). Marshall does mention though, in Volume One of his Memoirs (1983, p.177), the introduction (at the same time), of the Police Offences Amendment Act (1951) – which extended the definitions of Sedition and Subversion. This Act Marshall seemed to regret later. National also reintroduced the death penalty when it became government in 1949 – the Labour government having suspended the death penalty when they became government in 1935, and finally abolishing it in 1941. It is difficult to say if Marshall regretted that National reintroduced this sentence (his was the prerogative of mercy after he succeeded Clifton Webb as Attorney General and Minister of Justice at the end of 1954 up until 1957), as he did fight for its retention when it was finally abolished as proposed by the next National Minister of Justice, Ralph Hanan, in 1960. In Volume Two of his Memoirs (1989), Marshall runs through the murder rate figures for the period of National’s first period in office (1949-57), compares them with later figures (1971 to 1980) and observes the difference. (p.223). He does not though, offer us the figures for the period 1935 - 1949 nor 1957 - 1960 (Labour’s first and second period in Office), which would also have been interesting – for it follows that had there been a ‘jump’ of statistical significance during those periods then the argument would have been better put. It could be said that by this omission that perhaps Marshall did finally feel it necessary to justify himself in some way – even if only stung to by Muldoon’s critique of his first volume? So far as Sutch is

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At the trial in February 1975, Sutch was acquitted on the ground that the Crown had been unable to prove what information had been passed to the Russian agent; but Sutch did not give evidence at the trial to explain or deny his clandestine activities, which were proved beyond any doubt by the evidence given in Court, on which he stood condemned as a collaborator with a Russian spy.

In our free society Sutch could,99 if his motives were innocent, have met with members of the Russian Embassy openly in the diplomatic and social scene as many New Zealanders do without raising any suspicion of collaboration. Some friends of Sutch who could not bring themselves to believe that he was so committed to his socialist views have, in an attempt to explain away the unexplainable, suggested that Razgovorov might have been discussing with Sutch a plan to defect, but to defect merely required a visit to the appropriate authority. In any case if that were so why should he pick on Sutch as his intermediary? It was also claimed that Sutch had no secret information which he could have passed on and that on the face of it would seem to be so, unless Sutch was the intermediary for another mole or unless he was passing on commercial intelligence or assessments of individuals which the Russians considered to be of sufficient interest to justify the elaborate precautions which were taken. But whatever it was, no one has ever attempted to deny the facts and circumstances of Sutch’s association with Razgovorov of the KGB.

There was more to the incongruous character of Sutch than his ideological intrigues. He had a wide range of intellectual interests and pursuits. He was a prolific writer and lecturer of great versatility, covering economics, sociology, history, education, architecture, local government and town planning, social welfare and the rights of women, contemporary art and ancient artefacts. The continuing theme of his writing throughout his life was the need for New Zealand to abandon what he called our colonial mentality, and to develop as an independent nation, self reliant, well educated, socially and

concerned, Brian Easton (Sutch’s only biographer so far), has pointed out that ‘Marshall, who was Sutch’s Minister for less than five years devotes nine pages to Sutch [and] gives Keith Holyoake, with whom he shared a caucus for 27 years, 18 of them in cabinet, only seven pages…’ (see the Paper entitled Trying to understand Dr Sutch given at the Stout Research Centre Seminar Series, Wednesday 2 September 1998 at http://www.eastonbh.ac.nz/?p=49 )99 Strictly speaking, Sutch should have been convicted, as under section Four of the Official Secrets Act (also brought into Law in 1951), the fact that a person has had contact, or has attempted to have had contact, with a ‘foreign agent’ (an ambiguous term) is deemed to be sufficient proof that a person has ‘obtained or attempted to obtain information which is calculated to be or might be or is intended to be directly or indirectly useful to an enemy’. A criticism of this section of the Act, so far as it related to Dr Sutch’s trial in 1975, has been that the jury was being asked to assess Sutch’s actions from the viewpoint of 1951, from when this portion of the Act was directed specifically at those that might have assisted an enemy at a time when New Zealand had become involved in an actual war – in that instance, the Korean war.

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culturally advanced, building our standard of living on adequately protected manufacturing industries.

Stated in these simple terms, many could agree with his broad objectives, but when it came down to specific issues, he could see little that was good in the New Zealand political and economic scene and his remedies were often extreme, unacceptable in the current climate of public opinion. So he had more critics that supporters and while his contribution to the ferment of ideas was stimulating and provocative, he was denied the satisfaction of seeing his basic ideas gaining widespread acceptance. His effectiveness was further limited because from 1937 to the end of his career, there was an underlying element of suspicion and distrust which restricted his involvement in certain areas of government activity.

On the other hand, in less controversial areas and within the confines of broad governmental policy, the innovative capacity of his fertile brain and his wide-ranging experience ensured that his influence on decision making was considerable, but less than it might have been if he had not been so dogmatic in his views and arrogant in his manner. He was often at odds with his colleagues in the top level of the government’s advisers and with professional and academic economists. But he was not without friends and admirers among people who might be described as intellectuals with left-wing leanings, and others who shared his cultural and community interests.

His political and economic publications, particularly those produced after his retirement, make sad reading, for although his friends claimed that he had been “for four decades a major influence in shaping New Zealand economic policy” the truth is that he, himself, was bitterly critical of the failure of successive governments generally to follow what he would have regarded as enlightened policies, and in particular to adopt his concept of national development. His myopic and uncompromising views of New Zealand political and economic life emerge in his writings as a record of frustration and a testament of hopes deferred and aspirations denied.

I used the phrase “myopic and uncompromising” to refer to the views which he felt he could advocate with some degree of acceptance. If we believe that his concept of socialism was “at least non-capitalism” then his whole working life involved him in a compromise between his deeply-held beliefs and the limitations imposed by his position as a public servant and in a community where radical socialism was not an option. But his camouflage was not complete and his credibility was always suspect. He was never fully accepted because he was never fully trusted by the undefined and elusive arbiter of status known as the establishment.

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This enigmatic man defies classification. He exhibited some admirable qualities of humanity and a concern for people. He was dedicated to the advancement of education and the enrichment of the cultural life of the community. In some aspects of his personal life he appeared to be an austere and frugal man. He did not own, and could not drive, a car. He did not smoke or drink, but he liked to pose as a connoisseur of wines. When the police searched his house after his arrest, they found that he had accumulated large quantities of untouched alcohol.

In the discussions leading up to his enforced retirement at the end of 1964 he led the Prime Minister and me to believe that he was then solely dependent on his pension and, with his income reduced by a third, he would have difficulty in making ends meet. We took pity on him and arranged for his superannuation to be supplemented by consultancy fees from government sources. At the time of his trial in 1975 his friends appealed for funds to help to pay his legal costs. Shortly afterwards, to the shocked surprise of everyone, it was revealed that Sutch was in fact a wealthy man with substantial assets. There was no explanation offered for his accumulation of assets.100 He came from a poor family and all his working life was on a public service salary. It was publicly alleged101 but not proved that as a director of

100 Sutch’s wife, a barrister, also worked and indeed was at work the night he was apprehended by the police and the SIS according to the court report.101 If ever any of this was “publicly alleged” then this was most certainly not before 2 August 1974, when Prime Minister Kirk was told of this by Gilbert, as Kirk had not heard this before. Kirk is known to have kept a record of gossip (popularly known as the ‘K Files’) so as to avoid getting caught up in controversy, and sinister motives have been attached to this (by Michael Wall, for example - ‘the one-time advertising guru – the instigator of the infamous Dancing Cossacks television ads which helped usher Robert Muldoon to power in 1975’, in his novel Museum Street (1991), a person who ironically was also wont to complain about McCarthyist tactics and spin himself when employed to watch out for National Party Leader Jim Bolger’s image in the early 1990s - see the June 1994 issue of North and South: New Zealand's lifestyle magazine). Margaret Hayward in her Diary of the Kirk Years (1981), has also pointed out though, that in those days ‘there was no research officer, no press officer and not even a speech writer for the Opposition… Altogether the facilities for the Opposition were so bad that not even the deputy leader, Hugh Watt, had his own typist, but had to rely on someone from the pool of four typists who did the electoral and parliamentary work for all the Labour MPs.’ (see the introduction to the Diary of the Kirk Years). In Volume Two of Marshall’s Memoirs, 1989 (p.202), there is a reference to Margaret Hayward’s Diary of the Kirk Years (1981), in that he noted that she had noted that she had been impressed by a particular speech of his, and that she had recorded this the next day in the Diary. And so it seems possible that this was where Marshall had read of this ‘allegation’ also? The wording is different in Marshall’s work though, and Hayward does not mention the organisation, just that Gilbert had said that ‘Dr Sutch and another New Zealander in refugee relief during the war [had] acquired substantial assets’ (see above in main text after footnote 74). There is mention in Shallcrass’ introductory piece to this work (above footnote 1), and published in 1975, of the particular organisation (UNNRA), but generally it was no secret in any case that Sutch had worked with this organisation – Nash having been one of those that had pushed for its formation when Minister to Washington (1942-43). Shallcrass has it in his piece, that it was Sutch’s: ‘Work with supplies [during the war] between countries [that] brought him to the attention of the United Nations Relief and Rehabilitation Administration and [that] in 1945 he became their Director of Supplies and deputy Director of UNRRA for the South-west Pacific… UNRRA then appointed him Director of Operational Analysis in London. His job was to examine the needs of European countries devastated by War, from Italy and Austria to Poland and the Ukraine, and to decide how international aid could best be given. Here

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UNRRA, dispensing relief in war-torn Europe, he had also, like others at that time and in that situation, surreptitiously enriched himself in the black market and thereafter, adopting the role of a good capitalist whom he purported to despise, had quietly invested his ill-gotten gains. It is a plausible explanation consistent with his known conduct in money matters.

Whether Sutch was paid by the Russian KGB for information which may have been passed on to them is unknown except to the Russians themselves and they would certainly deny such accusations. But this at least can be said, that his concealed accumulation of assets in the end revealed that, behind the frugal façade, there was yet another Bill Sutch with the mercenary motives of a miser.

This facet of his character was further exposed after his death when his name appeared in the official list of income tax evaders. He was found guilty102 of making false returns of income or giving false information between 1966 and 1974. He had evaded the payment of income tax to the extent of $47,241, which even on the top rates of income tax at that time would have meant income in the vicinity of $100,000 undisclosed during that period.103 We had been deceived into believing that he only had his pension to live on and we helped him. He must have been laughing all the way to the bank, although when I come to think of it he was not normally a laughing man.104

he was noted for his reports on how to rebuild economies as diverse as those of Austria and Poland.’ (see Shallcrass’ introductory piece to this work above footnote 1). There is no mention of this allegation in Sinclair’s Walter Nash (1976) - while there is, therein, mention of the United Nations Relief and Rehabilitation Administration (UNRRA) on pages, 228, 238, 240 and 241. And there is no mention of this allegation in Parker’s, The SIS (1979) either - even though he spoke to as many of the right people (unnamed) as would talk to him, including Sir Alistair McIntosh whom he did name (as McIntosh had passed away the year before and Parker wanted to give him special mention for all the help he had been - see p. 8 in The SIS). Nor has Gustafson mentioned this - nor though, did Gustafson mention reading Hayward? 102 Another trial?103 Death and taxes? More seriously - why publish this? As a lesson, perhaps, to the rest of us so as we don’t die owing IRD anything. More pressure then, on the living. Less seriously, following on from that, one could, in that sense, take some of it with us then…only if we owe though…104Marshall perhaps – for it was quite some conjunction of events that saw Marshall’s knighthood announced the same day that Sutch was apprehended? For anyone interested in this interesting ‘conjunction of events’ they might be surprised at how far they might get pursuing the thesis that the decision to apprehend Sutch was finally made after it became known that Marshall’s knighthood was going to be announced that same day (in a ‘special honours list, by the Governor-General, Sir Dennis Blundell, on 26 September 1974). A doubtless reliable version of why Sutch was not asked about the meetings, goes to some length to point out that it was Kirk that had blocked this, telling them to find out what he could be handing over – this in consideration of the fact that Sutch had been out of Government service for ten years. It was Rowling, according to this version that decided on 13 September 1974 that ‘the police should intervene at the next meeting between Sutch and Razgovorov with a view to identifying what material, if any, Sutch was passing to the Soviets’. (see Gustafson’s, his way: a biography of Robert Muldoon, 2000, pp.192-193). He did not do this though (according to an interview with him - Rowling), Gilbert having already decided, he says in this interview, to intervene at the next meeting and to involve the Police (see 20/20

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Perhaps the most extreme contradiction occurred towards the end of his life when, moved by a pathetic craving for recognition and public approval, he tried to put pressure on the then Prime Minister, Norman Kirk, to recommend him for a knighthood,105 and about the same time, he was in clandestine communication with a Russian spy. What can you make of a man like that? Was he the good Dr Sutch as his friends proclaimed him to be, or the devious Mr Mole, as the evidence at his trial suggests? Or was he both?

Perhaps Alice in Wonderland might provide the last word: “The Mock Turtle drew a long breath, and said, ‘That’s very curious’. ‘It’s all about as curious as it can be,’ said the Gryphone.”’ (From Volume Two of Marshall’s Memoirs, 1989, p.141-49).

Turnovsky’s last word on Sutch:

Turnovsky (known as ‘Fred’) who had no axe to grind with Sutch (he had already ground it with Lochore) offers us, in Turnovsky, Fifty Years in New Zealand (1990), another view of the transformation of Sutch, his fortunes and his character, between 1961 and 1975 – and one that is very different from the view that Marshall held onto of the man:

‘In 1961, Bill was invited to assist in the organisation of a festival of the arts in Wellington, and he put his not

interview later in footnote 309). Rowling was also told, apparently, that at the previous meeting between Razgovorov and Sutch (on 28 August), Sutch had been seen raising his right knee onto which he next placed his briefcase – for about 30 seconds...? At trial though, Mr Y said he was not able to see if Sutch did anything with the briefcase other then rest it on his knee. Council for Sutch also argued at his trial that his arrest had been premature: ‘…extensive efforts made since Sutch’s arrest – including searches of his office, home and the Holloway Rd-Aro St area, and interviews with people up and down the country and overseas – had uncovered nothing. He (Mr Bungay) asked why the Crown had gone on looking if it was happy with its case. Sutch had been arrested prematurely, he suggested…’ (from the New Zealand Herald 22 February 1975). Obviously, in order for any of this to grow legs, the SIS would have had to have known in advance of the meetings, which on reading Parker’s account doesn’t sound likely, but they did apparently. (see John Henderson’s, Rowling: The Man And The Myth (1981).105 Sutch’s particular complaint (and this had also been pointed out to him by ‘friends’) was that he had never received any honour of any kind; even though the Party he had served for so long was at time in Office (see Margaret Hayward’s Diary of the Kirk Years, 1981, p.171); even though McIntosh had been knighted in 1973; and even though, though we have no way of knowing if this is related in any way to this complaint of Sutch’s, Reuel Lochore (formerly head of Security in the Prime Minister Department at the time of the Petrov ‘affair’) was by then quite openly implying to any that would listen (including and probably especially his and Sutch’s friend (since boyhood), Ombudsman Guy Powles), that it may in fact have been McIntosh that had been a Russian point of ‘contact’ within the New Zealand Prime Minister’s Department (of which Sutch was not a part of) circa the defection of Petrov in 1954, circa Menzies phone call to Holland. Perhaps though, that had been mentioned to Sutch by ‘friends’ also? Further to this, if you do read Hayward’s book you will note that the best has been made here of something that lacks self-consciousness (as it was put by Sutch to Hayward who faithfully recorded this). Hayward must have wondered about this herself and in a footnote (at the bottom of page 249), reveals that an ‘autopsy in 1975 revealed that Dr Sutch had been suffering from a gradual impairment of brain function’ for some time.

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inconsiderable vigour behind this venture. His own interest in the arts was confined, in the main, to collecting some fine pieces of pottery and an array of interesting rugs. To meet the wider needs of the festival, he set up a working party which I attended by invitation. It consisted of officials in his department, whose contribution by way of initiatives and ideas was minimal, but who had the great virtue of doing their master’s bidding without question. The outcome was as mediocre as the festival itself, and my part in it was more that of an indulgent observer than an active participant...

Then came his retirement, unceremoniously hastened by his minister, J.R. (later Sir John) Marshall. I had little contact with Bill Sutch during that period, and had to rely on newspaper reports and gossip for information. But we met again when he had become an embittered man whom the world had abandoned. When the third Labour government was elected in 1972, Bill must have felt relief was at hand, for Norman Kirk’s government had fastened industrial development firmly to its masthead, and he had a good reason to expect that he would be asked to play a key role in the industrialisation process. But it was not to be; instead Bill and I found ourselves in a “Box and Cox” situation which had its humorous side, but brought Bill little satisfaction. I was deputy-chairman of the Queen Elizabeth II Arts Council at that time, and my term was about to end in March 1973. I was most dissatisfied with the way the Arts Council was going, and had decided not to accept a further term unless the minister, Henry May, made me chairman, with the understanding that I would make some necessary changes to tidy up the bungling administration. The minister declined my offer, but a few weeks later I was appointed chairman of the Development Finance Corporation. This was a prestigious appointment, and appropriate in view of my position of president of the New Zealand Manufacturer’s Federation. DFC was a key element of Labour’s industrial development policy which was at the heart of its overall economic strategy. After the unconvincing performance of the defeated National government, there was a meeting of minds between the Manufacturer’s Federation and the new Labour government on the future direction of manufacturing towards export-led growth. I had been chosen to revive a disused DFC, and to turn it into a dynamic instrument of industrial policy. I could have hardly asked for a more challenging assignment.

A short time later Bill Sutch’s appointment as chairman of the Arts Council was announced, and then it all fell into place! The chairmanship of the Arts Council, to which I had aspired, had been kept in reserve for Bill Sutch, to whom the labour government was not prepared to entrust a position involving political and economic sensitivity. Instead, I had been given the appointment which would have been in line with Bill’s expectations. It was the height of irony that these political

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manoeuvres had produced such an unforeseen result, although for my part I was more than content with the outcome.

Much to Bill’s credit, he never held a grudge against me for the way things had turned out, or even expressed disappointment. We spent a long evening together, in the course of which I gave him a complete rundown on the Arts Council, its weaknesses, the people involved, the resistance he would encounter, and made some suggestions how to tackle the most pressing priorities. Having just completed my term on the council, I knew the problems at first hand, and was able to give Bill a precise, but also very critical appraisal. Moreover, I was anxious to see an improvement in the running of the Arts Council, and Bill undoubtedly had the ability, if perhaps not the commitment, to turn it around. After several hours, the session ended with Bill getting up to go, saying: “You know, Fred, I think I have been sold a pup.”

Our last encounter took place a few months later when we were both members of a New Zealand delegation to the regional Conference on Cultural Policy in Asia and the Pacific, an inter-governmental affair held in Yogyakarta, Indonesia. It was an important conference for us, because it was the first time we participated as members of the Asian-Pacific region. To add lustre to our delegation, Norman Kirk was the titular leader, which meant that he spent a few hours at the conference, made a speech, and continued on his prime ministerial travels. The question was which of us, Bill or I, would lead the delegation during the ten days of its duration? Bill’s claim was that, as chairman of the Arts Council he was responsible for cultural policy. I, on the other hand, was chairman of the National Commission for Unesco, a Unesco hand of long standing, and well-known to the organisation and its key players.

In the end, the government had to decide, and gave me the nod. Again Bill appeared to hold no personal grudge against me, although he obviously resented the decision, and this showed up in his performance at the conference. Towards the end he suffered a relapse of amoebic dysentery he had contracted during his exploits in Asia as a young man, and was unable to take any further part in the proceedings.

I cannot recall meeting him again before the bombshell appeared in the newspaper announcing Bill Sutch’s arrest on a charge of espionage, and his subsequent trial. I was enormously relieved by his acquittal. The very possibility of Bill serving what could have been a long prison sentence seemed quite intolerable. Yet there was no denying the fact that he had behaved in a strange manner which could not be easily explained.

As far as I was concerned, his behaviour fitted in with much of what I have described in this chapter – a man with an obsessive urge to be acknowledged, feeling slighted by those he

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believed owed him recognition and respect. Such a man, unable to tolerate being neglected, and who had had attention focussed on him throughout his working life, might, in a moment of depression, do something – anything – to draw attention to himself, anything to make him feel important. And such a man might engage in a game of cloak and dagger without thought of guilt, or without even considering the consequences of his conduct drawing attention to him, because this was precisely what he sought to achieve.

I am no psychiatrist, but have had occasion of coming to know, assess and understand people for a long time. Rightly or wrongly, that is what I made of Bill Sutch, a man I liked and respected, despite all his peculiarities and weaknesses.’(pp. 120-122.)

Across the Ditch.

When the colonies of Australia federated in 1901, Labour became a Federal Party. Prior to then separate Labour parties had been established in the colonies during the 1890s. These parties had been sponsored by the trade union movement so as to get politicians sympathetic to their interests elected to colonial parliaments. Australia's first Labour Government took office in Queensland in 1899 but lasted only seven days. The Australian Labour party first entered Federal politics following the first Commonwealth Elections of 1901 when eight Labour members were elected to the Senate and sixteen to the House of Representatives. In 1908, after an interstate conference, the name the ‘Australian Labour Party’ was formally adopted, and from 1912 onwards the party has been known as the ‘Australian Labor party’ (due to the influence, apparently, of the American Labor movement).

Australia's first Labor Government was a minority Government and took office in May 1904. It lasted just over three months. By 1915, though, the Australian Labor Party had governed in all states and had formed three Federal Governments. The Australian Labor Party, the first successful Labour Party anywhere, was from the beginning though, somewhat the ‘victim of its own success.’ Whereas Labour Parties in other parts of the world had merely to react to their countries involvement in the First World War (1914 – 1918), Labor, in Australia had had to direct that countries involvement in the war.

In September 1914, Andrew Fisher, previously Prime Minister briefly from November 1908 until June 1909, became the first Australian Labor Prime Minister to be actually voted into power (on 29 April 1910). He lasted until June 1913, when at election Labor came up short of one seat, and Joseph Cook, the first Liberal Prime Minister of Australia replaced him.

Fisher again became Prime Minister in September 1914 when Labor, after Cook had gone for an early election in the hope of strengthening his Liberal hand, swept the polls. Division within the Labor party ensued though, after Fisher, putting aside Labor's anti-

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war philosophy pledged instead (in October 1914), that Australia would ‘stand by the Mother Country to help and defend her to the last man and to the last shilling’.

As the war progressed though (and as Australia’s casualty rate climbed), Fisher found himself in an unenviable position as it did indeed begin to seem that the last man might be required. His personal health also failing he resigned and William Morris Hughes replaced him on 27 October 1915. Known as Fisher’s ‘shadow’ Hughes’ had been Attorney General in each of Fisher's three governments.106

Hughes was Prime Minister from October 1915 until February 1923, but not the parliamentary leader of Labor for all that time. Hughes came to be thought of by many in Australia as ‘the little digger’ because of his support for Australia’s fighting men overseas; but he is also remembered as ‘the rat’ for his ‘ratting’ on the party (or for splitting the party) following a referendum he called for, in 1916, in which he sought an endorsement for conscription.

Not only was there opposition from the union movement as regards conscription at that point in time, there was also strong disappointment within the union movement as regards Labor Government achievements up till that point of time. A struggle within the Labor Party in 1916 and 1917 is seen, by Australian historians interested in the history of the Australian Labor Party, as a consequence of the mixing of ‘bread and butter’ irritants with broader social and political differences. Conscription, though not just because nearly all the leading Labor Party politicians supported it, was subsequently opposed by nearly all union leaders, and this move of Hughes was defeated due to the support the unions could muster. (Fisher, the Labor leader that Hughes had replaced, also opposed it).

His referendum defeated, the Labor leader Hughes decided to walk and twenty-three Australian Labor Party parliamentarians walked with him and so was formed the National Labour Party. Hughes survived as Prime Minister with the support of the Liberals and is said to have ‘disgusted’ true Labor men when he finally merged his National Labour Party with the Liberals to form the National Party which he lead to electoral victory in May 1917. Following that election he again sought support for conscription by referendum but again did not gain sufficient support.

The Labor Party did not recover from this split until October 1929 when Labor defeated a National-Country Party coalition lead by Stanley Melbourne Bruce. Bruce, though born Australian, had been commissioned a British officer during the First World War and had served at Gallipoli and at the Western Front. After being invalided out of the Army in 1917 he returned to Australia decorated with the Military Cross, the Croix de Guerre and bearing the scars of several wounds. Persuaded to make recruiting speeches he soon attracted the attention of the National Party, which offered him the Federal seat of Flinders, which he won comfortably for the National Party in May 1918. In 1921,

106 Fisher was the only Labor Prime Minister ever to win a third term until Bob Hawke did the same then went one better. The Hawke Labor Government was first elected on 5 March 1983, and was re-elected in 1984, 1987, and 1990 - a record four successive terms. Fisher was also the first in Australia to repeat the remark that in many respects: "We are all socialists now" (a celebrated remark, made by the Liberal, Sir William Harcourt - British Chancellor of the Exchequer - before the Great War, 1914-18).

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while overseas on a business trip, Hughes contacted Bruce and asked him to represent Australia at the League of Nations (the body the preceded the United Nations), which he did. Then on his return to Australia Hughes also asked Bruce if he would agree to be treasurer, which he did also.

Bruce became Australia’s 12th Prime Minister on the 9 February 1923, after Earle Page, the leader of the Country Party, agreed to a coalition arrangement with National. At election Labor had a majority with thirty seats - whereas National had gained twenty-eight; the Country party fourteen. Page would not though, agree to the coalition being led by Hughes. Rather he was content with Bruce stepping into the top job even though Bruce had only five years experience as a politician. Hence it has been said of Bruce that he succeeded in politics ‘without apparently trying’.

Bruce’s emphasis was on business; on staying on side with Britain; and on staying on side with the Country party. To those ends, his government encouraged British immigration to build up the workforce; British loan capital to promote development; and the continuing production of primary produce for the British market for which there was export subsidy and price support.

Socialists, so far as Bruce was concerned, were, ‘wreckers’ who would plunge Australia into the chaos and misery of class war. Bruce, though he spoke of maintaining law and order, is said to have ‘increased tensions’ with suggestions of anti-union legislation and with proposals for the abandonment of the arbitration system as worldwide recession began to bite in 1929 and as that years October election approached. The response of the electorate was that the vote for the National-Country Party Coalition collapsed, as did the Wall Street stockmarket seventeen days later. Bruce also lost Flinders, though he regained it in 1931.107 In 1933 he was appointed Australian High Commissioner to London and in 1947 he was created Viscount Bruce of Melbourne - becoming the first Australian to sit in the House of Lords.

The 13th Prime Minister of Australia, ‘Jim’ (James Henry) Scullin, elected 22 October 1929, is seen by many Australian historians as perhaps the unluckiest Prime Minister of all. Not only was he the first ‘Labor man’ to step into the top job in thirteen years, but he also stepped into the top job just as the Great Depression began.

Scullin had first ventured into politics in 1906 when he stood unsuccessfully for the federal seat of Ballarat. He then stood for, and won, the federal seat of Corangamite in 1913, but lost it at a by-election in 1918. He then spent the next few years as an editor of a Labor newspaper, as a union organiser and as an anti-conscription activist.

In 1920 he stood for the Victorian seat of Grenville, was not elected, but was successful in 1922 at another by-election when he stood for the seat of Yarra. From then onwards he was the member for Yarra (up until the eve of the 1949 general election when he retired). He was elected Deputy Leader of the Labor Party in 1927 and became Leader of the Opposition (to the Bruce - Page Coalition) and of the Labor Party in 1928.

107 In 1932 Bruce was the Leader of the Australian delegation to the Imperial Economic Conference, Ottawa. He was also a Member of the Empire Coronation Committee, 1936-37.

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The Scullin Government’s plans for progress and reform were sidelined by the effects of the Great Depression and by British debt – the flow of which ceased following the election.

Scullin also lacked advisors and colleagues with ministerial experience. Such was the prevailing orthodoxy of the times then, that when the Labour Premier of New South Wales, ‘Jack’ (John Thomas) Lang suggested that loan repayments on existing debt could be deferred, and suggested as well a drop in interest rates so that his state government could help out the growing number of ‘ordinary decent citizens’ in great need instead, that Scullin wouldn’t take him seriously.

Known also as the ‘Big Fella’108, Lang then decided to stop repaying the loans and he also cut back on the interest. He was then, after some wrangling, removed from office and the Scullin government then set out to deal with the Bank of England’s demands for debt repayment by initiating spending cuts that made the lot of Australia’s ‘ordinary decent citizens’ worse. He did though, at the same time, see to it that Australia’s first Australia born Governor-General, Isaac Isaacs, was appointed.

Appointed by the Labor Leader, Scullin, to be treasurer, and to deal with debt, was Edward G. (‘Red Ted’) Theodore - formerly Labor Premier of Queensland. When Theodore was later accused of financial misdealing while Premier of Queensland, his treasury role was placed with Scullin’s only other colleague with ministerial experience - Joseph Aloysius (‘Honest Joe’) Lyons.

When Scullin reappointed Theodore Treasurer after the Queensland Government dropped its case, Lyons, a man who reportedly couldn’t stand Theodore, and who also distrusted his financial policies, withdrew his, and his supporters vital support from the government.

The Scullin Government was soon in trouble as Lyons was not the only person critical of Scullin’s judgement. There was also Lang - long indignant over his treatment by Scullin, and by then also openly opposed to him.

It is said that during this period Scullin’s hair turned ‘snow-white’ as he was caught up in a conflict between what he saw as prudent policy; the demands of those who stood opposed to him; and the demands of those who stood with him. Fearing that the Labor Party would split in two after the House (including Lyons and his supporters) passed a motion of no confidence in his government in November 1931, he asked the Governor-General, Isaac Isaacs, to then dissolve parliament. This Isaac Isaacs did,109 and at the subsequent general election the United Australia Party led by Lyons swept into power.110

108 The first ‘Big Fella’.109 New Zealand’s first New Zealand born Governor-General Sir Arthur Porritt (albeit that he was also the Queens physician) was appointed in 1967.110 Scullin’s unofficial epitaph is said to be that: “He chose the wrong time to be Prime Minister.” As for Lang, he was to be expelled from the Labor party but was readmitted in 1971.

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The United Australia Party which came to power on 6 January 1932, was composed of Lyon’s four supporters and the members of the National Party – the party which the former Labor leader Hughes had formed with the Liberals and which he had lead to electoral victory in May 1917.

Hughes, who had sided with Labor to dismiss Bruce in 1929, was by then siding with the United Australia Party, but would later, after being expelled from the United Australia Party, side with the Liberals - the party that Robert Gordon Menzies, another member of the United Australia Party elected to the House of Representatives for Kooyong, Victoria, in 1934, would revive in 1944.

In 1934 Lyons, the leader of the United Australia Party, allied with the Country Party and this helped him win two more elections.111 In 1939 though, just when a big heart was needed, Lyons died of a heart attack on Good Friday 7 April, and for just nineteen days (until 26 April 1939) Earle Christmas Grafton Page, the leader of the minority Country Party, became Australia’s 15th Prime Minister.

Page has been compared to Stanley Bruce in that he is said to also have been ‘extreme’ and to the ‘right’ by inheritance. He was born in Grafton, New South Wales, a wealthy country area, where he did well at school, and from where he then enrolled as a medical student at the University of Sydney.

He was a popular student - considered all the more so due to his ability to pick the winners at race meetings. He qualified as a doctor in 1904, and practised in his hometown area up until 1916, when he then served for eighteen months overseas in the Army Medical Corps returning at a period when country people were worried, with good reason, about their voice in Federal politics.

At that point in time Australia was evolving into an urban-industrial realm where ‘capitalism’ and ‘labour’ were battling each other with little regard being paid to the interests of the primary producers. Also, there was the very real fear that Hughes’ National Labour Party alliance with the Liberals (from which was formed the National Party - the party that Hughes led to electoral victory in May 1917) meant that Hughes’ influence (he had also been the Attorney General in each of the Labor leader Fisher's three governments) meant that he might ‘socialise’ the political realm.

Against this background the Country Party was formed and Page first stood for the newly formed party in the seat of Cowper, New South Wales in 1919, and was elected. From 1921 until 1929 he also led the Country Party.

***

Hughes’ remembered Earl Page as ‘ruthless’ for his hand in having him removed, early on in 1923, from the leadership role of the Nationalist conglomeration in favour of Stanley Bruce – Prime Minister from then on until October 1929.

111 Lyons was also the Australian Leader of the Ministerial Delegation to London that represented the Commonwealth of Australia at the Coronation of King George VI, and also attended the Imperial Conference of 1937 where he also caused a fuss.

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James Scullin, Prime Minister from October 1929 until January 1932, and Australia’s ‘unlucky’ Prime Minister, remembered Page for his 'stand-and-deliver' style of politics – the Country Party having soon found, after the 1923 elections, that they often held the balance of power in the Federal Parliament. Menzies remembered Page as ‘quite the finest Parliamentarian he had ever known’ – that despite, as the question of who should next be Prime Minister following on from Page’s stand in period, Page, attacking Menzies credibility - claiming that Menzies would be a ‘frail reed’ compared to Bruce in another war.

Bruce was though, by then more wrapped up in business than he had ever been, and was not interested in leading the country again. The whole hurrah backfired on Page and he was subsequently dismissed as leader of the party, and Menzies, at that time Deputy Leader of the United Australia party since 1935, and favoured by many more in the Country Party for next Prime Minister than any one else after Page’s stand in period, was sworn in for his first period as Prime Minister of Australia on 26 April 1939.

It would be his 'melancholy duty' Menzies announced on Sunday the 3 September 1939, to lead Australia into war. Once again though, leadership of Australia during wartime would fall mostly onto Labour’s shoulders.

In the August 1941 elections Menzies United Australia Party performed badly and Labor won power. Many apparently thought Menzies was finished, but in 1944 Menzies revived the Liberals – a party composed of anti-Labor elements, and it is said he then ‘bided’ his time.

Robert Gordon Menzies, of Scottish descent, and born the fourth of five children at Jeparit, Victoria, 20 December 1894, entered politics early in life. Both his father and an uncle had held seats in the Victorian Parliament. At age twenty-six, by then already a barrister of some note, he also married the daughter of a member of the Victorian Parliament. By age twenty-nine he was a King's Counsel (the youngest ever appointed in Australia); was well known; and was well on his way to becoming wealthy as a barrister.

Politics, it is said though, was perhaps in his blood. He first entered State Politics in 1928 at the age of thirty-four, and then Federal politics in 1934 when he was elected to the House of Representatives for Kooyong, Victoria. By 1935 he was Deputy Leader of the United Australia Party and was Attorney General and Minister for Industry in the Lyons led Government from 1934 until 1939.

It was during this first period in Federal politics that Menzies got stuck with what are now described as the ‘unaffectionate’ nicknames of ‘Ming the Merciless' and 'Pig-iron Bob'.

‘Ming’ and ‘Merciless’ were attached due to the amount of effort Menzies put in to deporting an anti-fascist, anti-war Czechoslovakian author and reporter, Egon Kisch112

112 This is also refereed to in Turnovsky’s book: ‘Kisch - the ‘rampaging reporter’.’

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after he arrived in Australia in 1934 to attend a congress against War and Fascism being held there. Kisch, refused entry at his first port of call in Australia, and encouraged by those who’d gathered at his next port of call to welcome him to Australia, jumped from the ship he was being confined to and broke his leg. He was then subjected to a test in Scottish Gaelic (a tongue Menzies was knowledgeable of) as a test of entry and eventually, even though a court case upheld that the test was not a proper test, he was deported.

The ‘Ming’ was derived, it is said, from the Scottish pronunciation of Menzies, as that sounds, apparently, to the Australian ear like ‘Mingles’. More likely though, they meant ‘mingy’ (tight, mean). There is also cartoon character now called ‘Ming the Merciless’, and perhaps there was before then as well? And the nickname 'Pig-iron Bob' referred to Menzies trying to use the law to force striking wharfies at Port Kembla, New South Wales, to load pig (scrap) iron onto ships bound for Japan – the waterside workers claiming that the scrap was likely destined to be used for armaments, which it was as it turned out.

In June 1940, during his short initial term as Prime Minister of Australia, Robert Menzies and his government banned the Communist party for supposed anti-war activities. In December 1942, Labor Prime Minister John (‘Plain John’) Curtin, lifted this ban following the German invasion of the Soviet Union (22 June 1941), following which Russia came into the war on the side of the Allies.

Curtin is said to have given ‘resolute and inspiring leadership’ to the Australian people during the Second World War and it is also said that Curtin was also fortunate in that had alongside himself during that period colleagues and public servants with ‘experience’ and ‘aptitude’. Significantly, during that period, plans were also drawn up for post-war expansion of the Australian economy. John Curtin died in office at Canberra on 5 July 1945 and was succeeded by Ben Chifley who had been, between 1941 and 1945, Treasurer and Minister for Post-War Reconstruction in Curtin's government, and architect of Labor's post-war policies.

By the time Ben Chifley became Labor Prime Minister, on 13 July 1945, the Australian Communist Party had more influence in the trade union movement in Australia than it had ever had before. Acceptance of this situation was due in large part to Russia’s huge sacrifice during the war in Europe, which had just ended. This acceptance was also about to end.

The Chifley Government (July 1945- December 1949), is remembered for initiating, in 1949, the Snowy Mountains Hydro-Electric scheme, which would eventually double the amount of electricity available to the nation; for its immigration programs (which opened the way for a huge influx of British and European immigrants – some five-thousand of whom worked on the Snowy Mountains Hydro-Electric scheme); for its support of the motor industry (which enabled the first Holden to roll off the assembly line at Fisherman’s Bend, Victoria, on 29 November 1948 – accompanied by a ten-piece band); for the establishment of Trans-Australia Airlines; and for buying Qantas from Qantas Empire Airways in 1947 (so as to set up a national carrier).

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The Chifley Government is also remembered for a number of ‘social’ policies’ – most notably the introduction of pensions for all widows (not just for the widows of servicemen), and for the introduction of benefit payments for the sick and for the unemployed. The Chifley Government also formed, in 1949, The Australian Security Intelligence Organisation (ASIO).

Menzies time came again after the war when Labor combined its program with strict austerity measures (as New Zealand did) so as to conserve funds. Many, it is said, felt they were being denied the fruits of wartime victory, and others feared that Labor was on 'the road to Communism’. The unions also damaged Labor’s electoral chances by embarking on campaigns of their own. Menzies, it is said, played on ‘fear’ and ‘resentment’ to unseat Labor on 19 December 1949.

By 1949, with the General Election scheduled for later that year, major strikes were damaging the Labor Government’s credibility and there were again calls to ban the Communist Party.

In 1946, Chifley’s view was that, ‘While we often disagree entirely with the views held by other people, freedom of speech and freedom of the press are cardinal features in a real democracy and are part of the policy of the Australian Labor Party.’ And in 1948, as troubles with unionists escalated, he said that, ‘The overthrow of Communist leadership in trade union circles is a matter for the workers themselves.’ (p.356)113

In June of 1949 the leaders of the Miner’s Federation in New South Wales called for a strike on the grounds that award talks seemed stalled. The strike spread to other States and soon coal stocks began to run out. Electricity usage then began to be rationed, and companies sent staff home. Within weeks there was domestic as well as industrial strife and this dragged on. Chifley’s response to this in Parliament was: ‘The great struggle that democracy is having today to combat the inroads of Communism is due to the fact that the conservative interests of the world have fertilised the soil in which Communism has grown. It is the fruit of hundreds of years in which 80 per cent of the people have lived in the direst poverty...The soil in which Communism has flourished was fertilised by people without any idea of democracy...

Communism can be beaten only by improving the conditions of the people, because bad conditions are the soil in which it thrives. I have often expressed the opinion that the Government regards the banning of Communism as futile...If a ban is imposed on the Communist Party, it will merely change its name as it did in Canada. We are going to fight Communism in the open.’114

Election time though, proved that Chifley was somewhat out of touch.

113 From Ben Chifley by Crisp, L.F. (1960).114 Ibid, (p.358).

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At the end of that year (on 19 December 1949), Menzies went to the polls claiming that to vote for Labor was to vote for the ‘yoke of socialism’; and stating that he had a basket of choice offerings for the electorate labelled ‘putting back value into the pound’ which ranged from the abolition of petrol rationing to the banning of the Communist Party’.

Menzies hit the right note with the electorate and his Coalition of Conservatives gained the treasury benches. Menzies’ would remain as Prime Minister and Leader of the Liberal Party of Australia from then on for 16 years (until 26 January 1966).

***

In 1951, Ben Chifley, like Curtin before him, died while in office (on the evening of 13 June, while working at his desk in Canberra - of a second heart attack having suffered his first in 1950). Harold Holt115 was apparently of the opinion as regards Chifley that he was perhaps ‘the most lovable man ever to have inhabited Parliament’. Another commentator from that time said that Chifley had ‘a masterful way of transforming chaos into order’.

Following Chifley’s death, Dr Herbert Vere Evatt, who, from 1941 had been both Attorney General (after Menzies) and Minister for External Affairs in the Curtin and Chifley Governments, succeeded Chifley as Parliamentary Leader of the Australian Labor Party on 20 June 1951.

Evatt, as Australian Minster for External Affairs, had advocated a strong and identifiable Australian Foreign policy. He had also expressed sympathy for the aspirations of the indigenous leaders of the countries in Australia’s region; and at the same time demonstrated less concern for the interests that colonial powers had long had in these territories.

Similar sentiment was expressed in New Zealand during that period, as well - and by both countries in the United Nations Assembly in New York. Evatt had been Leader of the Australian delegation to the founding meeting of the United Nations in San Francisco in 1945, and in 1948 he was elected President of the General Assembly of the United Nations.

Described as ‘brilliant, impetuous, but erratic’ as a High Court Judge before he resigned and entered politics in 1941, Evatt, the same age as Menzies, led the Labor party into three successive election campaigns during the 1950s, but remained the Leader of the Opposition until he resigned from politics in 1960.

The Petrov Affair.

115 Menzies was eventually succeeded as Prime Minister by his ‘favoured’ successor, Harold Edward Holt (on 26 January 1966). Holt disappeared while swimming at Cheviot Beach, Victoria, early in the morning of 17 December 1967. Holt’s body has never been found and numerous conspiracy theories have abounded ever since.

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Immediately following the defection (on 3 April 1954), of Vladimir Petrov (a diplomat at the Soviet Embassy in Canberra), Prime Minister Menzies announced that a Royal Commission would be convened in Canberra to inquire into the following:

To inquire into the documentary evidence Petrov had given the government, and also his oral and written testimony;

To inquire into espionage or attempted espionage by agents or representatives of the USSR in Australia, and identification of these people;

To determine whether any persons or organisations in Australia had communicated information or documents to those agents;

To determine whether any Australian individuals or organisations had aided or abetted espionage.

***

On Monday 17 May 1954, the Commission of Inquiry got underway with the morning newspapers claiming that: ‘Hostile Soviet activity would be revealed’; and also that: ‘Australians had aided red agents’!

Ignored by the press at the outset of the enquiry was the early claim by Evatt that the Australian Security Intelligence Organisation (ASIO) had made additions to the documentary evidence that Petrov was said to have passed over when he defected. Two sections of the documentary evidence to be reviewed by the Royal Commission (known as the ‘G’ & ‘J’ series) were in English.

Of real suspicion to members of the Labor Party at the outset of the inquiry (and they said so often) was that ASIO had taken it upon itself to influence the outcome of the upcoming election by making additions to the documentary ‘evidence’ that Petrov passed over when he defected. These additions named, amongst others, not only supporters of, and members of the Labor Party, but also Evatt.

A book, which appeared at the same time as the Royal Commission released its findings (in August 1955), tended to support this view, and cynicism is still expressed about the whole affair to this day.116

Written with the assistance of a journalist, The Petrov Story (1955) by Dr Michael Bialoguski, the person that had encouraged Petrov to defect, also contained, apart from his version of the lead up to the defection of Petrov, biographical material on persons similar to that which appeared in the ‘English’ documents.

Bialoguski was a Russian émigré himself, arriving in Australia in June 1941, via the Trans-Siberian Railway to Vladivostock and then via Tokyo where he discovered at the

116 See Nest of Traitors (1974).

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Polish Embassy there, that as his parents were Polish by birth, he could enter Australia as a war refugee.117

Bialoguski, born in 1917, at Kiev, the capital of the Ukraine, spent several nights sleeping on park benches after he arrived in Australia. He then attempted to join the army and on his second attempt, and on the basis of his previous four years medical training (in Russia), he was accepted and was assigned to a military hospital at Concord West in Sydney. Put to work scrubbing floors he complained and eventually was released so that he could complete his medical degree.

Bialoguski was, by his own account (in The Petrov Story, 1955), not as impressed by the Russian ‘sacrifice’ during the war as many Australian’s were at that time - believing that the average Russian, ‘had to fight because they were confronted by an enemy who gave them no opportunity of honourable surrender, and, on the other side, they were driven into action at pistol point by the NKVD men attached to each unit.’

Early in 1945, with wars end in Europe in sight, Bialoguski, ‘disturbed’, he said, by the increasing amount of Communist Party literature being distributed in Australia, approached Bill Barnwell of the Commonwealth Investigation Service (CIS) with a copy of the Slavonic Review that he had recently received in the post. His reason for doing this, he explained (in The Petrov Story, 1955), was that he wanted to find out if the general Australian ‘attitude of complacency towards a Communist fifth column118 was shared by the authorities.’ Barnwell, for one, didn’t share that attitude.At their first meeting Barnwell cut out an application form from another publication (Russia and Us), and asked Bialoguski if he would fill it in so as to gain membership of the Australia-Soviet Friendship Society. Barnwell also asked Bialoguski if he would begin to visit and socialise with the members and visitors to the Russian Social Club located in the basement of a building in George Street, Sydney.

Bialoguski continued with his profession, with his association with the CIS and with the Russian Social Club for the next few years. Then, when the Australian Security Intelligence Organisation was formed early in 1949 he applied for a position within that organisation to its first head Mr Justice Reed.

Selected especially for that job by Chifley, Mr Justice Reed checked with the CIS as regards Bialoguski’s credentials, was satisfied, and in August 1949 he offered Bialoguski a job with the new organisation. Code-named ‘Jack Baker’ Bialoguski, from then on, increased his level of participation in the activities of the Russian Social Club, and increasingly, from then on, came to be

117 On 1 September 1939, citing as just cause Poland’s refusal to surrender the port of Gdansk (known as Danzig, and constituted as a ‘Free city’ by the Treaty of Versailles in 1920). Germany invaded Poland on 17 September 1939. Russia (having signed a non-aggression pact with Germany the month before) then invaded Poland from the East, and the country was divided for a short time between the two. (On 22 June 1941, Germany then attacked Russia, and all of Poland came under German rule until the last stages of the war when Russian forces drove them out). 118 The term fifth column’ was first applied during the Spanish Civil War of 1936-39. As the forces of General Francisco Franco laid siege to Madrid (beginning 7 November 1936), General Emilio Mola called for a ‘fifth column’ to sabotage the city’s defences and to help his forces which were marching in four columns to take the city.

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regarded by those that were members and visitors to the Russian Social Club, as a person with strong Soviet sympathies. Then, on the evening of 7 July 1951, and at that club, he was introduced to Vladimir Petrov by another Russian émigré, Lydia Mokras – ‘a tall, blonde and’, so Bialoguski also said (in The Petrov Story, 1955), ‘mysterious Russian girl who lived with her husband in a flat in Cambridge Street, Stanmore, a Sydney suburb’.

*** When the Royal Commission adjourned three days after it began, Labor Party members felt one of their suspicions confirmed. Their claim that evidence had been fabricated would not get any airing at all during the vital, for them, intervening period between the adjournment and the election set down for ten days from then (on 29 May1954).

So far as the members of the Royal Commission were concerned, they were of the opinion that if it were the case that the documentary evidence had been interfered with, then the Commission could not proceed until all of the documents had been examined more closely – the Royal Commission’s official translator and interpreter (Winston Churchill’s war time interpreter Arthur Herbert Birse), having not yet arrived from England. The election was still a close run affair though; the Liberal–Country Party Coalition only just managing to scrape home. And this was in spite of what the press had to say during that intervening ten-day period.

A ‘slur’ (as Evatt put it) that proved difficult to refute in light of what the Commission was already known to be going to be looking into, appeared in the Sydney Morning Herald the day after the Commission adjourned on Wednesday 19 May 1954. In the first of a series of articles entitled ‘Election Issues’, the Sydney Morning Herald of Thursday 20 May 1954 set the tone for that bitter last run towards election day by headlining the view expressed by the high-ranking Liberal politician Eric Harrison, that:

‘The greatest single factor in promoting and encouraging Communism in Australia had been the stimulus given it by the Labor Party and Labor Governments.’

Before Evatt’s leave to appear before the Commission was finally withdrawn on 7 September 1954 (Evatt was banned from appearing before the Commission on the grounds that it seemed impossible for him to ‘approach’ the facts with the ‘impersonal detachment’ necessary to advocate), he had this to say to the press, and then to parliament afterwards:

‘I believe that when the tangled skein of this matter is finally unravelled the Petrov-Menzies letters case will rank in Australian history as an equivalent to the notorious Zinoviev Letter119 which was used to defeat a Labour Government in the

119 The Zinoviev ‘affair’ involved a letter allegedly written by Grigori Zinoviev, the President of Comintern (an acronym for Communist International – the Communist movement), to the Communist Party of Great Britain (CPGB) in October 1924. This letter, when its contents were revealed, urged the

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British elections of 1924, or the burning of the Reichstag which ushered in the Hitler regime in 1933.’ (Commonwealth of Australia: Parliamentary Debates, Hansard - 12 August 1954 pp. 282-84). Twenty years later, Nicolas Whitlam, Gough Whitlam’s son, in Nest of Traitors (1974), had this to say about the Petrov affair:

‘The second coming of Menzies, in December 1949, was heralded as a new era for Australia. According to the rhetoric of the 1950s, free enterprise was to flourish untrammelled by doctrinaire socialism, and the welling spring of communism was to be staunched in the nation’s breast. A dispassionate view, twenty years later, shows much of the private sector to have prospered not from free enterprise, but from ever-increasing subsidies and protection, with new business undertakings thwarted by restrictive practices and obstacles to entry that were conveniently ignored by those in power. The struggle against communism was equally bogus. For at least six years, to the December 1955 election120when Labor was so humiliatingly defeated, a great McCarthyite drama was played out in Australia. Sometime in concert, and sometime, it appears, independently of one another, ASIO, the CIS121 and the Liberal - Country Party government persecuted political nonconformists and others, Communists and fellow travellers. The audience, everyday Australians, had no difficulty deciding which side to support; authority, professing to act under the patriotic impulse, will almost always beat the individual. The victims were rarely prosecuted, for they rarely committed crimes; but they were silenced and dishonoured.

CPGB ‘to press forward the cause of revolution in Britain through its agents in the armed forces and its sympathisers in the Labour Party’. The letter was published just four days before the General Election of 29 October 1924 (in the Times and the Daily Mail after the Conservative Party’s Central Office managed to obtain a copy of the letter – for £5000). It is claimed that publication of this letter ensured that the Conservatives gained enough support to govern in their own right. Prior to the letters release Ramsay MacDonald (first Labour Party Prime Minister of Britain – for nine months) had been shown the letter by the Head of MI5, Vernon Kell, who had agreed to keep the matter secret and to investigate its origins further. It is presumed that someone else in MI5 then leaked it, as it had come into their possession, and there are also claims to this day that two of their agents also had a hand in writing it. 120 Following the election of 29 May 1954 (which saw the Liberal – Country Party coalition gain sixty-four of the one hundred and twenty seats in the House of Representatives) Evatt was challenged for the leadership of the Labor Party by the former Minister for Immigration in the Chifley Government, Arthur Calwell. In the aftermath of this split within the Labor ranks, a new Party was formed, one which would eventually call itself the Democratic Labor Party. The ‘birth’ of this Party is said to have helped Menzies ‘considerably’ in that he then called for an early election late in 1955, which he won ‘handsomely’. In 1961, after Evatt retired, Calwell again sought the leadership of the Party and at that point succeeded. As new Leader he also came close in 1961 to electoral victory - but again Menzies hung on. Calwell was succeeded as Leader of the Labor Party by Deputy Leader Gough Whitlam on 8 February 1967 who is said to have encountered considerable opposition from the ‘old guard’ as he climbed steadily upwards. Finally, in 1972, he was elected the 26th Prime Minister of Australia. Unlike the 13th Prime Minister Curtin (the unlucky one and the one whose unofficial epitaph is that: 'He chose the wrong time to be Prime Minister'), Whitlam was thought of within the Labor Party in 1972 as, ‘The right man at the right time’.121 Commonwealth Investigation Service.

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The ‘tangled skein’122 of the Petrov affair may never be unravelled. The result was a modified Australian version of the McCarthy era [and] in a larger sense the crisis provided a catalyst for [a] split in the Labor Party that kept it in Opposition until 1972.’123(pp.166-68).

***

An example of one of the documents which includes a mention of New Zealand is the document D.17 –– a communication transmitted from Moscow 6 June 1952, and translated from Russian. These communications became known during the hearing as the ‘Moscow letters’.124

‘D.17

CONCERNING HERBERT STANLEY NORTH (BORN IN 1920)In 1947-1951 Herbert Stanley North (born in 1920), a native of Australia worked in the Australian Embassy in Moscow in the capacity of cipher clerk and administrative clerk. From September 1939 until November 1945 North served in the Australian navy as a wireless operator. After demobilisation he worked in the Taxation department in the city of Perth. According to agent information dated 1947-1948, North was described as ill-disposed to the soviet. North was on terms of friendship with a technician at the British Embassy, Gilmore, with clerks at the American Embassy, Powers and Crawford, in whose company he regularly visited restaurants and imbibed large quantities of alcoholic liquor. After his marriage in 1949 to an employee of the New Zealand Consulate, Healy Ketlin, he ceased to visit restaurants, began to display an interest in Russian literature and art. According to the words of North’s wife, his anti-Soviet utterances were the result of negative influence exerted on him by the employees of the American Embassy, and after terminating his friendship with them he began to interest himself in Russian culture, and to study the Russian Language. In July 1951, North left Russia with his wife for Australia.’

Pertinent to this work is another of the “Moscow letters’ (also dated 6 June 1952). This concerned an area selected for the concealment of messages and for the retrieval of material left there for collection. In espionage parlance this is the ‘dead letter drop’ and as procedure is standard so as to avoid contact that might be detected between a ‘handler’ and an ‘asset’. An ‘asset’ is an agent or a sympathiser positioned or in a position in a target country. A signal is left nearby if there is a message or if there is material to be picked up. Normally, the location selected is one that the ‘asset’ passes regularly anyway – so as to not draw attention to himself or herself.122 Whitlam’s son echoes Evatt’s complaint here.123 And the election again of a Labor Government led by his father, Gough Whitlam.124 The Moscow Letters and the G Series of documents were published as Appendix 1 to the Report of the Royal Commission on Espionage, 1955, Government Printing Office, Sydney, pp. 304 – 417. In total the transcript of proceedings made up 9 volumes composed of 2,796 pages.

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‘D.23

CONCERNING SECRET HIDING PLACES FOR DOCUMENTSThe secret hiding places for documents selected by you have a number of defects. They are all located in one and the same area, which facilitates their detection by the counter-intelligence, even if you move from one secret hiding place to another.’125

In the G series documents, the documents in English that contain the biographical details of the many persons there mentioned, there is also mention of Evatt – and Calwell (the former Minister for Immigration in the Chifley Government), also. There is no date recorded specifically, but G.5 is dated 14 June 1948, and G.7 is dated 10 November 1949.

‘G.9

(T) (11) Olsen O. – promised ‘T’ assistance in the study of the country and in obtaining information passing through the newspaper. (12) Simpson Colin – favourably disposed towards us. (V) (13) Frazer – member of parliament, former correspondent, labour126supporter, very close to Evatt. Likes to drink and on such an occasion becomes very voluble. ‘A’127 used him to obtain information from Evatt.

125 A fitting observation that must be made here is that if Sutch was indeed a ‘mole’ which Marshall says was finally proved by ‘the final conclusive revelations during his trial in 1975’(and a ‘devious’ one at that), then why had the meetings between Sutch and Razgovorov been ongoing? Strictly speaking all that should ever have been noticed in that neighbourhood was the odd chalk mark here and there and that only by the local kids?126 Actual spelling? 127 Some of which, with other information, was then disseminated (made public), through the Communist publication Tribune. The identity of ‘A’ was not publicly disclosed either during or immediately after the enquiry ended. ‘A’ was, however, a journalist (a woman), whom during the war had worked for Australian Naval Intelligence, and whom after the war had (like Bialoguski), ‘been in touch first with the Commonwealth Investigation Service, and then ASIO.’ (in Nest of Traitors, 1974, p.47). In 1974, Rex Chiplin, another journalist and another person whose allegiance to Australia was called into question during the enquiry (that for not revealing the source that had provided him with ‘sensitive’ material that he had disseminated through the Communist publication The Tribune), identified ‘A’ (after meeting her again by chance at a Sydney railway station - mid 1974), as a Mrs Mercia Masson. During the enquiry Mrs ‘A’s evidence had been heard in ‘secret session’ (press and public excluded), and it was only after she ‘collapsed in a state of emotional distress’, and also after Chiplin then realised ‘for the first time that she was a security agent’, that he had acknowledged to the Commissioners that she had been the source that had provided him with the ‘sensitive’ material that he had disseminated through the Communist publication The Tribune. It is supposed, by the author’s of Nest of Traitors (1974), that the reason this ‘sensitive material’ was passed on to Chiplin was that the Menzies Government, having failed in a yet another referendum to ban the Communist Party (this had yet again been effectively opposed – this time by Evatt), and knowing that Chiplin would publish this material, ‘wished’ for (and the CIS granted this wish), the publication of this material so as to demonstrate that there was indeed, in the top ranks of the public service a long established, and far too comfortable, ‘nest of traitors’. (Chiplin was, incidentally, by 1974 when he met Mrs ‘A’ again, the Managing Director of one of Rupert Murdoch’s publishing companies in Sydney – Cumberland Press).

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(T) (14) Finnard – lawyer, graduate of Sydney University, interested in questions of Marxist philosophy. Makes very harsh remarks about the labour people. Offered to give ‘A’ interesting information. Was friendly with Withal, director of the federal chamber of industry. (15) Calwell – Minister for Information,128interested in our country. Has expressed a desire to meet ‘A’. (K) (16) Brook – said to be a member of the Communist Party. Brother a member of the Communist Party. Stood for election to parliament.129 (V) (17) Falstein – aged about 40, Jew, former member of parliament, noted for his leftist speeches, very much wanted to go to the Soviet Union. (18) McKell – former prime minister, was on good terms with Siminov, the first U.S.S.R. representative in Australia. Asked ‘A’ to turn to him for assistance.130

***

There were two duties that Petrov performed the day he defected – 3 April 1954. Prior to Petrov’s final decision to defect (31 March 1954), his Embassies First Secretary, Generalov, had confronted him about some documents that had been found in Petrov’s safe during a security check. These should have been placed elsewhere for more secure safekeeping, and this had not been the first time Generalov said, that he had found serious fault with him. This worried Petrov, more so than usual, as he was due to welcome his successor to Australia two days from then and hadn’t yet been advised of any other posting. He made his decision.

The next day he placed the documents he would defect with within the pages of a copy of Pravda and removed them to his home. The following morning, 2 April 1954, he left home early and flew to Sydney. He had been directed by Generalov to greet his successor, Kovalenok, and also some other Soviet diplomats arriving the next morning by ship. Seated behind him on the plane was the high ranking Australian Intelligence officer that he had already had several meetings with, and who was keeping close to him. He nodded to him and indicated that he would meet him later at the usual place in Sydney.

Later that day they met at the ‘safe house’ (it was a flat actually) in Sydney where the one friend he had made since he’d been in Australia, Dr Michael Bialoguski, had first introduced them. There he made it plain that he would defect, but said that he still had his two duties to perform the next day. That wouldn’t be a worry said the ASIO agent presenting Petrov with a document that Petrov then signed so as to apply for political asylum. Formalities over, they both left – Petrov heading off to stay at Bialoguski’s apartment for that night.

Early the next morning Bialoguski drove Petrov through downtown Sydney and dropped him off at the overseas terminal so as to he could meet the ship and greet his

128 Immigration.129 These persons remain unidentified.130 William John McKell was Premier of New South Wales from 6 May 1941 until 6 February 1947.

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successor and the other members of the arriving diplomatic party. From there Petrov took them by taxi to the airport and saw them all off to Canberra. He then, having no sooner seen his compatriots out through the door to the tarmac, returned to the car park to talk to the Australian Intelligence officer who was still keeping close to him.

Petrov insisted that he had one more duty that he wished to perform that day and that was to meet at the Kirketon Hotel with another Soviet diplomat about to leave for New Zealand,131 and to pass over cash for expenses to that man. This was agreed to, though where he went the Australian Intelligence officer followed.

Come 8 o’clock that evening Petrov was finally happy that he had discharged his remaining duties to the USSR and he defected. From his briefcase he withdrew his evidence of Soviet Intelligence activity in Australia (still stashed between the pages of Pravda) and deposited back in his briefcase a not inconsiderable amount of Australian currency for expenses of his own - £5000.

***

It was not until October of 1954 that the Australian Royal Commission on Espionage, having dealt with Evatt and his concerns,132 finally began to ‘inquire into matters of espionage or attempted espionage by agents or representatives of the USSR in Australia’, so as to identify any persons involved. And it is at this point that we have the only other mention, during or since the whole ‘affair’, of a point of contact with New Zealand.

So far as the Commissioners were concerned, it was also clear by then that this part of the enquiry could also be contained within ‘certain chronological and analytical boundaries’. The starting point, for example, would be 1943 - the year in which the first Soviet diplomatic mission to Australia was established.133 There were also certain areas of interest!

By October, so far as ASIO was concerned (and hence this had apparently been communicated to the Commissioners), the most interesting aspect of this part of the

131 See Nest of Traitors (1974, p.142), for this. And this is a perhaps but this could have been Burov’s successor, George Sokolov, who also wished to defect (see above in main text just before footnote 21). The time frame fits well – so a good perhaps then. One can only imagine what Lochore would have thought of some of this had he lived long enough to read some later publications, including, of course, George Fraser’s Seeing Red: Undercover in 1950s New Zealand by George Fraser (1995), in which Fraser outlined Sokolov’s interest in also defecting. Lochore would have been all for that – though that would also have strengthened his credibility as well. This is also, as Marshall said before in this work, ‘about as curious as it can be.’132 His leave to appear before the Commission was finally withdrawn on 7 September 1954 on the grounds that it seemed impossible for him to ‘approach’ the facts with the ‘impersonal detachment’ necessary to advocate (see before also).133 New Zealand sent its first representative, Charles Wallace Boswell, his wife Jean and five other staff including the Cambridge educated New Zealander, Desmond Patrick (Paddy) Costello (approached by McIntosh for this post), to the Soviet Union in 1944. Presumably the Soviets sent representatives to NZ at the same time - the exact year it seems, it is difficult to ascertain, and is not even mentioned in Parker’s work, The SIS (1979).

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inquiry could be the light that might be able to be shone on an earlier case of Soviet espionage in Australia – one that had been detected in 1948.

This concerned a series of leakages, after 1943, of sensitive material from Evatt’s Department of External Affairs in Canberra. It was knowledge of these leakages that had finally convinced Chifley, late in 1948, that there was a need in Australia for a professional and secret security intelligence service (ASIO, formed early in 1949) to be set up as part of their bureaucracy there.

For the Chifley Government, ‘the case’ (as it was referred to) first came to light early in 1948 following the arrival in Australia of a ‘team’ from MI5. Sir Percy Sillitoe, the head of MI5, led the ‘team’ (though he left Australia for New Zealand for a while), which also included Roger Hollis of MI5’s Soviet counter-intelligence section. Hollis (later Sir Roger, and Director General of MI5 between 1956 and 1965) also visited again in 1949.

Pressing their case for the formation of a security service in Australia (the ‘team’ also wished this ‘Service’ to be formed along the lines of MI5), the British, during 1948 and 1949, ‘progressively’ presented the Chifley Government with evidence of the transmission from the Soviet Embassy in Canberra to MVD134 headquarters in Moscow, of ‘certain material’ that had originated from London and that had been sent to Canberra during the war and intended for ‘Australian eyes only’.

Pressed as to how the ‘team’ from MI5 were so sure of this the British hinted at first that the source of this evidence was a British mole inside MVD headquarters in Moscow and for a while Chifley ran with this. Later, it was became clear that the ‘evidence’ was in fact derived from the work of an Anglo-American crypto-analytic team135 that had at last managed to decipher some of the radio traffic that had passed between the MVD office in Canberra and the MVD’s Moscow centre since 1943 - the year in which the first Soviet diplomatic mission to Australia was established. (This ‘work’ had been held up during the war, as all efforts at deciphering had been directed towards Japanese and German traffic).

It was Hollis, apparently, that finally managed to convince Chifley that the ‘team from MI5 knew what they were talking about, and hence that there was need for a service ‘to be formed along the lines’ of, and with the assistance of, MI5’. And he did this in the first instance, by outlining the MI5 ‘case’ against Jim Hill – at that time still a member of the External Affairs Department. (Hill had already, apparently, raised eyebrows on one occasion before then when he had been noticed by a colleague passing material to a person that, according to a warning already issued to External Affairs Department staff, ‘seemed likely to be an MVD agent’).

134 The NKVD (referred to by Bialoguski above), formerly ‘The People’s Committee of Internal Affairs’ during World War II, was upgraded in 1946 to a Ministry - the MVD.135 It was not until 1984, and the release of all the secret files related to the Royal Commission of Inquiry in 1954, that it became clear to researchers that were interested in the Petrov Affair (Richard Hall the author of The Rhodes Scholar Spy, 1991, being one of them) that this ‘evidence’ existed because of this previously unknown of work of this Anglo-American crypto-analytic team. This project had at first been refereed to, as ‘Bride’ but later has become known as ‘VENONA’.

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The leakage of material that seemed traceable to Hill was though, Hollis assured Chifley, ‘low level’. There was, though, leakage of other material, and that was considered ‘very sensitive’. And the ‘most sensitive’, so far as the team from MI5 was concerned as they continued to outline their ‘case’, was a highly classified report prepared in 1945 for the British Chiefs of Staff by a Defence Committee, and known as the Post-Hostilities Planning Staff.

That report, entitled: ‘Security in the Western Mediterranean and the Eastern Atlantic’, had been sent to Australia in the latter half of 1945, from Whitehall in London, to Canberra – to a joint Defence-External Affairs Department Committee, known as the Defence Post-Hostilities Planning Committee.

Amongst other things discussed in that paper (mostly fall back positions in case of war) was the importance of leading Italy, of strategic importance in the Mediterranean, away from friendship with the Soviet Union.

An investigation, once Chifley was told of this, was soon underway. Conducted by Brigadier Chilton, the Controller of Joint Intelligence, Chilton soon found that extensive investigation would not be required, as only one person had ever had that Whitehall Paper136 in his private possession and that on two occasions - between November 1945 and February 1946 and again briefly between 6 and 28 March 1946. His name was Ian Milner and he was a New Zealander.

Chilton’s investigation soon discovered that Milner had also had, and at the same time as well, another of the British Post-Hostilities Planning Staff Papers in his private possession. That Whitehall Paper had concerned the Defence of India and the Indian Ocean and had ‘quite frankly’ admitted that the British position in India had been vulnerable to Soviet aggression at the time it was circulated. Furthermore it had acknowledged that any Soviet advance through Persia (Iran) and Afghanistan would probably not have been able to be resisted either. That Paper had then concluded by canvassing ‘in some detail’ the political and military options that the Planning Staff thought might counter any possible Soviet ‘moves’ in those areas as well!

Early in April 1948 Chilton reported his findings to the Australian Secretary of the Defence Department, Sir Frederick Shedden. Shedden then wrote to Dr Burton,137 the Head of the External Affairs Department in Canberra, so as to enquire about Milner and the material:

360 Shedden to BurtonLetter, CANBERRA, 7 April 1948TOP SECRET AND PERSONAL

136 Hence the expression White Paper (?)137 At age twenty-six, Dr Burton joined the Australian External Affairs Department in 1941. In 1942 he was seconded as Private Secretary to Dr Evatt. He returned to the Department in 1943 and was from then on acting Secretary for the Department as well as Head at times. In 1947, at the age of thirty-two, he was promoted Permanent Head of the Department of External Affairs. His rise in the Public Service has been described as ‘meteoric’, but his fall was also quick, as he became, like many others, an incidental victim of the Petrov Affair.

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CONTROL OF DOCUMENTS RECEIVED FROM THE UNITED KINGDOM GOVERNMENTSir Percy Sillitoe, Head of M.I.5 of the War Office, recently came to Australia on the direction of the Prime Minister of the United Kingdom, to acquaint the Prime Minister with information, which had come to the knowledge of the United Kingdom Authorities, that a copy of United Kingdom Post-Hostilities Planning Paper PHP(45)6(0) Final - Security in the Western Mediterranean and the Eastern Atlantic, had come into the possession of the U.S.S.R. It was alleged that the copy had been obtained from an agent in Australia.2. As the Defence Department was the recipient of this document, the matter was referred to me initially for investigation and report on the system of control, circulation, and custody of secret United Kingdom Staff and Planning Papers in the Defence Department, and on the reliability of officers who handle these documents. This has been done, and an examination of our records shows: -(i) That none of the copies of this document are missing.(ii) That it was circulated to the three Service Members of the Joint Planning Committee and the Secretary to the Committee.(iii) That it was also furnished to Mr. Milner, who was apparently the External Affairs Representative on the Post Hostilities Planning Committee at the time, in accordance with a request of 6th November 1945 from him (copy attached).Mr. Milner had the document from 15th November 1945 to 19th February 1946, and a copy of United Kingdom Paper PHP(45)15(0) Final - Security of India and the Indian Ocean - was forwarded to him at the same time.Mr. Milner later obtained Paper PHP(45)6(0) again, and had it from 6th March 1946 to 28th March 1946.3. Dr. Evatt suggested, at a Conference with the Prime Minister this morning, that I should communicate the above to you in order that you could look into the matter in so far as your Department is concerned, and submit a report to your Minister. I also enclose Copy No. 109 of Paper PHP(45)6(0) Final, and shall be glad if you will return it in due course.[1]

[1] Burton sent an interim reply on 9 April asking 'what has occurred recently to raise the matter of a leakage which took place some years ago? In what form did the leakage take place?’138

And received what he ‘felt’ apparently, was a ‘curt’ reply. Milner was, Burton communicated to Sheldon, ‘well known’ by many in the External Affairs Department in Canberra who ‘all maintained’ that there was no reason to believe papers held by him would not be secure: 361 Burton to SheddenLetter, CANBERRA, 22 April 1948TOP SECRET AND PERSONAL

CONTROL OF DOCUMENTS RECEIVED FROM THE UNITED KINGDOM GOVERNMENT

138Australian Archives: A6691, AS3/1, Section 6.

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With further reference to your letter of 7th April, I have now had an opportunity to examine our files. The files concerned do not form part of our normal records, and have always been retained in the safe of the officer concerned, who at the present time is Mr. Moodie, and who previously was Mr. Kevin. No other officer sees these papers.Mr. Milner was, as your files indicate, temporarily in charge of post-hostilities planning work during the absence of Mr. Hasluck and before the Defence aspect of this work was taken over by Mr. Kevin. No officer other than Mr. Milner would have seen the document under discussion. As your records show, Mr. Milner obtained the document from the Defence Department and returned it.I take it that the Department has been approached on this matter because the receipt by Mr. Milner of the document opens up one of several lines of enquiry which should be made in order that a complete report can be given. There is no evidence of irregularity in the files of the Department, and the safe-custody of the files appears on enquiry to be assured. Moreover, Mr. Milner was well-known to the Department by many officers, who all maintain that there is no reason to believe the papers held by him would not be in safe-custody.No doubt copies of this same document were seen by a number of persons in the Service Departments, and perhaps there are other avenues which should be explored. The Minister points to use by Sir Keith Murdoch [1] of material parts of top secret documents which were in the possession of one or other of the Service Departments. In the absence of some evidence to the contrary, I do not believe any implications should be drawn from the facts that no source of leakage has as yet been discovered and that Mr. Milner is absent from Australia. This particular line of enquiry cannot be followed any further without an attempt to bring Mr. Milner back to Australia, through the Secretary-General. I gather that you do not think the facts warrant any such attempt, and in this I agree.If there is any suggestion of leakage which could not in any way be attributed to Mr. Milner, who has been absent from Australia for some two years, this in itself would indicate a high probability that he was not involved in the leakage of the document referred to.Having these facts in mind, particular care should be taken in making a report that no suggestion is made that Mr. Milner was an officer to whom secret information could not safely be entrusted. What is even more important, no suggestion should be made that any present officer of this Department is a person to whom secret information cannot be entrusted. On the contrary, any report made should contain a firm assurance regarding the safe-custody of any secret information in the Department.I should be obliged if you would arrange for me to see any draft report which might be returned by any channel to the United Kingdom authorities.

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[1] Chairman of Directors, Herald and Weekly Times Ltd. Former Director-General of Information, June-December 1940.139

Unsatisfied with this reply, Shedden then submitted a report to Prime Minister Chifley (not available).

***

Ian Francis George Milner was born at Waitaki, New Zealand on 6 June 1911. His father was Frank Milner the well-known flag-waving headmaster of Waitaki Boy’s High School, situated just north of Oamaru on the east coast of the South Island. Frank Milner was the first New Zealander to be appointed headmaster of Waitaki – in July 1906. Frank Milner had excelled at the Bridge Street Boys' School in Nelson, gaining the highest marks in Nelson and Marlborough in the Scholarship Examination that then permitted him to enter Nelson College in 1889.

In 1893 he entered Canterbury College and completed his BA in 1895 - having majored in Latin and English. In 1896 he completed his MA degree, with first-class honours in Languages and Literature, and he also passed the first section of an LLB degree. In 1897 he joined the staff of Nelson College and remained there until 1906 when he was appointed headmaster of Waitaki. Waitaki was, at that time, experiencing falling enrolment, something that Frank Milner successfully reversed.

In Wellington, in January 1907, Frank Milner married Florence (‘Flo’) Violet George, the daughter of a wealthy draper and warehouseman. They had three sons and one daughter. Frank Milner died in mid-stride when giving his farewell speech to Waitaki in December 1944 – intending then to stand for the National Party against Arnold Nordmeyer for the seat of Oamaru.

Ian Milner remembers his father, Frank, during his early years in Intersecting Lines: The Memoirs of Ian Milner (1993):

‘Father we saw little of, except at meal-times. His headmaster’s preoccupations, including the teaching of English and Latin to sixth form pupils, claiming him throughout the day. In the evening he would sit at his desk in the rector’s study writing, eternally writing, until midnight and often later. He wrote articles and speeches on education, the British Empire, the League of Nations, English literature. He filled large notebooks with jottings from English and American journals concerning

139 Australian Archives: A6691, AS3/1, Section 6. Though not made plain Sir Keith Murdoch (1885-1952), was Director-General of Information for a short time during Menzies first short period as Prime Minister of Australia. He was also Rupert Murdoch’s father – see footnote 127 for first mention of Rupert Murdoch. We have mentioned before that it is supposed, by the author’s of Nest of Traitors (1974), that the reason that ‘sensitive material’ was passed on to Chiplin was that the Menzies Government, having failed in a yet another referendum to ban the Communist Party (this had yet again been effectively opposed – this time by Evatt), and knowing that Chiplin would publish this material, ‘wished’ for (and the CIS via ‘Mrs A’granted this wish), the publication of this material so as to demonstrate that there was indeed, in the top ranks of the public service a long established, and far too comfortable, ‘nest of traitors’.

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international affairs. He kept up a running stream of letters to an extraordinary range of people: parents, local and national public figures, Old Waitakians140(especially those overseas), educationalists in England, the USA, Australia and new Zealand, dignitaries at home and abroad. It was with a sense of awe that I would enter his study and interrupt the dynamo of energy during peak hours.

‘The man’, as he was known to generations of Waitakians, had in abundance what the Victorians called ‘enthusiasm’: moral drive and energy of purpose. He had enthusiasm for so many things: the British Empire, the British Monarchy, the Royal Navy, the League of Nations (guided by British counsel), the world of Nature (he was a pantheist141in the mould of William Wordsworth), physical fitness (manly games for Waitakians: ‘tramping’ and cold showers the year round for himself) English literature, public speaking (‘the silver-tinged orator from the South Seas’ and American journalist dubbed him: he won international repute), and educational reform (above all, the humanising of the curriculum).

In outlook he was an ardent Imperialist of the Joseph Chamberlain and Dick Seddon breed.142England was the mother of parliamentary democracy, the citadel of freedom and human rights. The British Empire (and later Commonwealth), shielded in a world menaced by the failure of foreigners to follow British example. (p. 43).

***

In the biography, written by himself, of his father, Milner of Waitaki: Portrait of the Man (1983), Ian Milner has this to say about his father’s Imperialist faith and the association of that faith with the 19th century British politician and Colonial Secretary, Joseph Chamberlain (mentioned above), and ‘Dick’ Seddon - the Prime Minister of New Zealand from 1893 (the same year Frank Milner first entered Canterbury College), who also died, while in Office, the same year (and month) that Frank Milner was appointed headmaster of Waitaki – June 1906:

‘Whatever else was distinctive about Milner’s regime, nothing caught the public eye more than the imperial image he imprinted on Waitaki. Any secondary school of the time, through its Cadet Corps and routine observances, fostered the accepted loyalties to King and Country, Empire and Commonwealth. Waitaki supplied more than the normal quota of empire sentiment. In the 1920s and 140 This list included Reuel Lochore right up until when Frank Miner died in December 1944.141 Pantheism, basically, is a system of beliefs that sees all things enjoined; in nature a great inclusive unity such as has often been the subject of poetry.142 Interestingly Seddon, New Zealand’s Prime Minister from May 1893 until his death in June 1906, was not all that articulate. When speaking he often dropped his ‘h’ and when he got excited his provincial accent always came to the fore. His political foes often mocked him in the House, calling out that he was uncouth, and rumours often circulated about him – one being that he hadn’t been able to read until the age of thirty. In fact his father, Thomas Seddon, had also been a headmaster – of Eccleston Grammar School, situated near St Helens, Lancashire, England.

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30s the school gained a wider than national status primarily because of [his father’s] prestige as an eloquent protagonist of the Imperial idea, which brought him links with influential figures in English public life. How did the Man come to sound the Imperial music so loudly?

His first year as a teacher at Nelson College, 1897, was that of Queen Victoria’s Diamond Jubilee. ‘Imperialism in the air – all classes drunk with sightseeing and hysterical loyalty’ wrote Beatrice [Potter] Webb of the pageant staged by Joseph Chamberlain for the occasion.143The same year Chamberlain convened the Colonial Conference to consider closer links within the Empire, including the unborn but in some English quarters much desired child, Imperial federation. The most willing potential father, Chamberlain apart, was New Zealand’s stalwart Premier Richard Seddon. While in England for the Conference, he happily played to the gallery of neo-imperialist feeling. When it became evident that federation was out of the question, Seddon joined Chamberlain in sponsoring the compromise resolution ‘to hold “periodical conferences”’144. Back home, this ‘imperialist145 with a vulgarity noisy and flamboyant’ came into his own with the outbreak of the Boer War. Encouraged by right-wing elements, he decided to offer Britain New Zealand contingents and ‘discovered that imperialism might pay’. His public speeches, studded with emotive catch-cries like the ‘grand old flag’, the ‘dear Old Country’, the ‘crimson threads of kinship’, quickened the rising temper of national pride and imperial loyalty, at time jingoistic in tone. Seddon realized that New Zealanders were apathetic or hostile to imperial federation. But national pride was rampant when their cavalrymen rode to glory on veldt and kopje. Or when their Premier, ruffling Colonial Office minds, asserted claims to adjacent Pacific territories. Imperialism was ‘in the air’ in New Zealand, as in England. But, increasingly, it became merged with nationalist feeling.

The seed-bed of Frank Milner’s imperialist faith was the crowded lecture room at Canterbury College where Professor Macmillan Brown extolled in swelling periods the splendours of English Literature. Not merely as literature but as an expression of English history seen through idealizing eyes, of a uniquely English heritage of freedom, democratic instincts, and sense of justice.

Several strong influences worked on him while teaching at Nelson College:146 Joseph Chamberlain, Seddon as his New Zealand disciple, participation in the Boer War, and the centenary in 1905 of Nelson’s victory and death at Trafalgar.

143 Beatrice Potter had formerly been a lover of Joseph Chamberlains - 1882-86. (Source, http://www.spartacus.schoolnet.co.uk/TUwebbB.htm ).144 Later known as Imperial Conferences.145 Seddon.146 1897 – 1906.

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His admiration for Chamberlain is evident from the copious draft of a speech prepared during the Boer War. He stresses that the early social radical had evolved into an advocate of ‘true Imperialism’. He is much taken with Chamberlain the orator, referring to a ‘grand and stately peroration in the House on the Imperial instinct of the colonies as demonstrated...by the absolute spontaneity...of their patriotism and devotion in the dark hours of the Transvaal crisis.’ He eagerly embraced Chamberlain’s idea of federation. When the federal dream faded in the harsh light of national self-interest, he responded wholeheartedly to Chamberlain’s plea for Empire cohesion...

Lord Nelson’s centenary in 1905 was resoundingly celebrated in the town named after him. Milner was invited to give a public address. His studied rhetoric showed him rising to the occasion. They were ‘assembled to commemorate the glory of a life that bodied forth the supreme naval genius of England.’ (p.133).

The point at which discord developed more fully between Ian Milner and his father is also recorded in Milner of Waitaki: Portrait of the Man (1983):

‘War, in its first stages, brought discord within the family. Returning from a post-graduate fellowship in the United States, Ian accepted, in mid-1939 a stop-gap job in Wellington as research officer in the department of Education. During the ‘phoney war’ he [Ian] was distrustful of the Chamberlain147 Government’s intentions. The policy of Munich, which led to the Nazi occupation of Czechoslovakia, had not changed overnight. Powerful forces in Britain and in France were manoeuvring to induce Hitler to turn East against the Soviet Union, the real enemy.’(p. 175).

***

In Australia Ian Milner is remembered as having been a New Zealand Rhodes scholar who studied at the Universities of Oxford and California between 1934 and 1939, and whom in 1940 was appointed as a Lecturer to the University of Melbourne where he established the Department of Political Sciences there.

He is also remembered in Australia as a person whom, before the ban on the Communist Party was lifted in December 1942,148 while he did not exactly advertise his Communist Party membership, nor did he actively try to disguise it either.

147 The 19th Century British politician, Joseph Chamberlain was also the father of the British Prime Minister, Neville Chamberlain, mentioned herein by Ian Milner. And, as has already been mentioned, Neville Chamberlain is most clearly remembered as being the Conservative Prime Minister, whom convinced that Hitler was a ‘rational statesman’ who would keep agreements, had returned from his September 1938 Munich meeting with Hitler, proclaiming, as he waved a document above his head, that he had secured: ‘Peace in our time’. There is a clock named after Joseph Chamberlain (the ‘Chamberlain clock’ in Chamberlain square in the town centre of Birmingham), and it was he who coined the expression that ‘two weeks in politics is a long time’ - shortened to ‘one week’ by Labour Prime Minister Harold Wilson (1964-70; 1974-76).

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Following the lifting of the ban on the Communist Party, he then became known for his pro-soviet writings in the University newspaper, Farrago and for his lectures for the Australian-Soviet Friendship League. In addition to this he also became a leading member of the University’s Communist Party branch. Then, in late 1944, when pro-Soviet feeling in Australia was at its highest, he sought, and secured, a position in the Department of External Affairs in Canberra.

In 1945, Milner was given the responsibility of representing the Department on the newly established Defence Post-Hostilities Committee. This Committee was established by Ben Chifley, the Minister for Post-War Reconstruction in Curtin's government - said also to have been the architect of Labor's post-war policies, and the person who was also about to become Prime Minister when Curtin died while in office at Canberra on 5 July 1945. It was due to Milner’s participation in the work of this Committee that he gained access to the top-secret reports of the British Chiefs of Staff Post-Hostilities Planning Staff. On 6 November 1945 he put in a request for three of the British Post-Hostilities papers. He received two of the three he had requested on 15 November 1945. These concerned the Western Mediterranean and India (mentioned above). The third, entitled: ‘Security of the British Empire’ was not at that time available.

On 6 March 1946 Milner requested all three again, but again the third paper was not available. In total Milner had the two papers that were available in his private possession for four months. It was the Paper that stressed the importance of leading Italy away from friendship with the Soviet Union (see above) that had appeared in the deciphered Canberra to Moscow MVD radio traffic.

There was more. Late in 1945, Milner had also aroused the suspicion of an Army Officer seconded to the Post-Hostilities Division of External Affairs. This officer had informed his superior, Colonel Spry,149 at the time Director of Military Intelligence, that he had noticed Milner removing a ‘top secret’ file concerning International Peace Treaty negotiations from the Department for the weekend.

In 1954, as the Australian Royal Commission on Espionage (having dealt with Evatt and his concerns), finally began on the second part of their inquiry, Colonel Spry recalled this. Spry also recalled that the same officer had told him of another occasion when Milner had been unable to produce a certain missing document known to be in his possession. Also, he had been told that when Milner did produce the document, some thirty-six hours later, he had offered no explanation.

In 1947, Milner had left the Department of External Affairs in Canberra and from then on until July 1950, when he had applied for leave and travelled to Czechoslovakia,

148 Menzies had banned the Communist Party in June 1940 and in December 1942, Labor Prime Minister ‘Plain John’ (John) Curtin, lifted this ban following the German invasion of the Soviet Union (launched 22 June 1941), following which Russia came into the war on the side of the Allies.149 On becoming Prime Minister in December 1949, Menzies had replaced Justice Reed (Chifley’s choice for Head of ASIO at the beginning of 1949), with Colonel, later Brigadier and eventually ‘Sir’, Charles Spry.

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Milner had been an employee of the United Nations at New York. In June of 1950, the month before Milner took his leave and travelled ‘east’, Hill, having been transferred to work at the Australian High Commission in London (at the suggestion of Hollis), was approached by a member of MI5 who told him of their suspicions of him. The conjecture was, that Hill, a former pupil of Milner’s at Melbourne University, then contacted Milner and told him of this.

Hill returned to Australia shortly after the MI5 approach, was transferred to the Attorney-Generals Department, and two years later resigned and went into private legal practice.

In Czechoslovakia Milner found himself a position in the English Department at Charles University, Prague, and seldom left after that though he did return to New Zealand on a couple of occasions – one of these being when he was researching his father’s biography.

At the time that Petrov defected, in April 1954, this was all that was known as regards ‘the case’. That, and that Hill was no longer part of the public service; and that Milner was out of the country - teaching English to students in Czechoslovakia. On behalf of ASIO the Commissioners sought to know more… So far as Hill was concerned, there was, within the ‘documentary evidence’ that Petrov handed over when he defected, plain reference to Jim Hill by way of family details, and the Commissioners were able to identify him from this.

Specifically, in the documents G.2, ‘Master’ and ‘Tourist’ head a list of MVD contacts identified only by their code names. But in the document G.3, ‘Master’ is identified as “Wilbur Christinson – ‘Master’. (husband of the sister of Tourist)” - or Jim Hill.

Neither of the Petrov’s150 though, and they had been questioned about Hill, knew anything of him - their period in residence not having begun until 1951. So far as Milner was concerned, there was not, within the ‘documentary evidence’ that Petrov handed over when he defected, any such reference or clue that pointed plainly towards Milner, but the Petrov’s, even though their residency had begun long after Milner moved on from Australia, said that they did know of him.

While being questioned by ASIO about Milner on 9 April 1954 (Petrov defected 3 April 1954), Vladimir Petrov had revealed that ‘some four or five months’ before then, he had received a cable from MVD headquarters concerning the man. In this cable it was explained to Petrov that Milner, of help to them while at the United Nations, wished to return to New Zealand from Czechoslovakia where he then resided so as to ‘live with his parents’.151 Contingent on Milner returning to New Zealand was the matter of his

150 The defection of Vladimir Petrov’s wife, Petrova, caused an even bigger stir than her husband’s defection did, as it looked for a while, after her husband defected, that she was returning to the Soviet Union willingly. This was not the case however, and when she made this plain, and as she was being escorted towards the plane that would return her to the Soviet Union, her escorts were disarmed by the six Australian policemen standing by and she was removed from their company.151 In fact Milner’s father was dead (in 1944) and his mother near death if not dead by the time (‘Flo’ died in 1953), this request was said to have been made.

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‘reputation’ inside External Affairs in Australia, and so Petrov had been asked to ‘discover‘ this.

This task Petrov had performed by enquiring of the Australian-Soviet Friendship Society if someone could help with this. A week or so later, the Tribune journalist, Rex Chiplin, had got back to him with some biographical material on Milner, but, Petrov told his questioners, Chiplin had been ‘unable to say what the attitude would be in Australia to his returning to New Zealand’. There, according to Vladimir Petrov, the matter had lain since.

He also, he told his questioners, doubted that Milner had been recruited in Australia, as he believed he would have heard of that through his predecessor, Sadovnikov (1949-51). But, he conceded, Milner may have been active during the period of the first residency, that of Makarov (1943-49). He did, however, still know that Milner’s codename was ‘Bur’ – the Russian term, he explained, for a ‘bore’, as in a device for drilling deeply underground.

When, in August and September of 1954, ASIO questioned Petrova separately, a somewhat different picture emerged. Petrova went further than her husband had and stated that the purpose of Moscow’s enquiry regarding Milner was not, as her husband had already stated when he was questioned by ASIO, to assist Milner to return home to live with his parents, but ‘to plant him as a Soviet agent in New Zealand’.

Confronted in November of 1954, with the discrepancies in their stories as regards Milner, Vladimir apparently demanded angrily of his wife that she change her statement, as these were dangerous allegations that should not be made lightly. Petrova did change her statement, though ‘in spirit’, apparently, she continued to resist!

***

But for the ‘evidence’ produced by the work of Anglo-American crypto-analytic team Petrov would never have been asked about Milner – and probably, by the sounds of it, wouldn’t have offered anything on him either. And if it hadn’t been for Australia’s 30-year rule the fact that a project named VENONA had existed and had produced evidence against Milner, wouldn’t have become known of either.

Milner never knew of this evidence either, and in his denial (written towards the end of his life, and published two years later near the end of Intersecting Lines: The Memoirs of Ian Milner, 1993), that there was a case against him, he concentrates instead on the Commissioners summary in 1955 as regards him. They simply said that ‘since Milner was in Czechoslovakia he could not be examined’ – thereby impugning him, and on the ‘alleged recollection’ of Mrs Petrov, which was – the Report stated – ‘not confirmed by Petrov…’152

The 30-year rule, amongst other things, is meant in Australia to act as a brake on the hand of those involved in ‘secret policing’ in that persons may possibly be called to account in their own lifetime. One could speculate here that as ASIO is not yet

152 Pp. 186-87 of Intersecting Lines: The Memoirs of Ian Milner, 1993).

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exempted from this rule that Chifley may have seen to that, and that this was simply overlooked by Menzies, or that Menzies didn’t care.153 Thus, even ASIO’s files have to be deposited in Australia’s National Archives after 30 years – thereby making them available to researchers and anyone else that is interested as well.

In Britain they have their 50-year rule and then some, and in New Zealand – well, whatever the rule is in New Zealand, it doesn’t seem to have been defined yet. Even a simple request, such as an enquiry as to which part of New Zealand the genuine Kroger’s came from is met with a ‘no can do’ for reasons listed - one of them being the objections of another service, presumably the British?

Still, even without Australia’s 30-year rule, we would at least have learnt of the existence of the VENONA project, and that only a couple of years after the release of all of the material from the Australian Royal Commission of Inquiry (of 1954-55) in 1985. That the VENONA project did exist was, perhaps ironically, next publicised in Australia in 1987 - in Peter Wright’s book Spycatcher, published in Australia that year.

Not unexpectedly, the publication of this book followed a long battle unsuccessfully waged in the Courts of Australia by the British Home Office against Peter Wright and against his publisher – William Heinemann of Australia.

Peter Wright, British born, and a scientist, had formerly, from 1949 until January 1976, been a highly placed member of British Intelligence, and had retired with his wife to Australia, with a grievance and tired of it all, to be near their only daughter:

‘As I approached my final months in the office I felt a wave of tiredness. I did not know whether to stay in England and fight, [for a fair pension – having simply been told in 1949, when MI5 and MI6 (at the direction of Sir Percy Sillitoe) had sought the exclusive use of his specialist electronics skills, that he would be looked after] or cut my losses and run. My health was bad, my pension derisory. But I had my memories.’ (p.381).

Wright’s big mission, apart from expressing his grievance as regards his pension, was to publicise his case against his fifth man - Sir Roger Hollis, who had died in 1973. With Comintern cells always consisting of five persons, so far as Wright was concerned, only four, the Cambridge four, had been identified for sure – Maclean and Burgess in 1951;154 Philby in 1963;155 and finally Blunt (the Surveyor of the Queen’s Art collection, unmasked officially in November 1979, but actually unmasked in 1964 and given

153 In 1990 ASIO did attempt to have their files exempted from this rule, but their attempt to have the existing legislation amended did not succeed. Daresay they will succeed someday soon.154 On 25 May 1951, Burgess, having been tipped off that Maclean was about to be interrogated, hired a car in London and drove to Maclean’s house in Kent. From there they travelled to Southampton where they boarded a ferry for the Continent. One of the docker’s when he was questioned later, remembered them as they had apparently waved to him as the ferry pulled away from the quay and told him to tell anyone asking after them that they’d be back on Monday. 155 One of the versions of Philby’s disappearance goes like this: On 23 January 1963, Philby asked the taxi driver of the cab he was travelling with a companion in to a dinner party to stop and let him out. Telling his companion that he had forgotten to do something at the office, he said he would catch up with her later in the evening. She never saw him again and he turned up in Moscow some six months later.

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immunity in return for co-operation). Wright, in fact officially a spy catcher, had often questioned him, trying to get more out of him, but he had not found him co-operative at all.

So far as his pension went, Wright also recalls, in Spycatcher (1987), that he was asked by a ‘person’, as aware as he was that his ‘gentlemen’s’ agreement as regards his pension was not going to be honoured, if alternative employment might interest him. He then met with an assembly of persons who said that they were interested in preventing, if possible, the return of a Labour Government (and Harold Wilson), to power in 1974. Wright says, in Spycatcher (1987), that he was tempted:

‘[My] would be employer came straight to the point. “We represent a group of people who are worried about the future of the country,” he intoned... “And how do you suppose I can help?” I asked. “Information,” he replied, we want information, and I am assured you have it.” “What precisely are you after?” I enquired. “Anything on Wilson would be helpful. There are many people who would pay handsomely for material of that sort.” “But I am a serving member of the Security Service...” I began.He waved his hand imperiously. “Retire early. We can arrange something...”

The plan was simple. In the run-up to the election which, given the level of instability in Parliament, must be due within a matter of months, MI5 would arrange for selective details of the intelligence about leading Labor156 Party figures, but especially Wilson, to be leaked to sympathetic pressmen. Using our contacts in the press and among union officials, word of the material contained in MI5 files and the fact that Wilson was considered a security risk would be passed around.

Soundings in the office had already been taken, and up to thirty officers had given their approval for the scheme. Facsimile copies of some files were to be made and distributed to overseas newspapers, and the matter was to be raised in Parliament for maximum effect. It was a carbon copy of the Zinoviev157 letter, which had done so much to destroy the first Ramsay MacDonald Government in 1928.’ (pp. 368-69)

Tempted, and no fan especially of Wilson, Wright says that he declined involvement! (Labour, led again by Harold Wilson, did form a government in 1974, though in March 1976, Wilson unexpectedly resigned).

Wright also recalled, in Spycatcher (1987) - and this was one of his pieces of evidence against Hollis - that all VENONA traffic ceased after Hollis’s last visit to Australia.

156 Wright, interestingly, soon adopted the Australian spelling for Labor.157 See in main text before footnote 119 and in footnote 119 for first mention of Zinoviev.

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It was though, so far as the Americans are concerned, more likely that Kim Philby told the Soviets to change their codes after he received summaries of VENONA translations when he joined the British Mission in Washington in 1949.158

Wright has said though, that while:

‘Philby was indoctrinated [shown summaries] in 1949, other people, such as Roger Hollis, were indoctrinated in 1948, when the match suddenly ceased in Australia after he returned from organizing the setting up of ASIO.’ (p.184). A Time of Ferment?

The imagination of a boy is healthy, and the mature imagination of a man is healthy;but there is a space of life between,in which the soul is in ferment,the character undecided,the way of life uncertain,the ambition thick-sighted:thence proceeds mawkishness.159

From, Endymion, Preface. John Keats. (1795-1821)

So far as that ‘case’ against Milner is concerned, he has, since his death, been most convincingly exonerated. Do see James McNeish’s Dance Of The Peacocks (2003), but briefly the document transmitted from the Soviet Embassy in Canberra to MVD Headquarters in Moscow was transmitted intact – copy number and all. It may not have been noticed before, though this seems unlikely, but the document intercepted in transmition had at its head the copy number 109 (as submitted to Burton by Shedden for investigation also – see before in main text after footnote 137), and Milner signed for copy number 110? This will, of course, not satisfy all parties (review though Burton’s reply to Shedden in main text after footnote 138, and review also, footnote 139), nor will any case ever made that tries to show Sutch in a different light either. But more light, of course, can always be shone.

With Milner we at least have some indication of the ferment that may have led him, or anyone for that matter, along the path that for so long he was said to have travelled down:

‘In the mid-thirties Oxford had some 5,000 undergraduates. Of these about 2,000 belonged to one of the various political clubs. The Labour Club claimed approximately 700 (in 1935 the previously separate Communist October Club was dissolved and amalgamated with the Labourites). The Conservative Association

158 See the Report of the Commission on Protecting and Reducing Government Secrecy. Washington, United States Government Printing Office , (1997). http://www.fas.org/sgp/library/moynihan/index.html Go to bottom of page to VI. Appendices, then open document headed Cold War. Come up nine paragraphs from bottom of document and look for Philby. 159 Mawkishness: of faint, sickly flavour; feebly or falsely sentimental; over-attachment.

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had about 500, the Liberal Club 150, and the non-party League of Nations Society (its membership overlapping with that of the political clubs) 800 to 1,000. It was common practice for leading party figures in the national arena and members of the Government of the day to address the Oxford clubs. The Conservatives during my time had celebrities like Winston Churchill, L.S. Amery and Robert Boothby. The labour Club had a wide span of performers from leading centrists like Clement Atlee, Herbert Morrison and Hugh Dalton to brilliant spokesmen of the left like Stafford Cripps and Harold Laski, and prominent Communist representatives such as Harry Pollitt (party leader), Palme Dutt (an unsurpassed Marxist analyst of foreign affairs and eloquent speaker) and John Strachey (as a bird of passage). The Labour Club, of which I became a supporter, though mixed in its views, was well to the left of national Labour Party policy. Unlike the latter, it strongly favoured the Front populaire line of the then famous French Socialist Leader Leon Blum, embracing all leftist and anti-fascist groups, including the Communists. As I listened in an overcrowded hall to Clement Atlee being heckled by former Octobrists one week and Harry Pollitt beefing it out against the cat-calls of anti-Party liners the next, I though of the Liberal Sir William Harcourt’s celebrated remark before the Great War, now updated: ‘We are all Socialists now.’

The very pressure of events, at home and abroad, drove us to the left. In his authoritative study Food, Health and Income Sir John Orr revealed on the basis of a thorough statistical study that in the mid-1930s nearly one-third of the people of Great Britain were forced to live on a diet below the bare minimum set by the British Medical Association as necessary for normal subsistence. I’d seen for myself the northern industrial heartland of England and found its urban areas one sprawling East End (as it then was), only with infinitely more old-fashioned smoke-stacks to poison the lungs and blacken the dreary rows of brick houses and squalid streets. I made a trip to Jarrow in one of the officially labelled ‘distressed areas’ where the economic crisis had brought about the worst incidence of unemployment and poverty. It was a ghost city, Decaying in front of your eyes. In Oxfordshire, and the southern counties, the infant mortality rate per thousand at the time was under forty. In the ‘distressed areas’ it was over eighty. When the unemployed movement sent its protesting “Hunger Marchers’ (they moved all over Britain) to Oxford on their way to London mass rally, Labour Club members organised reception committees to welcome and cater for them. During the winter of 1934 the labour Club chartered busses and we went over to Tonypandy to show solidarity with the New South Wales miners, largely on the dole. We marched alongside them in a huge demonstration to demand Government action to relieve their conditions. Merely to set eyes on a Welsh mining village as it

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was then – the dead slag heaps like a lunar landscape, the rusting pit-head wheels motionless against a sullen sky, the lifelessness of a war-time evacuated area – impacted like a shock-wave.

As we marched shoulder to shoulder with men in whose haggard faces and sunken eyes the reality of unending, unemployment and malnutrition (at least) was written, the familiar catch-words of ‘capitalist crisis’ and men ‘rotting on the dole’ became charged with life. When the speeches were over – tough terse fighting words, no rant – the whole ‘demo’, marching men and their wives alongside, broke into the Welsh anthem ‘Cwyn Rhondda’. The thousands of voices, blended instinctively in tonal unison, seemed to me an assertion of life, of human dignity, against the deadness of everything else – the abandoned pits, the squat stone houses, grimy streets, sunless indifferent sky. Spain was the touchstone of political faith – for the Left as for the Right. The story has been told by many, and various, hands. It’s not possible now – so much blood having flowed since under the bridges of Europe and Asia – to bring to mind with adequate vividness what the civil war and fascist intervention in Spain meant to my generation. Since the last of the Spanish Republicans and international volunteers, after the final Nazi and Italian fascist bombings and shelling, were driven over the Pyrenees and herded into ‘refugee’ concentration camps in the winter of 1938-39, there followed like an accompanying hammer-blow the Nazi occupation of Czechoslovakia. Then six years of world war, with the loss of so many million human lives, twenty million of them Russian. And within twenty years after the slaughter – after Belsen, Buchenwald160, Dachau, Auschwitz – and Hiroshima – the American military machine, manned by nearly half a million soldiers at peak, was bust blasting and napalming its barbaric way to frustration and defeat in Vietnam.

It all began in Spain. Franco’s attack, soon supported by Hitler and Mussolini on a formidable scale, sounded the alarm for democracy, for peace, for any hope of socialism the world over. Cecil Day-Lewis’s poem ‘The Volunteer’, an epitaph for his fellow countrymen who fought with the International Brigade, may seem simplistic today. But it voiced for me and many others the urgency and moral compulsion arising from the struggle in Spain:

Tell them in England, if they askWhat brought us to these wars,To this plateau beneath the night’sGrave manifold of stars –

It was not fraud or foolishness,

160 The Buchenwald concentration camp, near Weimar, Germany, became operational on 1 August 1937. The hill on which it stood was called "Ettersberg," a place where Goethe often wrote and sketched, and that was the initial name for the camp, which the people of Weimar protested. The name was then changed to Buchenwald (Beech Forest).

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Glory, revenge or pay:We came because our open eyesCould see no other way.

Meeting after meeting of the Labour club was given over to Spain. The British Labour Party’s shameful acquiescence in the Tory pro-fascist policy of so-called ‘non-intervention’ was bitterly denounced. I took comfort from the stand of the New Zealand Labour Government in opposing this wretched subterfuge, as it had earlier Britain’s toleration of fascist Italy’s aggression against Ethiopia. New Zealand’s representative on the League of Nations Security Council in Geneva161found himself more than once casting his vote along with Maxim Litvinov, the Soviet Foreign Minister, in favour of collective security measures against the Fascist Powers’ acts or threats of aggression. Newspaper reports of the time had it that on one occasion Anthony Eden, British Foreign Secretary, was so incensed by New Zealand’s attitude that he called the Wild Colonial Boy to order by blue-pencilling162 some passages of a speech that its representative, W.J. Jordan, was about to make to the Council.163

The Labour Club [at Oxford] raised funds to send medical supplies and arms to the Republican forces and the British section of the International Brigade. On one occasion John Cornford, the Cambridge student leader, communist and occasional poet – one of the finest minds of his generation - addressed the Club. He had fought in Spain immediately after the fascist offensive started in 1936. I see him now, in a roll-top sweater, face flushed with animation, a crop of curly dark hair rising over those piercingly bright eyes. He spoke of his pulses in plain, impassioned words, voicing the feelings and conscience of us all. The time to stand and fight was now: our frontier, as democrats and socialists, was not the Rhine but across the Huesca plain and the Guadalajara mountains...

Within a few months he was killed in action, at the age of twenty-one, trying to hold back the fascist offensive at Cordova. His story, like that of many others, including New Zealander’s such as Auckland University’s brilliant scholar G.C. McLaurin and Otago’s Arnold McClure,164has been told by those

161 The League of Nations (the precursor body to the United Nations), was established in 1920 after the end of the First World War with the aim of preventing future wars. Established as the Treaty of Versailles went into affect, the first meeting was held in Paris on 16 January 1920. On 27 October 1920, the League established its headquarters in Geneva - the League having ‘recognized’ the perpetual neutrality of Switzerland.162 Blue is the diplomatic colour used for censure.163 A French newspaper reported this first (according to Edition no. 218 of The Week – 23 June 1937); and then in Britain, the New Statesman (according to Sinclair’s Walter Nash, 1976, p.387) – founded by Beatrice (Potter) Webb and Sidney Webb in 1913.164 The Spanish Civil War began in July 1936 when General Franco led an uprising against the Spanish Frente Popular (People's Front) Government elected 16 February 1936, and ended with Franco’s eventual victory in March 1939 (though he claimed this earlier – on April 19, 1938). John Cornford, the son of English poet Frances Cornford, was the first Englishman to make his way to Spain to fight for the Republican cause.

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qualified to tell. Though I hadn’t known Cornford except as a public platform figure, his death gripped me deeply. I felt that if I were to be true to my convictions I should follow his example and volunteer. I was in my final Oxford year. I went on studying and took part in Labour Club activities. My conscience knew that I had avoided Cornford’s frontal challenge. These were times that tried men’s souls more searchingly than ever before. What was happening in Spain would decide the fate of democracy and liberty everywhere, including England. As Cornford put it in his fine but little-known poem ‘Full Moon at Tierz: Before the Storming of Huesca’, written while fighting on the Aragon front in the late summer of 1936:

England is silent under the same moon,From the Clydeside to the gutted pits of Wales.

The innocent mask conceals that soon Here, too, our freedom’s swaying in the scales.O Understand before too lateFreedom was never held without a fight.

Men make their own history, said Karl Marx. But in specific, determining circumstances: freedom is knowledge of necessity. Now was the necessary hour to shape those circumstances in the interests of mankind’s future. As John Cornford wrote with fateful stoicism in the same poem:

The Intersecting Lines that cross both ways,Time future, has no image in space,Crooked as the road we must tread,Straight as our bullets fly ahead.We are the future. The last fight let us face.

During my last year at Oxford, 1936-37, I shared a house with fellow New Zealander’s Jack (J.A.W.) Bennett and John Mulgan...’ (From Intersecting Lines: The Memoirs of IAN MILNER, edited and introduced by Vincent O’Sullivan, 1993, p.144-149)

***

A period of ferment in Dr Sutch’s life, Marshall has said, occurred while he was at Columbia University:

‘Sutch was a student in the United States of America, the vortex

Many came to see the war (some through Cornford’s eyes) as part of the general struggle against Fascism and made their way to Spain to give support to the Republican Government. A small number also volunteered to fight with Franco's Nationalist Army. From Jan 1936 the United States barred Americans from serving in the ‘Spanish War’ and under a Non-Intervention agreement (February 1937), the Government’s of Britain and other European nations also attempted to prevent men and women from their countries participating in the war. Despite this nearly 60,000 volunteers from 55 countries made a clandestine journey mostly through France then by foot across the Pyrenees, to join the Republican cause. The withdrawal of volunteers began in October 1938 under the auspices of the League of Nations.

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of that capitalist catastrophe. At Columbia University in New York [1931-1932] he was exposed to the general disillusionment with the capitalist system which was rife among young intellectuals at that time. He went there with the faith of a Methodist lay-preacher and left as a convert to the ideology of socialism. He was undoubtedly surrounded by others of like mind and was perceived (like others at Cambridge University at the same time) to be worth cultivating for future use – worth even sending on a tour of the Soviet Union, the Marxist alternative society which he later referred to as the “success of the Russian revolution”.165

Shallcrass, in our introductory piece, expanded on this period in Sutch’s life:

‘Dr Sutch’s university work [in New Zealand], particularly in the English Poor Law, led in the early thirties to the award, against world competition, of a university fellowship at Columbia University, New York, where he took his doctorate in economics and political science; his post-graduate work with world authorities ranging from anthropology to central banking, was essential to his later contribution to the texture of New Zealand life’.166

Sutch’s thesis, which led to him being awarded his PhD, was entitled ‘Price fixing in New Zealand’ and was published in 1932. Coates, after Sutch joined his ‘brains trust’, got offside with ‘business elements’ within the Reform Party ‘due in part to his attempting (as world wide recession was setting in) to set butter prices at a fixed level through the mechanism of a Dairy Board’.167

In 1933 Price fixing (or setting) became part of the American response to the Depression. The National Recovery Administration (an initiative of President Franklin Roosevelt’s ‘brains trust’ and hastily assembled in mid-June 1933), ‘aimed to substitute industrial cooperation for the “cannibalistic” competition which had prevailed since the onset of the Depression… The mechanism designed to achieve all this, and thereby to reverse the vicious spiral of decline, was the NRA code of fair competition.’168

***

The piece that appeared in The Week, in 1937, and that it seems both Marshall and Parker have referred to - in that this ‘leak’, is supposed to have been of ‘secret Commonwealth defence information’ (as Marshall put it, in Volume Two of his Memoirs, 1989169); or of ‘material on security in the pacific’ (as Parker puts it in The SIS, 1979170), follows:

165 See Marshall before in main text after footnote 89.

166 See Shallcrass before in his introductory piece to this work – above footnote 1.167 See before in this work in the main text after footnote 8.168 From The Dark Valley: A Panorama of the 1930s, 2001, p227.169 See above in main text after footnote 92170 See above in main text after footnote 38

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__________

No 214.

THE WEEKMay 27th

28 VICTORIA STREETLONDON. S.W.1

TELEPHONE. VICTORIA 1954

The vital...

-- 3 --

PACIFIC PACT

That the proposal for a regional understanding and a pact of non-aggression between all the Pacific Powers made – undiplomaticallyin the view of some British circles – by Australian Premier Joseph Lyons171 at the present Imperial Conference is not likely to make much headway unless resolutely pressed by interested Powers outside the British Commonwealth of Nations cannot now be denied. The opinion of the British General Staff that at all costs terms must be made, be it even for a short-term run, with Japan in order that the Singapore base shall be completed and thereby compensate somewhat for the slump in the strategic value of the British bases at Hong Kong and Shanghai, and the determined anti-American faction in the Cabinet172 ensure that for all practical purposes nothing will be done, if then, until after the conclusion of the present negotiations with Japan for a “stabilisation of the position in China”, as it has been described. Three factors operating to make the successful conclusion of these negotiations an early possibility are;

(1) the recent change, if only skin deep, towards a less openly aggressive policy in China, on the part of the Japanese Government and the Japanese Army, who have been seriously

171 Lyons’ proposal was not anticipated, caused division, and was made in his speech at the first session of the Imperial Conference 14 May 1937: ’While I do not desire to anticipate the discussion which will take place when we have the question of foreign policy before us, there is one area of the world, the Pacific, where Australia's interests are so vitally concerned that I desire to make a brief reference to it. The Australian Government has noted the tendency of States to endeavour to enter into agreements in the form of regional pacts in respect of regions where their interests are directly concerned. Australia would greatly welcome a regional understanding and pact of nonaggression by the countries of the Pacific, conceived in the spirit of the principles of the League. Towards the achievement of such a pact we are prepared to collaborate with all other peoples in a spirit of understanding and sympathy.’ (Australian Archives: FA: Imp. Conf., Meetings, 1937).172 In the wake of the abdication of King Edward V111, which only just preceded the Conference there was, apparently, quite some anti – American feeling at play.

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alarmed at the result of the recent elections to the Lower House.

(2)the above-mentioned strategic urgency for Britain to win a breathing space so as to complete her defence plan in the Pacific; and

(3) the fear, shared equally by Japan and Britain, of the growing national unity in China, which, it is believed, is proceeding with a rapidity which may, sooner than generally believed, threaten to check the possibility of further Japanese and British expansion there (Following hard on the news that a Chinese National Defence Council had been established including as a member the leader of last year’s Kwangsi revolt, a determined, though somewhat over-enthusiastic patriot, it is learned that not only has the military drive of Nanking against the Communists entirely stopped, but Nanking and Red troops are actually co-operating in the north-east.) On the other hand an influential body of opinion with considerable experience of the Far Eastern situation holds the view that Britain would do well not to trust too much to any agreement with Japan and cite that country’s former failings so far as abiding by her word is concerned. These point out that although “spheres of influence” may be guaranteed, there is no reason to believe that, in the rapidly changing situation, these guarantees will be anything like guarantees tomorrow. It is from a section, though a section only, of this group that support for Mr. Lyon’s proposal is forthcoming.

Meanwhile that section of opinion, which together with its representatives in the Cabinet, have consistently advocated a rigid adherence to an unmodified Ottawa and, for this reason, did their best to cold-shoulder Mr Norman Davis173 while on his recent visit to this country in conjunction with International Sugar Conference, and are now accusing Mr. Mackenzie King174 of being, as they put it, a yes-man for President Roosevelt , are convinced that Mr. Lyon’s proposal is a Yankee set-up, aimed at still further bringing pressure to bear so that the present trade policy of the Empire shall be modified. It is this section, too, who are to the forefront in advocating a quick settlement of the present negotiations with Japan so that

173 An American diplomat. 174 The Canadian Prime Minister, William Lyon Mackenzie King was born in Berlin (later renamed Kitchener), Ontario in 1874. His father was a Lawyer and his mother’s father was William Lyon Mackenzie, the Leader of the 1837 Rebellion in Upper Canada. Mackenzie King studied Economics and Law at the University of Toronto and at the University of Chicago. After graduating with an M.A. in 1897, he pursued his studies at Harvard. In 1900, he entered the civil service and became the Deputy Minister of the new Department of Labor. King also joined the Liberal party and won a seat in the 1908 election. In 1909 he was chosen Minister of Labor in Prime Minister Sir Wilfred Laurier's Cabinet. He lost his seat in the 1911 election, then ran and lost again in the 1917 election. In 1919 Mackenzie King was made leader of a divided Liberal party, which he welded together again. He began his first period as Prime Minister of Canada after the Liberals won the 1921 General Election. ‘Liberal’, for Mackenzie King, meant reformist. He was Prime Minister of Canada from 1921 to 1931, then from 1935 to 1948.

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Britain will have a stick of not inconsiderable importance with which to bargain with the United States, whose pressure for a modified Imperial trade policy they regard as almost irresistible.

Plenty of Time?

There is plenty of time to win this game, and to thrash the Spaniards as well. Sir Francis Drake, 20 July 1588.

On the subject of Anglo/Japanese relations circa that period, the work of historian Ian Nish (b.1926) is extensive. In a paper given at a Conference on the Pacific War, held at the Imperial Museum, London in December 1991 and entitled: A reappraisal after fifty years, Nish contends that there is agreement amongst scholars that from 1937 until 1941 when Japan attacked ‘Fortress Singapore’, Britain did whatever it could to avoid confrontation with Japan:

‘The demands on British resources were so formidable that diplomatic ingenuity offered the only realistic way of resolving issues and of avoiding confrontation...in the period between 1937 and 1941...to ensure that the concessions she made were minimal, that is, a vulnerable Britain conceded enough to avoid forcible confrontation.’175

That Britain was anxious to hold the Commonwealth together as a block at that time, so as to continue to ‘appear’ a ‘Great Power’, is not a contested view of history either. Historian Lorna Lloyd, another whose work is succinct and is worth reading, says in her work entitled: Loosening the apron strings: the dominions and Britain in the inter-war years,176 that:

‘After the League’s failure in Abyssinia177Britain faced the prospect that confronting the dictators would overtax her own resources and might fail to enlist dominion support. She had to think in terms of unity of action. She also had to persuade the dominions to spend more on defence without her knowing how weak she was (in case they then decided to abandon the idea of supporting Britain and concentrated on self defence).’

Onto the world stage.

175 Reproduced in, From Pearl Harbor to Hiroshima: the Second World War in Asia and the Pacific, 1941-45, p.22. 176 See this work reproduced at http://www.psa.ac.uk/publications/psd/1998/lloyd2.htm 177 In October of 1935, the ‘League’ declared that the invasion of Abyssinia (Ethiopia) by Italy (beginning 18 February 1935) was an act of aggression and ordered its members to impose sanctions upon Italy on 4 July 1936 – the occupation by then a fait accompli. The sanctions were though, only half-heartedly applied, and failed to restrain Italy. Oil and iron, for instance, were not included in the list of banned raw materials able to be exported to Italy. Sanctions were soon lifted much to the repugnance of some members of the League and relatively normal relations were soon resumed. Mussolini and his black shirts had taken power in Italy with force but with little bloodshed in October 1922. The Mediterranean, Mussolini had claimed before then, was ‘our sea’ and he soon began to state that it was Italy’s right and also his intention, to dominate it.

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When Nash, accompanied by Sutch, arrived in London late in 1936 they were set upon practising a little ingenuity themselves. Their arrival in London also coincided with the beginning of the battle of Madrid where Fascism and Communism finally smashed into each other (beginning 7 November 1936), and with Winston Churchill’s speech, The Locust Years (made in the House of Commons 11 November 1936), in which Churchill wondered out loud about the lack of preparation for an obvious course set upon by Germany? 178

What Finance Minister Nash and Dr Sutch hoped for when they arrived in Britain late in 1936, was for an expanding market for New Zealand product (a by product of this being that New Zealand could develop),179 even if such expansion was regulated by quotas or

178 Churchill had also been another beneficiary of the Zinoviev affair in that he had been out of Parliament for a term before then. Returning to parliament in 1924, he became Chancellor of the Exchequer in Stanley Baldwin's Conservative government (1924-29). Formerly a Liberal Member of Parliament (1917-22), Churchill’s new ‘Conservatism’ when re-elected in 1924 saw him urge harsh measures during a general strike in 1926, which he was afterwards blamed for starting. For this he was also remembered and was denied any responsibility over and above that of an ‘ordinary’ Member of Parliament until war began in 1939. In November 1934, two years before the following speech was made, Churchill had been accused by Stanley Baldwin of exaggerating this danger, and he (Baldwin), at the same time assured the House of Commons that Britain still had an ample margin of safety. Winston Churchill’s speech, The Locust Years : ‘I have, with some friends, put an Amendment on the Paper. It is the same as the Amendment which I submitted two years ago, and I have put it in exactly the same terms because I thought it would be a good thing to remind the House of what has happened in these two years. Our Amendment in November 1934 was the culmination of a long series of efforts by private Members and by the Conservative party in the country to warn His Majesty's Government of the dangers to Europe and to this country which were coming upon us through the vast process of German rearmament then already in full swing. The speech which I made on that occasion was much censured as being alarmist by leading Conservative newspapers, and I remember that Mr Lloyd George congratulated the Prime Minister, who was then Lord President, on having so satisfactorily demolished my extravagant fears. What would have been said, I wonder, if I could two years ago have forecast to the House the actual course of events? Suppose we had then been told that Germany would spend for two years £800,000,000 a year upon warlike preparations; that her industries would be organised for war, as the industries of no country have ever been; that by breaking all Treaty arrangements she would create a gigantic air force and an army based on universal compulsory service, which by the present time, in 1936, amounts to upwards of thirty-nine divisions of highly equipped troops, including mechanised divisions of almost unmeasured strength and that behind all this there lay millions of armed and trained men, for whom the formations and equipment are rapidly being prepared to form another eighty divisions in addition to those already perfected. Suppose we had then known that by now two years of compulsory military service would be the rule, with a preliminary year of training in labour camps; that the Rhineland would be occupied by powerful forces and fortified with great skill, and that Germany would be building with our approval, signified by treaty, a large submarine fleet. Suppose we had also been able to foresee the degeneration of the foreign situation, our quarrel with Italy, the Italo-German association, the Belgian Declaration about neutrality - which, if the worst interpretation of it proves to be true, so greatly affects the security of this country - and the disarray of the smaller Powers of Central Europe. Suppose all that had been forecast - why, no one would have believed in the truth of such a nightmare tale. Yet just two years have gone by and we see it all in broad daylight. Where shall we be this time two years? I hesitate now to predict…’ (For the complete speech and several others see: http://www.churchill-society-london.org.uk/Locusts.html 179 Dr Sutch, according to Jack Shallcrass - in our introductory piece above footnote 1 - had a special interest in this and often considered a wider context. Sutch’s argument often was that New Zealand conformed to the classic role of a colony – that is, it had become (since 1932 presumably), a source of raw materials for Britain (in New Zealand’s case the products of its grass-land); and a market for its (Britain’s) manufactured goods. Because of this New Zealand also conformed in other ways as well – not

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by some other means. Gordon Coates (Dr Sutch had previously been his secretary-economist as well) had tried this before, had:

‘...asked whether Britain would give unrestricted entry to New Zealand produce if tariffs on British goods were drastically reduced or even removed. Baldwin [had replied that he] could not consider a suggestion put forward by particular trade interests. Coates [had] then asked whether the British would consider a bilateral reciprocal trade agreement with New Zealand. Baldwin replied, in July 1935, that at Ottawa [in 1932] each Dominion had been given (in separate agreements) much the same concessions. Any modification of this treatment would need to be discussed at an Imperial Conference

‘Nash was very well-informed about all this and widely read in the relevant literature. His Secretary-Economist, W. B. Sutch, had [also] just written a book on the subject,180for which Nash wrote the preface.’ (in Sinclair’s Walter Nash, 1976, p.136).

Though there seemed little chance of success, Nash had, none the less, decided to arrive in Britain well before the next Imperial Conference began, in time so as to lobby for this. There seemed at least some chance of success as regardless of policy, the ‘British’ were more flexible in practise for:

‘while preaching equal treatment for the Dominions, they had given Canada preferential bilateral treatment for bacon and ham. Though they made speeches about the liberalization of trade, the British leaders had been as affected as anyone by ‘the economics of siege’. While regretting the trend, in the early nineteen-thirties they had made a series of bilateral trade agreements with foreign states. Nearly half of Britain’s non-Empire trade was conducted by this method. Very often such arrangements, sometimes backed by credits to foreign importers, were the only ways of arranging for trade exchanges. For instance, by an Anglo-German Payments Agreement of 1934, 55 per cent of the value of German exports to the United Kingdom was ear-marked by the Reichsbank to pay for British exports to Germany. By 1939 even the USA had descended to a direct barter with Britain of rubber for cotton. [And] the collapse of the World Economic Conference in 1933 had led writers like Arthur Salter, a leading British public servant and intellectual, to write that trade negotiations had more chance of success if they were bilateral and not universal.’ (in Walter Nash, 1976, p.136).

Lobby as Nash could though, and as he did as well, he was told that what New Zealand wanted was not considered by the British to be enough reason for change: Not easily put off, Nash then went on to another tack, though he argued this privately:

‘What New Zealand wanted was not, in itself, a powerful argument...it was ‘immoral’ [though, he argued] to deny New

developing its own outlook either.180 Recent economic changes in New Zealand (1936)

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Zealand the right to sell to Britain what its people needed; that New Zealanders ate 93 lbs of mutton a year and the British only 28lbs’. (in Walter Nash, 1976, p.140).

Sinclair, while mentioning this, does not expand on this, but it is pertinent to add here that that this plea of Nash’s, though made in private, followed on from publication of Sir John Boyd Orr’s ‘famous investigation’ Food, Health and Income (1936), in which it was suggested that, ‘the Establishment put up the strongest possible resistance to informing the public of what the true position was regarding under-nourishment among their fellow citizens’; with The Times though, having already ‘admitted’ (on 13 February 1936), that ‘half the population was living on a diet insufficient or ill-designed to maintain health and the proportion reached three-quarters in areas of high unemployment’.181 Nash did publicise New Zealand and its exports and in so doing also publicised himself. Often, during 1937, Nash was invited to the top of the table to sit:

‘Nash visited the meat and fruit markets. He travelled to Glasgow, Bristol and other cities, urging people to buy New Zealand goods so that New Zealand could buy more British. He delivered forty-three speeches, for instance to the Royal Empire Society, at the Empire Parliamentary Conference, and over the BBC. He addressed radical clubs at Cambridge University, where he received an honorary doctorate of law. Lord Rutherford lent him his cap and gown. He spoke at Oxford and lunched at New College with G.D.H. Cole. He preached at St Lawrence Jewry. He spoke at a League of Nations Union meeting, urging the powers to stop the war in Spain. One such speech greatly impressed Lord Davies, founder of the New Commonwealth movement, which sought to promote international law and order by establishing international armed forces.

Altogether, in ten months abroad, about two of which were spent in ships, he visited sixty-six factories. At one of these, in Birmingham, the party was shown old account books dating back to the eighteenth century. While others studied the list of tools, Nash ran a finger down a column of figures and said, ‘That column’s a farthing out’. To those who knew Nash well this story was always thought ‘typical’. He had meetings with 300 individuals and groups, including over 100 meetings with ministers and officials. Lot [his wife] and he went to endless private lunches and dinners – with George Bernard Shaw, with the Baldwins, the Chamberlains, the Bledisloes. In addition, he ate 143 official luncheons and 98 dinners. His digestion was excellent.

One of the things he enjoyed most was meeting all the famous Labour leaders, whom he had admired for years. He addressed a Labour meeting. Over a hundred attended including Tom Mann, Ben

181 From The Dark Valley: A Panorama of the 1930s, 2001, pp.167-68. Also, see Milner above (in main text after footnote 159), for mention of Orr’s ‘authoritative study’, and also for mention of malnutrition and of the very high child mortality rate in the ‘distressed’ areas of Britain.

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Tillett, and Sidney and Beatrice [Potter] Webb. Probably he admired the latter couple more than anyone else. Lot and he stayed with them over two weekends.

If the books of world records included the names of the most active politicians, Nash’s would be near the top. Much later in his life, Nash gave the impression that activity was an end in itself...but in 1936-7 most of the activity was highly purposeful. For one thing, it generated a great deal of publicity about New Zealand, New Zealand exports, and himself, in the metropolitan and provincial press.’ (in Walter Nash, 1976, p.150). Nash was broad in outlook and genuinely popular – his approach often novel. Elements of the British press, seeking to background Nash, found that Nash, while not always taken seriously, nevertheless took his opportunities, whenever they presented themselves.

At a Pacific Relations Conference held in Banff (Scotland) in 1933, held during the depressions deepest years, and at a ‘round table discussion’ there chaired by Nash, Nash had also proposed the possibility of trade as an instrument to guarantee ‘international order’. Though self (or New Zealand) serving, of course, he had argued there and after that, that the economic rational of the day (in Britain) was not practical:

‘Though, in theory, free trade would give the best results...it was not practicable. ‘Economic nationalism expressed in the quota or agreement system’ might produce better results. There, and elsewhere, he [had] urged that (as the free traders believed) each country should specialize in producing what it could best produce. But after that, not market forces, but international agreements should dispose of the exportable surpluses. The credits earned by exports should be allocated to various purposes, including of course, the (reciprocal) imports. Orderly marketing should aim at planned economic expansion, until human needs were met...world economic order [could] ensure justice, for ‘No nation of equal verity, mental efficiency, and vision can be permanently kept on a lower living standard’ than its equals. (He was thinking of the Chinese and Japanese.) The economic system must ensure ‘full development’ for every individual as well as for every nation’.’ (pp.133-134).

Commonplace.

The more featureless and commonplace a crime is, the more difficult it is to bring it home.

From: The Adventures of Sherlock Holmes, The Boscombe Valley Mystery. Sir Arthur Conan Doyle (1859 – 1930).

We have to seriously ask, don’t we, if any person, any power, ever needed, in 1937, to ever rely on one New Zealander, Dr. W.B. Sutch, for ‘secret Commonwealth defence

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information’, (as Marshall has put it – above); or on Dr Sutch for ‘material on security in the pacific’ (as Parker has put it – above)? This information presumably being that it was the ‘opinion of the British General Staff that at all costs terms must be made, be it even for a short-term run, with Japan in order that the Singapore base shall be completed and thereby compensate somewhat for the slump in the strategic value of the British bases at Hong Kong and Shanghai...’ (The Week above, after footnote 170).

Lt General A. E. Percival was sent to Singapore in 1936 to oversee the completion of defences, and was the person who would later, when he returned there in May 1941, lead the defence of Singapore – attacked, as was Hong Kong, the day after the Japanese attacked Pearl Harbour 7 December 1941.182

General Percival surrended the base to General Yamashita on 15 February 1942,183 and for a long time afterwards Percival was felt to be at blame for the failure of Britain’s defence plan for the Pacific region. On his return to Britain at the end of the war, he was asked for a report which he duly wrote and which was published in 1946. In Percival’s Report there is reference to material relating to questions raised in Singapore in 1936 about the defence of Singapore, appearing, ‘somewhat to my dismay’, he says, in the Press in Britain. Percival also mentions one of the leading Japanese residents committing suicide so as to avoid arrest for spying:184

‘I first went to Malaya in the spring of 1936 as General Staff Officer 1st Grade, Headquarters, Malaya Command. Maj. -Gen. W. G. S. (now General Sir William) Dobbie had shortly before been appointed General Officer Commanding. The Headquarters Staff was being expanded to keep pace with the development of the Singapore defences and I was the first officer to hold a first-grade appointment on the General Staff. I had just completed a course at the Imperial Defence College where officers of all the fighting services meet together with representatives of the Dominions and some civil servants to study jointly problems of Imperial Defence...

I went to Malaya full of enthusiasm for the job, as those who are keen on their profession usually do when taking up a new appointment. I had studied the attack and defence of Singapore on more than one occasion at the Staff College and at the Imperial Defence College, and was anxious to see what the place was really like. I think I pictured the life there as rather resembling that of Malta, where I had served a few years previously and where everybody quickly gets to know everybody else. But I was quickly disillusioned. I had not realized, as in fact few people do until they go there, the size of Malaya or

182 Singapore, which has an impressive natural harbour, is comprised of one large, low-lying island, about 40 km (25 miles) wide by 22 km (14 miles) from north to south, and many smaller islands – in total 622

km2 (240 sq. mi.). 183 Darwin, in Australia, was attacked for the first time on 19 February 1942 by Japanese aircraft (four days after the ‘fall’ of Singapore). Australia continued to reinforce Singapore after it was attacked, and lost many ‘fresh’ troops taken prisoner.184 The Report, copies of which are difficult to find now, can be found at http://www.fepow-community.org.uk/arthur_lane/Percivals_Report/

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the vastness of the population of Singapore. As Chief of the General Staff of Malaya Command, I had expected to be a person of some consequence until I realized that defence was of very little interest to the great majority of the people of Malaya in those days. Malaya was a rich commercial country whose people lived mainly on the production of rubber and tin. Before the arrival of the British more than a hundred years before, its people had been of a warlike disposition, but under British rule they had gradually learnt ways of peace and for many years they had been left alone to develop their industries and enjoy the benefits of civilization. They had not been touched even by the First World War, which had brought them great riches, though it is true that in the years which followed they had suffered severely from slumps in world prices which had led to severe reduction of staffs and caused much hardship among people with slender means. And so it was not to be wondered at that the people as a whole were not interested in defence. War had not come to Malaya for over a hundred years, so why should it come in the future? If the British Government liked to build a great Naval Base at Singapore - well, that was their business. Similarly, it was not to be wondered at that few people, except those in official positions, realized for some time that a 1st Grade Staff Officer had been appointed to Headquarters, Malaya Command. After all, military officers were birds of passage while the majority of civilians were permanent residents. The latter have their own friends and it is perhaps natural that they should get a little tired of trying to get to know successive military officers and their families who are certain to leave as soon as they have really got to know them. This situation has, in the past, given rise to a great deal of criticism of the civilians in Malaya, and especially in Singapore, by Service people. I believe it is to a large extent inevitable, and that it will always happen in places where the population is so great that people naturally tend to form themselves into groups with common interests. Anyway, that was the situation which I found in Malaya and, for my part, I was not sorry to be free for a time from too many social functions, for it gave me time to get down to the mass of work which I found waiting for me.

At that time our work consisted chiefly in developing the defences of Singapore in accordance with a War Office plan. Approval had to be obtained for all major expenditure and, owing to the shortage of available funds, demands were often heavily cut. It will be readily understood, therefore, that the G.O.C. was strictly limited as to what he could do on his own initiative, while delays were occasioned by the necessity to get War Office approval first for a project, then for an estimate and finally for a contract. It was not until after the outbreak of war with Japan that the G.O.C. Malaya was given a free hand with regard to such expenditure.

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There were few troops in Malaya at that time and the majority of what there were, were concentrated on Singapore Island. Here there were two British battalions, reinforced in 1937 by a third, the personnel of the coast and anti-aircraft defences, some administrative units, and the Singapore Volunteers. On the mainland there was one Indian battalion at Taiping, the Malay Regiment at Port Dickson, the Federated Malay States Volunteers, and units of the Straits Settlements Volunteers at Malacca and Penang. This garrison seemed small enough, but the strength of our garrison in Malaya, as elsewhere overseas, was based on the thesis that the British main fleet would sail for Malayan waters as soon as danger threatened and that the role of the other Services was therefore only to hold the fort until the fleet arrived. This would be a matter of only a couple of months or so. The main problem, therefore, was the local defence of Singapore. Nevertheless, during my tour, I found opportunity to do a great deal of travelling on the mainland of Malaya in order to visit the various regular and volunteer units. In the course of these visits I obtained a wide knowledge of the country and its defence problems and I also got to know a great many people. Wherever I went I received a warm welcome and, for reasons I have given, I found it easier to get to know the people on the mainland than those in Singapore. It was, I think, as a result of one of these visits that the phrase “The back door to Singapore”, which has since received such prominence, was first used in public. I had been attending a week-end exercise of one of the volunteer units and at the final conference I had stressed the increasing importance of the role of the Federated Malay States Volunteers on the mainland as being the defenders of the back door to Singapore. A few days later, somewhat to my dismay, a summary of what I had said was reproduced in a newspaper in the United Kingdom. No permission had been asked for nor had I been given any idea that a representative of the Press was present. I recount this story because it was typical of many similar incidents which happened while I was in Malaya and which accounted, I think, to some extent for the cautious attitude which some commanders displayed in their dealings with the Press. In 1936 and 1937 things were moving fast in the Far East. In Japan the struggle for power between the Army and those who stood for constitutional government was at its height. In February 1936 occurred the cold-blooded murder of a number of Japan’s leading public men by a band of soldiers, followed a month later by the appointment as War Minister of Count Terauchi, one of the most autocratic of Japan’s generals who was later, during the Far Eastern war, to become Commander-in-Chief in the West Pacific area. Early in 1937 the Japanese people, alarmed at the dominance which the Army was establishing, brought back the more moderate party at the elections, but this only sufficed to stir on the Army to further efforts. In July 1937, war, which was to continue for eight years, broke out between Japan and China, although it was at that time, as

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afterwards, always referred to by the Japanese as the “China Incident”. In Singapore one of the leading Japanese residents committed suicide by taking poison to avoid arrest on a charge of spying.

We in Malaya watched these events with the keenest interest. It was clear that the Japanese military leaders had taken the bit between their teeth and that the situation which was developing in Europe was likely to provide a suitable opportunity for their ambitious designs. It was, as usual with the Japanese who are past-masters in the art of secrecy, difficult to get any very up-to-date information as to the efficiency of their fighting services, but we saw them carry out combined operations on the China coast with equipment which was far in advance of anything which we had at that time. They seemed to have no lack of special landing-craft which they used with great boldness, while we knew that ours at home had been limited by financial restrictions to what could be counted on the fingers of one hand. They also made use of special landing-craft carrying ships, the forerunners of those which played such an important part in the later phases of the war. Another matter which seemed to us of great importance was the fact that the Japanese were building a fleet of fast 18-knot merchant ships. We couldn’t help feeling that they had some ulterior motive in this and that they might at some time be used for carrying troops instead of cargo. In November 1937 1 received orders to leave Malaya at the end of the year and return to the United Kingdom...’ A Weak Hand?

The Week would not be called a ‘Communist periodical’ nowadays – and even if it was then, the case made against Sutch that he may have leaked this information to that publication does not stand up by a day.

Maurice Shadbolt, in One of Ben’s (1993), also has this to say on where The Week’s ‘sympathies’ lay:

‘I knew of Claude Cockburn [the editor] and The Week. Anyone who knew anything about England in the 1930s knew of both. The Week had dedicated itself to disclosing scandal, corruption and sympathy for fascism in high places.’ (p.282).

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Shadbolt was introduced to Cockburn’s second wife Jean (nee Ross),185 by a friend (in Aberdeen, Scotland), at a time when he was feeling apprehensive about pushing for publication of his work The New Zealanders (1959). In part this work (this sequence of stories) was inspired by James Joyce’s work Dubliner’s (1914), as was the work for its title. Jean Cockburn was able to help and Shadbolt now has thirty-five titles to his name, two of which, have on their covers, paintings by this persons mother (it’s a small world isn’t it186).

Nowadays The Week would also more likely be compared to Private Eye, an English publication around since the 1960s, than to anything else. And it is this publication, notable for also taking risks with its reporting, that The Week is said also to have been the ‘Grand dad’ of.187

The editor/writer of The Week, Claud Cockburn, was the son of a former British diplomat to China, an Oxford graduate also, and was formerly also a correspondent for the British newspaper The Times, and was based in Washington for quite some time before he decided to return to Britain, visiting Germany in 1933 on his way back. His motto, oft quoted was ‘never believe anything until it has been officially denied.’

Where Cockburn had got further offside with the British ‘establishment’ though, was over his reporting the Republican version of events in Spain from Spain. This he did by joining with the Republican Fifth Regiment – a ‘peoples’ militia formed of all types in Madrid late in 1936.188

Another more notable person who reported the Francoist versions of events in Spain and who didn’t get offside with the ‘establishment’ was Kim Philby who was even interviewed in 1939 about his experience of Spain on the BBC by none other than another of the ‘Cambridge four’ group of spies, Guy Burgess.

And another person who reported from Madrid at that time was the New Zealander Geoffrey Cox189 – another Rhodes scholar (he had arrived in Britain from New Zealand 185 Jean Ross was the person on whom Christopher Isherwood based the character of Sally Bowles in his novel of the same name published in London in 1937. Set in early 1930's Berlin, against a backdrop of the Nazi's rise to power, Isherwood's novel captures the excesses of Weimar Germany. The inspiration for Sally came from Isherwood's friend Jean Ross, a promiscuous nineteen-year-old nightclub singer, who shared lodgings with Isherwood during that period. Ross gave him permission to use her experiences in Berlin, but went to considerable lengths to avoid public identification with Sally Bowles. Isherwood refused to reveal the true identity of Sally Bowles until after Jean Cockburn’s death in 1973. The character has now assumed a life of her own, having been transformed by each successive representation on stage or screen. The novel was the basis for a 1951 stage play, I Am A Camera and a hit Broadway musical in the 1960's. And in 1972, Bob Fosse directed and choreographed the celebrated film version, Cabaret starring Lisa Minelli - winner of eight Academy Awards.186 Contact this person, rather than his mother, at mmcivor@xtra.co.nz , even if only to let us know that you got this far…187 See http://www.private-eye.co.uk/ 188 The battle for Madrid began on 7 November 1936. And it was in Madrid, on 9 November 1936, where Auckland’s G.C. McLaurin was killed. Otago’s Arnold McClure (also mentioned by Milner above) was killed at Saragossa in 1937 – no exact date or resting place known.189 Geoffrey Cox would become a member of the British ‘establishment’ himself when he was knighted for services to journalism in 1966. Born in Palmerston North in 1910 Cox attended Southland Boys High School and the University of Otago, graduating with an MA in History in 1931. Awarded a Rhodes

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in 1932), and a person whom also quite often stayed overnight with ‘fellow’ New Zealander’s Ian Milner and Jack (J.A.W.) Bennett at the house Cox’s good friend, John Mulgan, had rented in Oxford (see Milner for mention of this above).

Cox, the first correspondent to report the arrival of an International force in Spain (for the Chronicle 11 November 1936) wrote and published (in 1937) his first work, Defence of Madrid,190 in which he recorded his experience of Spain. The publisher of that work (Victor Gollancz), was the same one that Jean Cockburn put Shadbolt in touch with some twenty-one years later, and who saw to it that The New Zealander’s was published (in 1959). In 1938 Victor Gollancz also published an anthology of poetry that Mulgan had put together entitled Poems of Freedom.

Not mentioned in any of the aforementioned work (from Sinclair to McNeish), is mention of any point of contact between any member of the Nash party and any of the New Zealander’s at Oxford during 1936-37, which even included Shirley Smith, Dr Sutch’s second wife whom he married in 1944.191There is though, a mention of sorts, by Milner in Intersecting Lines (1993), which follows:

‘During my last year at Oxford [1937] all New Zealanders there had been invited to meet (Sir) Carl Berendsen, then NZ High Commissioner in London and later Ambassador to the USA and permanent representative at the United Nations. Berendsen was a lean-faced man, with an aggressive jaw, grey hair thinning over a bullet-hard head. Bluff, outspoken, with a resonant Kiwi accent. Conservative by instinct, given to choleric prejudices. Yet in personal dealings ready to play the benevolent uncle. He wanted to know what we were going to do after graduating: ‘New Zealand needs men like you, mark my word.’

Despite the sherry and declarations of good intent, the cold fact emerged that the number of returning Kiwi Scholars hovered

Scholarship in 1931, he studied at Oriel College, Oxford from 1932 to 1935. After the war Cox continued in newspaper journalism in Britain and in 1956 moved to television, becoming editor of the news service of the newly established commercial channel, Independent television News (ITN). Under his direction ITN pioneered the development of this new journalistic medium. Cox has written of this experience in his work See it Happen (1983). In 1967 he also founded News at Ten - the first half-hour news broadcast on British television.190 There is also a film entitled Defence of Madrid (made in November 1936) - a silent film (50 mins.) made in Madrid by Ivor Montagu and Norman McLaren as the Progressive Film Institute's contribution to raise money for Spanish Aid. In the first part the history of the war is explained, with its consequences: Italian airplanes bombing Madrid, the destruction of human lives and historic buildings, the rescue work. In Part II the formation of the Republican army is shown, the front line near the University City, the food queues and the evacuation of women and children. The last part shows the arrival of a Soviet food ship and the activities of the International Brigade, with footage of Ludwig Renn and Hanns Beimler; Eleanor Rathbone and Christopher Addison adding their comments in captions. (The source for this is the Communist History Network Newsletter (CHNN), online at http://les1.man.ac.uk/chnn/chnn04cpf.html 191 See James McNeish’s, Dance of the peacocks (2003) for mention of this, but with no mention of any connection between Dr Sutch and herself either then or later… What McNeish does mention however, in respect of Shirley Smith (who had arrived at Oxford in 1937), was that Norman Davis (another New Zealander who had taken up his Rhodes scholarship in 1934), the scholar that would later succeed Tolkien (Lord of the Rings), in the Merton Chair of English Language and Literature at Oxford, also proposed to her.

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on zero. Manoeuvring Carl discretely into a corner, I made the point that I’d just been offered a Commonwealth Fund fellowship to the USA to study Pacific, especially Far Eastern, relations and was wondering whether...He cut me short. ‘Take it, my boy. And when you come back we’ll have a job for you, make no mistake.’ He explained that a new office for External Affairs was about to be separated out from the Prime Minister’s Department.

Nearly three years had gone by. I stood waiting expectantly outside Berendsen’s office in Parliament House. He greeted me with a powerful handshake. I did notice a sort of glazed look in his eye. ‘So you’ve come back, my boy.’ Pause. Was I Oliver Twist asking for more? Carl’s bluff self-confidence didn’t mask some embarrassment as he told me that things hadn’t worked out as well as expected. The much-desired offspring, External Affairs, was still gestating in the PM’s Department. There would be no job for the returning scholar, pockets full of paper qualifications. ‘But we’ll find something for you, my boy. You can be sure of that.192

I made my way gloomily up the Terrace to the upstairs bed-sitter flat I was sharing with Martyn Finlay.’(p.156-57).

This lack of mention of any point of contact between any member of the Nash party and any of the New Zealander’s at Oxford during 1936-37 is not just odd because Nash ‘spoke at Oxford and lunched at New College with G.D.H. Cole’193 Even more ‘odd’ is this mention of Berendsen as being the High Commissioner to London when he was not.194

Berendsen was though, in London to attend the Imperial Conference – this being one of his duties since he attended his first in 1926 (with Coates195), and so he can be connected to the Nash party also attending the Conference.

This, the only mention up till now of any point of contact between any of the New Zealander’s at Oxford during 1936-37, with any member of the Nash party during that same period and by Milner only, is obscure?

192 Milner was given something to do, but nothing near as meaningful as he had hoped for and after a short time he moved on to Australia. And it has been claimed since (by the Australian, Richard Hall, in his work, The Rhodes Scholar Spy, 1991), that because Milner was not given anything meaningful to do upon his return to new Zealand, that that is why he went on to commit his nefarious deeds! On the inside cover of Hall’s Rhodes Scholar Spy (1991), it says that: ‘Richard Hall is a writer and journalist with a special interest in espionage matters, both in Australia and overseas. Author of the classis Australian book on the subject, The Secret State, he also wrote A Spy’s Revenge, an account of the Peter Wright Spycatcher case. He is active in political circles, and is a former secretary to Gough Whitlam.’193 See mention of this before, by Sinclair, in main text after footnote 181.194 Instead it was Jordan, an elected member of the New Zealand Parliament since 1922, and New Zealand’s High Commissioner to London since 1935 - only retiring from that post after his wife died in 1950. 195 See Berendsen’s bio details before, footnote 47.

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Obscuring this further is the fact that Berendsen was never ‘a lean-faced man, with an aggressive jaw, grey hair thinning over a bullet-hard head’ - though Jordan most clearly was196. Nor did Jordan (if this was just a simple mistake on the part of the editor of Intersecting Lines, 1993, Vincent O’Sullivan), speak with ‘a resonant Kiwi accent’ – his voice being that of a Cockney’s - his country of origin Britain before he emigrated to New Zealand in 1904. This was no mistake on the part of the editor though, and we are reassured of this by O’Sullivan in his introduction to Interesting Lines (1993) who though he:

‘...attempted to follow what ever leads Milner gave...every word of the memoirs is his.’ (p.7).

And so this remained (until now) - this ‘odd’ and only related of point of contact with the Nash party by any of the New Zealander’s at Oxford during 1936-37, and with this ‘twist’ in the tale as well - none of which can be put down to editorial error and which for some reason seems deliberate on the part of Milner in that his description of Berendsen - his countenance, his ‘bluff self-confidence’ (no ‘mask’ to Milner?) - is also transposed to Wellington. Perhaps he did this though, to inspire further intrigue? Or perhaps it was that he felt he had always drawn the short straw for some reason as well?

This ‘lack of mention’ is no longer the case though. And appropriately it is Vincent O’Sullivan (the editor of Milner’s Intersecting Lines, 1993), in his more recent work (more recent to McNeish’s by only months), The long journey to the border: a life of John Mulgan (2003), who goes further than McNeish in this respect - in that O’Sullivan does mention points of contact between the Nash party and the New Zealander’s at Oxford during this period. Most notably though between Mulgan (the correspondent Cox’s good friend)197 and Nash (though he met Sutch, of course, O’Sullivan said, as well).

Cox also reports, in his Eyewitness: A Memoir of Europe in the 1930s (1999), that when German troops marched into the Rhineland, they did so in full knowledge that the statesmen of the Western democracies, and particularly those of Britain, would have dispersed to the countryside:

‘To keep my knowledge of German in trim, I got into the habit of listening to the news on the Berlin Deutschland Sender. From its bulletins, just audible through crackling static, I learnt on the morning of Saturday 7 March [1936]198 German troops had been sent into the Rhineland, the zone forbidden to the armed forces of the Reich under the Versailles Treaty. As with his

196 See photographs of the two to compare - Berendsen’s dated 23 July 1936 @ http://www.dnzb.govt.nz/dnzb/Find_Quick.asp?PersonEssay=4B25 & Jordan’s taken during the war @ http://www.dnzb.govt.nz/dnzb/Find_Quick.asp?PersonEssay=4J13 .197 Both ‘best man’ at each other’s weddings - with Milner in attendance at both (according to both McNeish and O’Sullivan).198 On Monday 9 March 1936, the German press warned all Jews that if they voted in the upcoming election they would be arrested. And on the following Saturday Hitler told a crowd of 300,000 that Germany’s only judge was God and itself. (On 29 March, Berlin Deutschland Sender broadcast the Nazi party’s claim that ninety-nine percent of Germans had voted for Nazi candidates).

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announcement of the reintroduction of compulsory military service a year later, Hitler had acted at the weekend...

The habit, particularly favoured by Baldwin, of politicians and diplomats and editors gathering at the weekend at the great country houses of one of the ambitious political hostesses, such as Nancy Astor’s Cliveden, or Ronnie Greville’s Polesdon Lacy, or Mrs Ronald Tree’s Ditchley Park became increasingly inappropriate for these more urgent times. Not only did it remove ministers from their offices, but it must also have been tiring rather than restful, giving added force to Baldwin’s view that ‘half the mistakes since 1918 have been the work of tired men’. There can have been little chance for a busy man to recharge his batteries at a house party where the hostess was anxious to have the country’s affairs discussed and determined around her dinner table or on her lawns. At least Chamberlain had the good sense to get away fairly often to a trout stream or a salmon river – even if, as I saw it at the time, he misused the energy this gave him.’199 (pp.187-88).

***

‘Zero hour’ for The Week (closed down 15 January 1941), says Claud Cockburn, in his first autobiography, In Time of Trouble (1956), was a Wednesday in the mid-spring of 1933. Rumpole (John Mortimer) like, Cockburn writes:

‘We had chosen Wednesday as “press day”, so that The Week would reach people ahead of the existing weekly newspapers. I had a great deal of difficulty in getting hold of a mailing list. There was no money to hire one of the lists which were...available, and instead I had borrowed one which contained names of the subscribers to the then temporarily defunct weekly paper Foreign Affairs.

I wrote the entire issue covering three sheets of foolscap written on both sides. And then cut the stencils...All the things that always happen on such occasions happened. None of us had ever used a duplicating machine before and stencils cracked like sails in a gale and the place was bespattered with sticky brown ink. The valuable Pekinese dog belonging to the secretary chewed up the reserve tubes of ink...By the early morning we had the whole lot enveloped and mailed and staggered to the Café Royal to drink champagne.

199 At the International Exposition, held in Paris and beginning at the end of May 1937, Britain ‘represented itself as largely pastoral and entirely upper-class, displaying an elegant pattern of golf balls, a frieze of tennis rackets, polo sets, riding equipment, natty dinner jackets, plus coronation robes and a cardboard cut-out of Neville Chamberlain fishing in long rubber boots.’ (from The Dark Valley: A Panorama of the 1930s, 2001, p493). Mussolini, asked by Chamberlain to intercede with Hitler prior to Chamberlain’s well remembered flight to Munich (through which Chamberlain yawned apparently), mused that as ‘soon as Hitler sees that old man, he will know that he has won the battle. Chamberlain is not aware that to present himself to Hitler in the uniform of a bourgeois pacifist and British Parliamentarian is the equivalent of giving a wild beast a taste of blood.’ (ibid, pp.487-88).

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To my companions I pointed out that the whole thing was absolutely sure-fire...Unfortunately no one had warned me that the Foreign Affairs list was years old. Forty per cent of the people on it were dead, indifferent, or had radically changed their attitude to world affairs. Also there had been a serious miscalculation regarding the mentality of the British public – its readiness to jump for something new...the news spread rapidly among my friends and acquaintances that my big idea had misfired.

And yet little less than two years later this small monstrosity The Week, was one of the half-dozen British publications most often quoted in the press of the entire world. It included among its subscribers the Foreign Ministers of eleven nations, all the Embassies and Legations in London, all diplomatic correspondents of the principal newspapers in three continents, the Foreign Correspondents of all the leading newspapers stationed in London, Paris, Amsterdam and New York, a dozen members of the United States Senate, twenty or thirty members of the House of Commons and a hundred or so in the House of Lords, King Edward V111, the secretaries of most of the leading trades unions, Charlie Chaplin and the Nizam of Hyderabad.

Blum read it and Goebbels read it, and a mysterious warlord in China read it. Senator Borah quoted it repeatedly in The American Senate and Herr von Ribbentrop, Hitler’s Ambassador in London, on two separate occasions demanded its suppression on the ground that it was a source of all anti-Nazi evil.

Admittedly none of this seemed at all probable at the end of that first week when the total circulation stood at seven. Apart from the moral shock – disclosure of low mental level all round, nation sunk in apathy – this kind of response left hardly any money in circularise anywhere else and raised the whole question of how to go on living at all.

I was forced to live meagrely on the twelve-shilling postal orders which occasionally came in, spending much of my spare time at the Café Royal, then in its last phase as a gathering-place of just the kind of people who ought to be reading and talking about The Week.

It made – since a good bottle of wine cost three shillings – a fine, nearly free, place to do business in. People coming in for drinks who had vaguely heard of The Week would often pay over their subscription money in cash, though they probably would never have got around to sending in a subscription form and a postal order. The late professor Joad200brought in quite a freshnet one night by shouting his congratulations on The Week all over the Café Royal and declaring that no man in the place

200 Also known to the New Zealander Geoffrey Cox (see James McNeish’s, Dance of the peacocks, 2003).

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could claim to have any idea upon what was going on unless he were a subscriber to The Week.

Even so, things remained extremely difficult for several weeks, until one day, with the circulation awfully steady at thirty-six, the Prime Minister intervened.

The World Economic Conference – some joker had housed it among the fossils in the geological Museum – was a big thing in his life. Figuratively speaking, he had his name in lights all over it. Yet, the Premier excepted, almost everyone from Leadenhall Street to the Afghan Legation knew that the Conference was dying on its feet. But it was thought not very good taste to point [that out] in public. “Useful spadework” was what the newspapers said was going on.

The Week, in a special issue, reported exclusively upon what was really being said sotto voce by informed observers. It remarked that the only spade at work [at] the Conference was the grave-digger’s. Quoting Charles Dickens, it saw fit to liken the position of the Conference leadership to that of the Dover Mail, “The guard suspected the passengers, the passengers suspected one another and the guard...and the coachman was sure of nothing but the horses.”

On the day this appeared Mr. MacDonald convened a special off-the-record press conference in the crypt. He said he had a private warning to utter. Foreign and diplomatic correspondents from all over the world jostled past mementoes of the Ice Age to hear him. In his unique style, suggestive of soup being brewed in the West Highlands, he said that [there] was plotting and conspiracy and here in his hand was a case in point, tantamount to that sort of thing.

Everyone pushed and stared, and what he had in his hand was that issue of The Week; and he went further to quote from it, and to warn one and all to pay no heed to the false prophets of disaster, activated by motives of this or that or the other thing. This was good strong stuff and stimulating to these people who hitherto had never heard of The Week, and, but for this, possibly never would have.

Regrettably I had to miss a good deal of it. I recalled that this was the hour when [our] manager would be sitting in a barber’s shop in Curzon Street where he spent a rather large part of each morning, and that the secretary was away attending some society wedding. The office was deserted. I urgently desired to know what else Mr. MacDonald had to say, but equally I urgently needed to dash back to Victoria Street so as to be there in time to answer the telephone which, as could easily be foreseen, would soon be vibrating with voices of the anxious cognoscenti of international affairs.

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It was ringing all night. “This is the diplomatic correspondent of Le Matin. I want...” “Here is the diplomatic correspondent of Frankfurter Zeitung. I require immediately.” By tea-time the circulation was in the seventies, with Pertinax and Mme. Tabouis, then in their heyday, well up there with the leaders.

And then to prove that it wasn’t just raining manna, it was pouring it, another big shower of it fell.

While I was still scribbling down the names of the new subscribers, I heard afar off a muttering and a puffing, and then upon the ladderlike stair leading to out attic I heard the thunder and crack of impetuous feet. In a split trice the place was heaving and bulging with enormously moustachioed men, and women with mauve veils, speaking excitedly of the prophet Isaiah. What did they want? They wanted subscriptions to The Week. Why? Because at a neighbouring hall – Caxton or Central – there was in session a congress of citizens taking the view that the future may readily be foretold by measuring the Pyramids and that the British (even, stretching a point, the Americans) are the lost tribes of Israel. Someone had read aloud to this gathering a passage from an earlier issue of The Week, and it absolutely confirmed, apparently, something Isaiah had said. It could be that The Week was divinely inspired by the prophet. In any case they wanted forty subscriptions quick.

They were solid people with cash in their hands, and I could hardly refrain from taking time off to telephone the café manager at the Café Royal to tell him that in an hour or two it would be in order to wipe clean my terribly congested slate.

_____________//_______________ “If you go on like this,” said Mr. John Wheeler-Bennett, then Head of the Royal Institute of International Affairs at Chatham House, “you will soon, I should think, be either quite famous or in gaol.” “Lots of people,” I said, “have been both.” “That,” he said, turning upon me his luminous smile, and beaming as though an awkward question had now been satisfactorily resolved, “is so.”

A lot of people who, by constantly talking of The Week, complaining of it, denouncing it as a horrible liar, and even praising it, were helping to make this tiny sheet “quite famous”, were also of the opinion that something terrible must be going to happen to The Week pretty soon. Mr Kingsley Martin, editor of the New Statesman, who had been very kind to me personally and wished us well, was one of these. Once he wrote in his column in the New Statesman201that he had been waiting for

201 John Pilger is currently a columnist with the New Statesman.

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a fortnight for “the heavens to fall” as a result of a particular disclosure in The Week – it was fairly clear from the context that what the heavens were going to fall on was me. Another time he came briefly to my office to tell me that he had just read the current issue and wanted to warn me that to his mind the only doubt as to the result was whether I should get out with a heavy fine or suffer a sharp gaol sentence into the bargain.

The Criminal Libel law and the Official Secrets Act,202one or the other of which we apparently infringed about twice a month, were the instruments which people imagined were going to send me to gaol. Since, as I have said, I had no lawyer to bother me about such things, and since nobody but myself could possibly be involved in whatever unpleasantness might arise, I was saved all the advance worry which nags at people and by simply being ignorant of whether I was infringing some law or not, saved myself from the temptation which otherwise would have been irresistible – to omit or tone down reports of facts and reports of rumours merely on the ground that to publish them might land one in the Courts. We were of course repeatedly threatened with libel actions, but none of them was ever brought and none was ever settled out of Court. When deciding whether to write a story which was obviously, in the legal sense, libellous, but which I believed to be true and of some public interest, I used instead of a lawyer a simple criterion of my own.

In case he brings an action, I asked myself, which of us in the end will look more ridiculous? On the whole, this criterion worked fairly well. When the emissaries of the libelled came to see me with threats and menaces, they were immediately discouraged by the evident poverty of our organisation. Their usual technique was then to demand an unqualified apology. This I invariably refused on principle, although always expressing readiness to write another story on the same subject giving any facts they might chose to supply tending to show that an earlier story had been baseless.

How often we really infringed the Official secrets Act, or were suspected by the authorities of espionage or improper relations with public servants for the purpose of extracting state secrets, I have no idea. For the first eighteen months or so, at any rate, we were highly suspect – naturally, and for the same reason that I had been suspect in Berlin, namely that we had no easily recognisable fancy dress and the authorities were somewhat in the position of the drunken Dutchman in the musical comedy who gets by accident into the middle of a fancy-dress ball and runs frantically from person to person imploring them, “Do please tell me once and for each what are you as?”

202 Nowadays considered somewhat of a panic measure, the Official Secrets Act in Britain first came into force in 1911. Since then criminal prosecution and imprisonment threaten anyone who publicly discloses or passes to an unauthorised person any bureaucratic document or fact that a government has deemed to be officially secret. Thus, critics of the Act still say, truly informed debate does not always take place.

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Obviously the authorities would much rather deal with people who are visibly members of some recognised political organisation, and I had a lot of evidence that they were considerably worried by not knowing what I was “as”.

Long ago Wilmott Lewis had drawn my attention to what he called “the factual heresy” or “the illusion of spot news”. Wilmott Lewis, who was usually right about such matters, took the view that about ninety per cent of what the public conceived to be “inside news” or “spot news” is either something so trivial or obvious that it is not worth writing about, or else is not “inside news” at all in the sense of being something secret and confidential, but is the kind of information which any highly informed and reasonably intelligent person could piece together from say, a weeks reading of all available newspapers and a weeks conversation with all available sources. And even this, he used to insist, is not enough. News, he used to say, is in itself nothing. Presentation is almost everything. The entire question, he would insist, is a question of style.

I have seen people who, as he made these observations, came rapidly to the idiotic conclusion that the creative journalistic process is much simpler than it really is – you could see them beginning to imagine that all the man had to do was to sit about reading and talking and presently, having developed his “style”, present the matter in coruscating prose. This of course is untrue too, and the reason why Lewis, for example, leaned over backwards talking about style, and the reason why it is necessary to do so repeatedly, is that, although in the early days of journalism style was emphasised to the point where the role of the “facts” was merely forgotten, nowadays the “factual heresy” is a dangerous one.

To hear people talking about facts you would think that they lay about like pieces of gold ore in the Yukon days waiting to be picked up – arduously, it is true, but still definitely and visibly – by strenuous prospectors whose subsequent problem was only how to get them to market.

Such a view is evidently dangerously naïve. There are no such facts. Or if there are, they are meaningless and entirely ineffective; they might, in fact, just as well not be lying about at all until the prospector – the journalist – puts them into relation with other facts; presents them, in other words. Then they become as much a part of a pattern created by him as if he were writing a novel. In that sense all stories are written backwards – they are supposed to begin with the facts and develop from there, but in reality they begin with a journalist’s point of view, a conception, and it is the point of view from which the facts are subsequently organised. Journalistically speaking, “in the beginning is the word”. All this is difficult and even rather unwholesome to explain to the

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layman, because he gets the impression that you are saying that truth does not matter and that you are publicly admitting what he long ago suspected, that journalism is a way of “cooking” the facts. Really cunning journalists, realising this, and anxious to raise the status of journalism in the esteem of the general public, positively encourage the layman in his mistaken view. They like him to have the picture of those nuggety facts lying about on maybe frozen ground, and a lot of noble and utterly unprejudiced journalists with no idea whatever of what they are looking for scrabbling in the iron-bound earth and presently bringing home the pure gold of Truth.

When I had to start explaining what The Week was trying to do, I did myself a good deal of harm by being rather too frank about this matter. To make matters worse, I went about saying that rumours were just as important, just as significant, just as – in the last analysis – “valid” as “facts”

Contemporaries on the existing weekly newspapers used to complain that The Week published rumours which they themselves refused to publish until they were confirmed.

In the same way people who refused to print anything that was not a confirmed fact were likely to print very little of general interest. And I found that attitude arrogant, for, unless one imagines one is God, how on earth can one tell truth from rumour in less than perhaps fifty years? And fifty years is too long to wait if one is in the business of issuing a weekly newspaper.

So far as The Week’s newsgathering operations were concerned they were conducted for the most part on a barter basis with a group of what were then the best-informed and most live-minded correspondents in London.

They included Mr. Farson, correspondent of the Chicago Daily News; Mr Stefan Litauer, correspondent of the Polish News Agency; Mr. Paul Scheffer, correspondent of the Berliner Tageblatt, and a varying group of French correspondents.

Two or three times a week we met around noon in Mr. Farson’s office at Bush House and pooled our information. And on the days we did not meet we pooled information over the telephone. To describe this pool as a “group” would be to use too formal a word, but – owing, I think, to Mr. Farson’s guidance – we all of us came to realise that there was something to be said for regular exchanges even when there seemed to be no news at all. The mere fact of each in turn going through a kind of “total recall” of what had been said by informants – diplomats, financiers and others – during the course of the past forty-eight hours was clarifactory and often produced a piece of the great jigsaw which otherwise could have been overlooked or forgotten. Usually of course there was plenty of news. There was news which – for example – Mr. Farson could not handle for his

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paper but which was exactly suited to The Week. Everyone had something to contribute, everyone picked from the bag what suited his own requirements. Apart from what The Week could directly contribute to the pool, it had a special role to play, a special utility. There were innumerable stories which, for example, Mr. Farson or Mr. Litauer could not venture to send directly to their papers or news agencies but which they could send if they had just appeared in The Week and could thus be quoted instead of being sent on the responsibility of the correspondents.

The French were particularly good at playing this game. And, as time went on, this group – every member of which had his own special contacts with news sources in London, his own confidential sources of news in his own country and a lively awareness of the difference between the apparently significant news and the news that really was significant in the light of knowledge of the basic trends – made up a pretty formidable information centre.

And then naturally the whole business “snowballed”. When it was seen what kind of stories The Week uniquely would handle, all sorts of people – for motives sometimes noble and often quite vile – would approach The Week to draw its attention to the most extraordinary pieces of more or less confidential information. Sometimes it came from frustrated newspapermen who could not get what they considered vital news into their own papers. More often such confidences were the outcome of obscure financial or diplomatic duels. They would come, for instance, from the Councillor of an Embassy who was convinced of the wrong-headed policy of the Foreign Office and the Ambassador, and wished, without exposing himself, to put a spoke in their wheel.

The savage tensions of the 1930s naturally produced a situation favourable to this type of development. Under the frightful overhanging menace of Hitlerism, there roamed the capitals of Western Europe people who were half saint and half bandit – the sort of people who would commit a murder for twenty pounds and suicide for a good idea.

A satisfactory thing about Herr von Ribbentrop was that you did not have to waste time wondering whether there was some latent streak of goodness in him somewhere. He was all of a piece. He had me followed about London by enormous blondes... The blondes were sometimes female, sometime male. One of the males had the job of getting a seat beside me on one of those plush-covered benches by the marble-topped tables in the old Café Royal, which at that time I used as an alternative to my office, on account of the superior amenities...

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Not wanting anyone’s time to be wasted, I arranged for use on these occasions some informative little dialogues with whichever friend happened to be sitting with me.

Me: Say what you will, you cannot deny the gentiles started the last war. Wormed themselves into key positions everywhere...

Friend: But look at the thing broadly – think of their contribution to literature, culture in general. Look at Shakespeare.

Me: Shakespeare I grant you – if he really was a gentile. But if you want to talk about writers, what about Wells, and Shaw? Typically disruptive, negative Gentile mentalities. Mind you, I’ve many good Gentile friends myself. But taken in the mass...’ (pp.224-37).

Allowed to publish again from 23 October 1942, Cockburn continued with his publication The Week until its last edition of 18 December 1946. In 1947 Cockburn moved to Ireland but continued to contribute to various newspapers and journals. This included a weekly column for the Irish Times, and he was for some time also a ‘guest editor’ of Private Eye. He also published several books including Aspects of English History (1957), The Devil's Decade (1973), Union Power (1976) and Cockburn Sums Up (1981). And he also published three volumes of autobiography, In Time of Trouble (1956), Crossing the Line (1958) and View From the West (1967). Claude Cockburn died in December 1981.

***

The only publication of any comparison in New Zealand then and ever since (only though perhaps in that it was insisted upon that both publications cease as the war progressed), was the journal Tomorrow begun in Christchurch not long after The Week began to appear in Britain. Tomorrow was started by Andrew Kennaway Henderson, a person whom had declared himself a conscientious objector at the outset of the First World War – this stance not being challenged until he was called on for military service in January 1918. His first refusal saw him serve nine months hard labour at Paparua prison. His second refusal, on 5 November 1918 (the war ended 11 November 1918.), saw him sentenced to a further two years.

Released in 1920 he worked for a short time in Wellington for a stonemason, then returned to Christchurch for a while, then with his wife left for Auckland where they lived for a while (before they brought a property in the Henderson Valley), with the Mulgan’s – friends from Christchurch, and also the parents, incidentally, of John Mulgan mentioned above by Milner, and also the author of the much commented on and studied (in New Zealand University literature courses – as much for the title as the novel’s contents) novel, Man Alone.203This move did not work out for the Henderson’s 203 During Milner’s last year at Oxford (1936-37) he shared a house with fellow New Zealander’s Jack (J.A.W.) Bennett and John Mulgan (mentioned by Milner above). Jack Bennett, whom Milner had briefly known in New Zealand, having met him in Auckland through his friend from Waitaki days, Jim Bertram, had, in 1931, won a postgraduate fellowship to Oxford’s Merton College. There he and Mulgan,

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due to the failure of the newspaper Critic that Henderson produced cartoons for; and also due to his wife, Pauline, falling ill. In 1925 Pauline returned to Christchurch, and to her mother’s to convalesce, and her husband moved to Sydney where he gained employment as an illustrator for several daily and weekly newspapers - his wife joining him there later. In 1931, the Henderson’s returned to Christchurch and to Pauline’s mother’s (she was recently widowed) to live. It was back in Christchurch that Henderson also began planning for the publication of a weekly newspaper, Tomorrow - one that would concern itself with issues of gravity affecting New Zealand, and one that would solicit the views of political and literary figures on those matters, even going so far as to allow the use of non de plumes if the contributors so desired. Henderson provided the illustrations and was solely responsible for the editing and management of a newspaper, which did of course become controversial. It was also very successful and references to Tomorrow are scattered through just about anything written concerning any literary figure around at that time.

Tomorrow’s first edition appeared on 11 July 1934, and eventually, so it is said, the Labour government closed it down - in May 1940. In April 1940, though, Pauline Henderson passed away and that may have been a factor in Henderson not deciding to battle on then?204

nominated twice in New Zealand for a Rhodes scholarship but finally helped to Merton College, Oxford, by his parents, shared a tutor – the English poet Edmund Blunden. During the war Bennett went off to America, posted as Director of British Information Services to New York. After the war he returned, minus his first English wife, to Oxford and was appointed Fellow and Tutor of Magdalen College and from then on pursued a scholarly life, never moving far from there again. Milner noted later that when they shared house in Oxford in 1937, he found that, unlike Mulgan, Bennett was more flexible and more open to argument – in short, he says, in Intersecting Lines (1993), a more ‘lovable man’ than Mulgan. (p.151). Mulgan was by that time also with the Clarendon Press in Oxford and Milner says he travelled regularly to London on Press business. To Milner, Mulgan was his own ‘man alone.’ Near the end of the war Mulgan took his ‘own’ life in a hotel room in Cairo at the point where British forces in Greece were beginning to conduct operations against the Left and the Communists – factions that Mulgan had helped, since 1943, organise into a group united in resistance to the occupying Germans (in short against friends that he had managed to make). There is a clue perhaps, to Mulgan’s ‘depression’ – touched on by Milner in his Intersecting lines (1993), but not made any more of by Milner who, though he obviously had no sympathy for the man, obviously also though, thought this piece of Mulgan’s (depressing in itself) worthy of resurrection in some respect: ‘He [Mulgan] recalled in [Report on Experience - another work of Mulgan’s and published by his Oxford University Press, London, 1947] meeting a young Frenchman in Paris during Christmas 1938 who told him that after being mobilised ‘in the hollow crisis of that autumn’… he went to Forsbach in front of the Maginot line, and lay there in a gun-pit, shivering through the autumn night, waiting the order to fire. And night after night, the steel trains thundered across the frontier, fulfilling the last orders of Schneider-Creuzor for Thyssen or Krupps. Nearly all other traffic was suspended but the steel trains went though unimpeded, answering the orders of a greater power than any he was called upon to die for.’ (in Milner’s Intersecting lines, p.153). Not moved, perhaps, by actions towards fine words like Milner was, but more, maybe, towards action – a fine New Zealand trait, though in this case an impulse carried too far. 204 Reuel Lochore was also a subscriber (perhaps even a contributor?) to Tomorrow, and historian Michael King in his article on Lochore, published in the March 1991 issue of Metro, attempts to make something of Lochore resigning his subscription in January 1940 - saying in effect that this act was evidence of his commitment to the fight against Germany. In January 1940 though, Lochore also married

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All roads lead to where?

Obviously some offence occurred or was given, otherwise Hankey would never have drawn attention to Sutch in the way that he did?

Percival’s report indicates though that there was likely no shortage of information on the pace of preparations from Singapore, and Cockburn’s piece also speaks with some volume. There is another possibility so far as issue no. 214 (27 May) of The Week may have caused offence, and that is, the mention of the suggestion of a ‘pacific pact’, made:

‘...undiplomatically in the view of some British circles – by Australian Premier Joseph Lyons at the present Imperial Conference...’ (from 214 above).

This undoubtedly could have been put down to Sutch, but is not ‘in fact’ a release of ‘secret defence information’. Even Parker, in his The SIS (1979), was awake to the fact that it was difficult to work out who publication of this ‘defence information’ might have been destined to help - and indeed he also struggled framing this:

‘It was two years to the outbreak of War. The Fascist and Communist powers, Nazi Germany, Japan and the Soviet Union were potential enemies, the first two more so than the third. It is an interesting conjecture which of these Sutch intended publication of these defence details to aid.’205

the older Dorothy as well! Something from King on how Lochore viewed the war once it was underway: ‘In fact, once New Zealand was fighting Germany, nobody supported the war more vigorously than Reuel Lochore. His notes on interviewing prepared for the Alien’s Tribunals, which produced the kind of grilling of which Turnovsky complained, make it clear that he was ruthless in his determination to ensure that people with Nazi sympathies were not considered eligible for New Zealand citizenship. In January 1940 he resigned his subscription to the journal Tomorrow in protest at the fact that some of its contributors were opposed to the war, because of the Russian-German non-aggression pact. “Sir,” he wrote then, “we are at war; and there is only one thing to do about a war – to win it. All nuances of opinion must be temporarily resolved into the plain black-and-white of pro or contra. Let your brittle intellectuals [we can presume from this that this was addressed to Henderson, and was perhaps published in Tomorrow as well] give up their new Year resolutions and build up the national will to victory; or let them try to sabotage this country’s war effort, if they dare….”’ (p.124). Ian Milner was also a contributor to the publication Tomorrow – sending ‘despatches’ back beginning early 1935 with an account of his trip to Russia (with James Bertram meeting up there with Charles Brasch as well), and continuing with ‘reports’ from Britain and then the United States up till September 1939 (when he returned to NZ from Berkeley, California). ‘A collection of these pieces [suggests Vincent O’Sullivan, in his introduction to Intersecting Line, 1993], would run to hundreds of pages, and give perhaps the most sustained and intelligent assessment of world politics written by any New Zealander in the thirties. Although their point of view is consistently from the left, and Milner’s opinions of British politicians unremittingly severe, history has vindicated the sheer sense of most of his views. Their only rival in New Zealand journalism would be ‘Behind the Cables’, the fortnightly articles sent back to the Auckland Star in 1936-7 by John Mulgan…’ (p.17).205 See Parker above, in main text after footnote 39.

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This is simply put and leaves Italy, a fascist power long before Germany,206 and whose invasion of Abyssinia (beginning 18 February 1935 not only broke the collective will of the League of Nations, but also encouraged Hitler’s opening gambit – reoccupation of the Rhineland on 7 March 1936)207 - totally out of the picture? Publicising this suggestion of a ‘pact’ though would have been consistent with the line that the New Zealander’s were taking at the conference – that trade could ameliorate tensions that had developed and that were continuing unchecked, world wide.

Our last word on this from Sinclair’s Walter Nash (1976) begins with a caution to Nash from the worldly Ormond Wilson:

‘Ormond Wilson208wrote to Nash on Savage. ‘Don’t let Savage succumb to the duchesses’ embrace and see that he makes a good stand for democracy and international cooperation at the conference. He’ll say anything radical that you tell him to.’ Savage’s main speech on foreign policy was certainly written by Carl Berendsen,209 but was revised a little by Nash. It was critical of Britain’s policy of appeasing the dictatorships and her failure to consult with the Dominions, particularly over the Hoare-Laval pact, which involved a reversal of the policy of applying ‘sanctions’, under the covenant of the League of Nations, against Italy, which had attacked Abyssinia. The Dominion had not, he said, received ‘one word of warning’. He denounced this attempt ‘to buy off the aggressor at half-price’ – half of Abyssinia – and urged genuine support for the League of Nations.210

The way to peace must also involve considerations of ‘economic justice’ for all peoples. Statesmen ‘ignored the fact

206 In 1922, in Italy, Liberal leader Luigi Facta’s cabinet resigned after threats from Mussolini that "either the government will be given to us or we will seize it by marching on Rome." Mussolini then sent his black shirts into Rome and formed a government. Earlier that year a German-Russia treaty had been signed in Italy recognising the Soviet Union (this recognition anathema to not just Fascist thinking). In 1923 Adolf Schicklgruber (Hitler) launched his first attempt to seize power in Germany with a failed coup in Munich that came to be known as the Beer-Hall Putsch. He proclaimed himself chancellor and Ludendorff dictator. He then wound up in jail (in 1923 and 1924), where he wrote Mein Kampf, (My Struggle): sub-titled Four-and-Half Years of Struggle against Lies, Stupidity, and Cowardice. The cowardice referred to continuing acceptance of the burden of reparations imposed on Germany at the end of the First World War. To that end France was the most strict ‘entering’ Germany to extract resources as well. Much of Hitler’s success can be put down to his fostering resentment.207 See Cox on the timing of this opening gambit by Hitler as well – in main text after footnote 197.208 Ormond Wilson is mentioned before in this work - in main text before footnote 51 and in footnote 51.209 Berendsen was, in the sense that you are if your mother is, Jewish. He is said though, to not have felt this keenly (bio details footnote 47). In 1936, Nazi officials in Berlin had declared that their treatment of the Jews was not any of the League of Nation's business.210 Abyssinia (Ethiopia), being a member of the League of Nations from its inception, should in theory have been defended after Italy invaded - and by more than just the sanctions that were half-heartedly applied - the League having also agreed, upon its inception, upon the principle of collective-security or action in cases of aggression against its members. In his last act at the League of Nations (at the end of June 1936 – Mussolini’s troops having just occupied his Capital, Addis Ababa, the month before), Haile Salassie, the ‘Lion of Judah growled, as he stalked proudly from the platform at Geneva: “It is us today. It will be you tomorrow.”’ (from The Dark Valley: A Panorama of the 1930s, 2001, p282).

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that war was almost entirely the result of economic causes, the chief of which was the inability of the people to purchase to the same extent as they had produced, an omission which inevitably brought them into conflict with other nations over foreign markets.’ (pp. 146-147).

Nor were the Australian’s thinking of war at that time of the Conference either – obvious from their having suggested the ‘pact’ in the first place - even though Menzies, Deputy Leader of the United Australia Party, Attorney General and Minister for Industry in the Lyons led Australian Government from 1934 until 1939, was of the view at the time:

‘That Australia’s views on international events should be conveyed in private to the British government.’211

This may still though, put into better perspective the effort Menzies put in to ensuring the export of ‘pig (scrap) iron onto ships bound for Japan– hence Menzies being tagged ‘pig iron Bob’212 by waterside workers claiming that the scrap was likely destined to be used for armaments, which it was as it turned out.

Going round in circles?

The day before the publication of edition no 214 of The Week (on 27 May 1937), the following was recorded in the Diary of the Canadian Prime Minister, William Lyon Mackenzie King:_______

307Wednesday, May 26, 1937. (cont’d.)(typewritten – p.445.)

He was unable to recall for a moment the name off the architect.On the hall itself were hung tapestries which came from BuckinghamPalace, when King Edward went to live at Buckingham Palace. I liked the colour of green and gold, a very dark greenish yellow on the walls. We were received by the Queen in the front drawing room which looks out on the garden. The sun was shining brightly on the lawn; lighted up the red tulips just beyond. Her Majesty was dressed in white and was alone in the large room. I was the first to shake her hand, and was followed by the other Premiers, she, herself, coming forward and going down the line to shake hands with each in turn. She then returned toward the end of the room that she had come from, and I said to her that we had come to extend to her our best wishes for a happy year and many years to come. She expressed her thanks and smiled, and then asked as to how we were all getting along at the Conference, saying that we must be tired. (p.445) I mentioned that every one was having a busy time but all seemed

211 In Lorna Lloyd’s work: Loosening the apron strings: the dominions and Britain in the inter-war years, at http://www.psa.ac.uk/publications/psd/1998/lloyd2.htm 212 See before in main text after footnote 111.

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to be co-operating so well. The only remark I eventually made was the beauty of the day; seemed to be a happy augury of the year on which she was entering, and that we hoped it might be so. After the queen had had a further word or two, we again shook hands and withdrew.

Massey213drove with me from Marlborough House along the Mall, telling me en route that Dawson of Penn had said to him that the College of Physicians and Surgeons would like to know at once if we wished to purchase the building as otherwise they would have it done over themselves as permanent quarters. I told Vincent I was prepared to incur the expenditure but I thought it would be well for my colleagues present to visit the building and I would agree to support the purchase if they would do likewise.

I was a little early for the opening of the Conference, so drove around for a few minutes, and then watched a battalion of Grenadier Guards rehearsing for the military tournament, the band playing the Royal Grenadiers. It brought back to my mind the words, which, as children, we used to sing at the air. The Drum Major was in special guard uniform on account of it being her Majesty’s birthday. It was interesting to think of some of the words being: “Hurrah, Hurrah for Canada, her woods and valleys green,Hurrah for dear old England, Hurrah for England’s Queen.” I had never expected to see that verse fulfilled just in this particular way. I recall it being the first words my brother Max sang when he came out of unconsciousness of several days. At the morning Conference, there was some discussion pertaining to disclosure of information from some who were present. Savage referred to Lady Astor214 having spoken to him, at St. James Park, about his speech, and revealing that Nancy had knowledge of what he had said. Mr Baldwin said that she, although of his supporters, had a very loose tongue,215 and they had a good deal of difficulty with her, but he would make enquiries of her about the matter himself.216

It is impossible to prove that Sutch did not cause offence in some way, but at least this, from Mackenzie King’s diary above, shows that there was indeed in ‘some British

213 Canada’s High Commissioner to London.214 Lady Astor (nee Langhorne), a Conservative Party member (1919-45), was the first or second women (depending on what you read) to sit in Parliament (1919-45); was American and a divorcee herself (like Mrs Simpson) - before she married 2nd Viscount Waldorf Astor, the eldest son of 1st Viscount Astor, an American-British financier (heir to a fur fortune) who settled in Britain in 1890.215 Churchill is said to have said the following of Lady Astor: ‘She combines a kindly heart with a sharp and wagging tongue, denouncing the vice of gambling in unmeasured terms and is closely associated with an almost unrivalled racing stable. She accepts Communist hospitality and flattery and yet remains the Conservative Member for Plymouth. She does all the opposite things so well and so naturally that the public, tired of criticizing, can only gape.’ Another story has that he also once said to her ‘that if she was his wife he would poison her, to which she is said to have replied, ‘that if she were his wife she would take it.’ (There is a photograph of Lady Astor at http://www.spartacus.schoolnet.co.uk/Wastor.htm )216. From the Diaries of Prime Minister William Lyon Mackenzie King, Canadian Archives, MG26-J13.

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circles’ (see 214 above), knowledge of what was being said, and no doubt knowledge also of what was being proposed, at the Imperial Conference in 1937. And this knowledge, we can also see, was out and about at least one day before Edition 214 of The Week hit the streets on 27 May 1937.

***

And what a ‘circle’ this was. For it was at Cliveden House, the home of Lady Astor217that the so-called ‘Cliveden Set’ met – so named by Claud Cockburn who often referred to this group obliquely in The Week and in this instance (in edition 214) undoubtedly, when he was commenting on the fact that:

‘a proposal for...regional understanding and a pact of non-aggression between all the Pacific Powers [had been] made – undiplomatically in the view of some British circles...’

A recent description of the “Cliveden set”, by Norman Rose, the author of The Cliveden Set: Portrait of an Exclusive Fraternity, describes them at best as ‘a group of like-minded politicians, financiers, journalists and academics, concerned above all with maintaining the integrity of the British Empire.’ And at worst (and in the same work), as ‘a treacherous cabal seeking to manipulate foreign policy in its own class interests in the late 1930s’ - a group that included, ‘leading politicians, academics, bankers, writers and newspaper editors all of whom gathered periodically at the wealthy country estate of Nancy and Waldorf Astor.’ A review of this book mentions what a good read it is and mentions a Milner as well:

‘This book, The Cliveden Set, by Norman Rose, has more accomplishments to its credit than most histories. It is scholarly, well informed, wide ranging and fun to read. It is unpompous, with agreeable touches of irony, as when one of the `set' went with Keynes to Berlin in autumn 1922 to advise on financial reform, `the arrival on the scene of a group of experts caused the mark to spin out of control'. The book's subtitle, Portrait of an Exclusive Fraternity, may mislead. In the years he deals with, when Cliveden was lived in by Waldorf Astor, 2nd Viscount, and Nancy Astor, their house was not `exclusive'. All sorts of people enjoyed hospitality there, especially under Nancy's influence. The main members of the `set', those who came most often to Cliveden, had all been members of Lord Milner's `kindergarten', who influenced the British part in the Boer war. Before that, they had been undergraduate students, mostly at New College. So was Waldorf Astor and there he got to know Milner's young men. From about 1910, they came frequently to Cliveden: especially George Dawson, soon to be editor of The Times, Philip Kerr, later Lord Lothian, who came to matter when he worked with Lloyd George on the treaty of Versailles, Robert Brand, an economist and financier, who married one of Nancy's sisters,218Lionel Curtis who was involved with the Royal Institute of International

217 Also, see before in main text after footnote 198, for first mention of Lady Astor (by the New Zealander Geoffrey Cox).

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Affairs, largely financed by Astor. Three of these, not including Philip Kerr, were closely associated with All Souls College. There they had important contacts: indeed, the `Cliveden Set' could be called the `All Souls Set'. Claude Cockburn invented the `Cliveden Set'. Rose carefully describes his rather absurd career and points to one week-end in October 1937 when important guests, as usual, assembled at Cliveden. As usual, there were Brand, Curtis, Dawson and Lothian, but also Anthony Eden, Neville Henderson, ambassador in Berlin, and many others. On 9 November, the Evening Standard reported that Lord Halifax, soon to be Chamberlain's foreign secretary, was going to Germany for a `hunting exhibition' (Halifax was an MFH),219 but would also see Nazi leaders. Cockburn, eager to extend the influence of his periodical, The Week, published the `sensational' allegation that all this had been worked out at Cliveden in October by a gathering that for years has `exercised so powerful an influence' on foreign policy. A month later, The Week labelled it `the Cliveden set'. The notion still remains and many, at the time, seemed to believe it. Perhaps the most striking example Rose offers is Franklin D. Roosevelt, who told the press of a `Cliveden Set of Washington...' This is a good book.’220

***

There is no direct family relationship between Lord Milner and the Frank Milner of Waitaki, but there was an indirect connection and Ian Milner comments on this in his biography of his father, Milner of Waitaki: Portrait of the Man (1983):

‘As a model of imperialist influence in his earlier years one might well think of his celebrated, to some notorious,221namesake, Lord Milner, architect of British rule in South Africa and untiring advocate of closer Imperial ties. Among his copious notes on Chamberlain, however, only a passing reference to Alfred [Lord] Milner occurs. There was a connection, though indirect, by way of Frank Milner’s’ interest in and personal links with several members of Lord Milner’s ‘Kindergarten’ formed in the 1890s: the group of talented young men – theorists, publicists, administrators or future statesmen – imbued with his imperialist views. Outstanding amongst them was (Sir) Lionel Curtis. Together with Phillip Kerr (Lord Lothian), Leo S. Amery and others, they founded a journal in November 1910, the Round Table. Its aim was to spread the Kindergarten’s ruling idea that ‘the principle of cooperation was insufficient

218 Brand (married to one of Nancy Astor’s sisters), was a member of the South African-centred ``Milner's Kindergarten'', the heirs and administrators of Lord Cecil Rhodes' Trust – the trust that administered the Rhodes scholarships to Oxford.219 ‘Master of Foxhounds.’220 Review of The Cliveden Set: Portrait of an Exclusive Fraternity, by Norman Rose (London: Jonathan Cape, 2000) in the English Historical Review, April, 2001, pp. 277, by R.A.C. Parker. 221 Notorious so Ian Milner thought because Lord Milner’s collected speeches, in Nation and Empire (1913), ‘in their stress on… racial superiority and authoritarian social thinking foreshadowing Nazi ideology’. (From Milner’s notes in his biography of his father, p.204).

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as a means of holding together the Empire’ and that ‘some form organic unity [such as was the outcome of Ottawa in 1932] was the only alternative to disruption.’ (p.137).

There is also mention of this Round Table in the Diary of the Canadian Prime Minister, Mr. Mackenzie King on the page following the one above:

_____

308‘Wednesday, May 26, 1937. (cont’d.) (typewritten – p.446.)

I spoke of the reports in the press revealing a good deal of information concerning certain of the delegations with very little of others, indicating that the “Times” was being supplied additional information from sources other than the official communiqué. Baldwin said that that had been the perpetual trouble though they did their utmost to safeguard secrecy. (p.447)

The Australians next spoke of some information in regard to the New Hebrides being transferred to France having been made public, though no records were taken of it at all. Malcolm MacDonald222said that they had found out the correspondent who got the information but they had yet to discover through whom it was obtained. However, they were following the matter up. Altogether the discussion was opportune in view of our meeting our own Press later in the day. It is perfectly clear to methat outside of the trouble in England, there is an invisible Government, a round table group that are seeking to run matters their own way. Baldwin referred to the round table group himself as being the group very actively concerned in Foreign Affairs, etc. As we were seated together at the table, I recalled the fact that this might be one of the last meetings of the cabinet under Baldwin’s Presidency, and remarked to Lapointe223that there were sitting side by side in a row, three Prime Ministers, the one of the day, next to him the one of yesterday – Ramsay MacDonald, and beyond him, the Prime Minister of tomorrow, Neville Chamberlain. This was something that he might never see again. Lapointe drew my attention to the fact that Hertzog224was inclined to sleep, and Ramsay MacDonald was doing the same. Lapointe mentioned this as evidence that they were getting old; Fielding and others used to do the same in Cabinet.

222 Dominion’s Secretary.223 Canada’s Minister of Justice. Notorious in Canada (now), for not allowing a ship carrying Jewish refugees to dock there.224 South African Prime Minister and Minister of External Affairs. The name Hertzog is of Austro- Hungarian origin and means ‘Count’ much as King means King.

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Sir Samuel Hoare225gave an account of British naval policy and power, an admirable account, concise, complete, and, I imagine, very sound, the only point at which it seemed difficult for him to complete the picture of Imperial policy was its reference to possible attack on Canada by Japan. Baldwin and others made clear in their statements that they did no contemplate any difficulty arising out of Japan on the Pacific except in the event of European war, in which event, Japan might seize her opportunity. It is quite clear that both New Zealand and Australia feel that Japan is their real enemy, and they demand from England an Imperial policy which will give them the same protection as the British Isles. Sir Samuel Hoare indicated that the Singapore Base was destined as a feature in that purpose.’226

This next page (the second), from Mackenzie King’s diary shows us definitely that insofar as leaks to the press were concerned circa the Imperial conference in 1937, ‘grave finger [’s] of suspicion’ could probably have been pointed at any number of persons. There was keen interest and controversy. Nor, it seems, had the emphasis on Singapore been made as plain as it was before then (Sir Samuel Hoare having not attended the conference before then also227), at the end of that day (26 May 1937), the eve also of publication of Edition No 214 of The Week (27 May 1937).

***

It may though, have seemed possible to link Sutch with this by working back from something which occurred later as Sutch had also accompanied Bill Jordan228 to a League of Nations meeting at Geneva229where an undiplomatic ‘row’ occurred and diplomatic fallout from this was also commented on by The Week, though in a later edition (edition no. 218 - 23 June):

___________

225 When Savage, in his speech (in main text after footnote 209), was ‘critical of Britain’s policy of appeasing the dictatorships…’, he was as well being critical of Sir Samuel Hoare – then First Lord of the Admiralty (up until 28 May 1937 when Chamberlain became Prime Minister), then British Home Secretary (up until 10 May 1940 when Churchill became Prime Minister). In June 1935, Hoare, then British secretary for Foreign Affairs, had signed on behalf of Britain the Hoare-Laval Treaty with Pierre Laval, then French Premier. This Treaty, or Pact as it has also been called, ceded a large area of Ethiopia (known as Abyssinia until the 20th century, and colonised by Italy for a short time before they were ejected in the late 19th century), to Italy. This pact was quickly repudiated due to public outrage, and the Laval Government fell in January 1936. Laval was executed at the end of the war for excessive collaboration with Germany. After Churchill became Prime Minister Hoare was replaced in cabinet and sent to Spain as Ambassador for the next two years. 226 From Diaries of Prime Minister William Lyon Mackenzie King, MG26-J13. 227 Noted by Mackenzie King in his diaries (ibid above), and mentioned also in Australian Archives re. Lyons’ speech - see footnote 165 before & Australian Archives: FA: Imp. Conf., Meetings, (1937).228 See above, Milner, for mention of Jordan attending this also - in main text after footnote 162.229 Mentioned in Sinclair’s, Walter Nash, 1976 (p.387); and also at http://www.indiana.edu/~league/1937specialassemb.htm , where the dates are given for when Sutch attended (as a ‘substitute’ delegate) with Jordan – on 26 and 27 May 1937 in Geneva. Shallcrass (in our introductory piece at the beginning of this work – above footnote 1), mentions this as well – that ‘he [Sutch] was a New Zealand delegate [in 1937] to the League of Nations.’

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No 218 .

THE WEEKJune 23rd

28 VICTORIA STREETLONDON. S.W.1

TELEPHONE. VICTORIA 1954

Behind a good deal of the...

-- 3 --

THE DOMINIONS AGAINST BRITAIN

Stories of an almost gloves-off row on the issue of British Foreign

policy at the recent Imperial Conference have for some time now been

going the rounds in informed circles. Last week the icy silence of

the press both at home and abroad was broken by the appearance of an

article in a solitary and usually well-informed French paper declaring

that strong criticism at least was levelled by Dominion spokesman

against the present policy of the Foreign Office. But the silence was

immediately resumed.

The fact that not a single British newspaper devoted even so much

as half an inch to the French story, following as it did the vigourous

denial by Mr. Anthony Eden that he, in any way, brought pressure to

bear on the delegate from New Zealand at the League Council meeting,

created the impression that a grave difference of opinion had in fact

existed between Dominion delegates on one side and the Government

representatives on the other, at the Conference. (Journalists attending

the session affirm that Mr. Eden publicly crossed over to Mr. Jordan

and, flourishing a pencil, persuaded him to modify a speech rather too

critical of the British Government policy to be tolerated).

That impression was strengthened when the press reports of a meeting held in London at which the New Zealand Finance Minister, Nash, strongly criticised the Foreign Office, appeared; not a single mentionof Nash’s criticism was made although a suggestion that the league should hold a mandate for Spain, made in the same speech, received notice.

Actually, THE WEEK learns, the row of unprecedented character hinted at in the French press was led by the New Zealand Premier, Mr. Savage, and not, as then stated, by Mr. Jordan.

Mr. Savage apparently began his speech by declaring that while the British Government had complained consistently about the weakness of the League, they had no one to blame but themselves. Indeed it was Britain

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that had taken the lead in weakening the League on every occasion upon which the League was weakened.

From the Beginning

In the first place, Mr Savage declared, the conclusion of the Locarno Treaty230was in itself an indication that Britain had little or no intention of pursuing a thorough-going League policy, for, in the situation prevailing at the time the treaty was signed, the treaty was merely a repetition of League obligations on a Western European scale - - unnecessary if Britain intended to “make the League work”.

***

For Sinclair, so far as he was interested in whether or not Sutch stepped a long way out of line some time in 1937, he wondered ‘whether cool and uninvolved enquirers [might] wonder [if] there was not some smoke below so much fire.’ (see Walter Nash, 1976, p.342).

230 The Locarno Treaty, or ‘Pact’ as it was also called, was an agreement entered into (in 1925, at Locarno, Switzerland), by Britain, France, Germany, Italy, Belgium, Czechoslovakia and Poland. It guaranteed the demilitarised status of the Rhineland and the common borders of Belgium, France and Germany – all as specified by the Treaty of Versailles of 1919. It was not a true guarantee against a German invasion, only a promise by the signatories to send troops in the event of a German invasion. On 7 March 1936, Adolf Hitler ordered his troops to march into the Rhineland, thereby breaking the Treaty of Versailles and the Locarno Pact - hence, as Savage declared, concluding the Locarno treaty. On 30 March 1936, Britain announced its largest naval construction program (of 38 warships) undertaken in fifteen years. Mackenzie King mentions a review in his Diary in which he noted (in 1937) a warship with the number 38 on its side. Hence we might conclude, Britain might have built warship number 38 first.

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Altogether though, the New Zealand party that attended the Imperial Conference in 1937, Prime Minister Savage also in then end,231 were not well received by the ‘British establishment’, nor did they impress all of their Commonwealth peers either.232

Nash was, though, a hit with the press, and Mrs (Lot) Nash was a hit with Mackenzie King (a life-long bachelor he mentions how taken he was with her in his Diary also). But, he was also, we might add here, similarly taken with another lady about whom there were genuine security concerns though he was never told of this:

‘Igor Gouzenko’s widow has disclosed that her husband provided evidence of a well-known Canadian lady who was ‘deeply involved in the intrigue of espionage’ [but as this person] happened to be a personal friend of Mackenzie King, then the Prime Minister, Gouzenko was ‘advised’ by the Canadian security authorities not to mention her name to the Royal Commission appointed to examine his evidence about the deep Soviet penetration of Canadian

231 Savage died, while in office, on 27 March 1940 – World War by then underway again. Savage’s biography (at http://www.primeminister.govt.nz/oldpms/1935savage.html ) is succinct - only touching lightly on the events of 1937, and containing a spelling mistake: ‘In 1937 travelled to Britain for the coronation of King George VI and made headlines for repeatedly criticising Britain over its appeasement of Japan, Italy and Germany. This attracted much criticism for such a public display of Empire disunity’. The biography does not mention that after Savage died his body was carried by train from Wellington to Auckland (for eventual interment), nor (of course) that it slowed at stations along the way where crowds gathered to show their respect. It was ‘an ordinary train with a big white banner attached to the side of an ordinary carriage [in which Savage was laid out] with a large red cross [the Red Cross of Geneva?] in the middle of it. I was only young [9yrs]. The train went through [Otahuhu station] without stopping but it did slow down. Everyone was quiet – the men removed their hats. I can see it still.’ (Conversation with this person’s Mother, 20 December 2003). Savage, an Australian, was succeeded by the Scot, Peter Fraser (on 1 April 1940), who took the Labour party through to the end of its first tenure - until 13 December 1949. It’s an aside, but Helen Clarke (New Zealand’s Prime Minister since 5 December 1999) has said (in Auckland’s Weekend Herald, 29 –30 November, 2003), that she sees herself more in the mould of Peter Fraser. An elder family friend of this person has said that ‘this could be so as ‘Mickey’ Savage was a very modest man’ And it was suggested, in the editorial of the (NZ) National Business Review, 17 May 2002, that ‘World Bank economist Helen Sutch, daughter of the late discredited economist Bill Sutch who helped create the Reserve Bank in 1933’ might have been in line for appointment as Reserve Bank Governor, following Don Brash’s resignation in April 2002 prior to his entry into politics in July 2002. Commenting on why she might have been eligible, the editorial had this to say about Helen Sutch though she’d hardly stuck her head up: ‘Ms Sutch, who worked for the Lange government, is not from the hard left but is sufficiently economically wet to win favour with a centre-left government. She is attractive and an ardent anti-corruption candidate to boot but, according to some, she lacks the hard edge to be Reserve Bank governor. It would be a shame if the job, like others in the public sector, were to become a victim of cronyism. The governor's appointment should not be delayed to satisfy a political agenda.’ Helen Sutch was not though, appointed Reserve Bank Governor (she probably didn’t want it), though Don Brash (politically very, very wet) was soon promoted to leadership of the National Party. Brush was also of the view, though only tentatively (as he still often seems), in 1975, that New Zealand industries should perhaps be protected from foreign takeover so that they might expand overseas themselves (see Foreign Investment Policy in New Zealand, a publication by the NZ Institute of Public Administration, Government Printer, 1975).232 See Sinclair’s Walter Nash 1976, pp 133-152; and the Diaries of Prime Minister William Lyon Mackenzie King, Canadian Archives, MG26-J13, covering this period also.

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life.’ (From Chapman Pincher’s, Traitors: The Labyrinths of Treason, 1987, p.255)

To round off though:

When the ‘grave finger of suspicion’ was pointed at Sutch as regards the release of ‘secret Commonwealth defence information’ (as Marshall put it); or of ‘material on security in the pacific’ (as Parker put it), that had been a very close call indeed. Little time had been allowed for the printing of edition 214 of The Week, though enough time, perhaps, for communication of the scoop – which Sutch could perhaps have been responsible for had he not been in Geneva with Jordan then.233

Nor were defence preparations at Singapore very secret in any case; nor did the British wish these defence preparations to be kept secret.234 On the same day that Mackenzie King mentions Lord Hoare providing an ‘admirable account of British naval policy and power’ (26 May - see above), Lord Hoare also said this to those attending the Conference:

‘By our action in building, developing and equipping the Naval Base at Singapore, we have advertised to the world generally and to Japan in particular our intention to maintain Imperial interests in the Pacific. This great project undertaken at a time when our financial resources were restricted by the years of the depression is now happily approaching the date of completion. It may, therefore, be said that our intentions are obvious.’235

That which appeared in The Week the following day may even have been news to the New Zealanders, for according to Sinclair they were told very little. Or should we say, that Sinclair had little to say on this, which is surprising when you take into consideration the fact that he had access to all of Nash’s papers (see Sinclair’s Preface in Walter Nash, 1976), ‘a very large garage full’ apparently and even the ‘most secret’ as well - the property of NZSIS who Parker says asked for theirs back and ‘duly received them [though] to their credit both Sinclair and the publisher refused [requested excisions] from the book of those few passages which related facts contained in the security papers…’236

From Sinclair then, on the Imperial Conference; the Committees that Nash, accompanied by Sutch, sat on; and on defence, first, so far as Sinclair was able to tell:

On Defence:

233 See http://www.indiana.edu/~league/1937specialassemb.htm and footnote 229.234 The Naval base in Singapore was completed on 14 February 1938, and the official opening, with pomp and ceremony, was then scheduled for May. 235 Source Australian Archives - E (PD) (37) 7 (extract) LONDON, 26 May 1937.236 See Parker above, in main text after footnote 38.

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At the 1937 Imperial Conference, Savage [not Nash] pressed New Zealand’s views unavailingly. The conference as a whole leaned heavily towards appeasement. New Zealand’s defence (as well as foreign and trade) policies were discussed. The security of New Zealand supposedly rested on the Singapore naval base, from which a great British fleet would operate, to protect the Asian and Pacific Dominions and colonies. By the early nineteen-thirties some of the chiefs of the British armed forces had doubts about whether an adequate naval force could be spared from Home waters, or whether Britain could face Germany and Japan together.

The British authorities had grave doubts about this strategy themselves but before they distributed copies of their Far Eastern Appreciation to the Dominion leaders, references to the precarious supply situation at Singapore, to the actual time necessary for the navy to relieve the base, and to the precarious position of Hong Kong were deleted. Thus the Dominions were presented with an optimistic picture which the Committee of Imperial Defence did not itself accept. The aim was to encourage them to coordinate their defence planning with Britain, rather then concentrate on local defence.237

In June Savage, Nash, and Berendsen attended two more meetings with the [British] Chiefs of Staff. Chatfield again emphasized the role of the main fleet. He explained that, after it arrived, Japan would not be invaded, but would be defeated by economic pressure! Reassured or not, Savage had to agree that New Zealand could do nothing alone, and must ‘sink or swim’ with the United Kingdom. When asked whether New Zealand would keep its [two] cruisers, Savage said they would get the advice of the Chiefs of Staff before deciding. Nash brought up the governments basic doubt. He said that the latest British estimate was that it would be sixty days before the main fleet could reach Singapore. Was that the maximum estimate or might it be 120 days? And could Singapore hold out even for sixty?’ (pp.200-201).238

237 It’s an aside but one of those who ‘subscribed’ to the view that New Zealand could defend itself, and should therefore concentrate on local defence, was John A. Lee – dismissed from the party in May 1940 following his attack on Savage. On the inside cover (back) of Soldier published in 1976 it says that: ‘In 1940 Lee was expelled from the Labour Party in circumstances now generally recognised as revealing his characteristic independence and integrity of though and conduct. He is the author of a dozen successful books. His earlier war book, Civilian Into Soldier (1937) [that year again], was published in England and has sold 18,000 copies.’ It was his left arm that Lee lost in the action that led to his being awarded the Distinguished Conduct Medal (‘for Gallantry at Messines’ in 1918). Soldier tells the story of a soldiers wounding in France, of his recovery in England and of his falling in love with a ‘girl’ called Hawea (from a prosperous New Zealand high-country background), whom he doesn’t see again after he is invalidated back to New Zealand. The first draft was written, Lee said, ‘while all the past was in my mind and my wounds unhealed.’ (Inside front cover, Soldier, 1976). This work, by John A. Lee, ends with a ‘Dear John’ letter.238 By 1939 the British estimate conveyed to New Zealand and Australia of when a fleet might be able to relieve Singapore if attacked was 90 days, and for supply vessels a further twenty. Singapore, after it was attacked 8 December 1941, held out for 69 days.

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On Committees and Economic matters:

‘The 1937 Imperial Conference lasted from mid-May to mid-June. The New Zealand representatives, Savage, Nash, Jordan, and their twelve secretaries and advisors, were kept very busy, usually serving on several committees and sub-committees. Even then the delegation was too small to be represented on every committee. The main burden fell on Nash. He chaired the imperial shipping committee and was member of several others, including those on economic questions and food supplies...

At the economic committee Nash took the opportunity to press his own views, equally novel to most of his audience. He described the guaranteed price and the importance of the ‘nutrition movement’. Improved standards of nutrition might mean bulk purchase of food at agreed prices, but this was ‘going beyond what the present government of the United Kingdom will undertake’. The second-best was ‘regulated expansion’ in food supplies – and in came his bilateral agreement, at some length.’ (pp.146-147).

Nash understood a subtle point as regards New Zealand’ position and its development post depression – a point not totally appreciated by many in New Zealand at that time. This was that if there was ever to be an even standard of living for the farming sector - not bust, but not boom either – then primary production levels would need to bear some relationship to demand. And then there was also another section of the community in New Zealand to be considered. You could argue here that in came Sutch, known ever since as the main and most persistent proponent of industrialisation in New Zealand, into Nash’s thinking, rather than imagining that it could ever have been the other way round. Sinclair elaborates on Nash’s thinking and also underpins this view:

‘Had Nash’s world economic order come about it would have involved not only state trading but state regulated production. This latter point was one he did not often stress in New Zealand for quantitative restrictions on production were quite unacceptable to farmers. It was, however, implicit in his scheme: the state could not pay guaranteed prices for limitless unsaleable produce, so production must be restricted to equal local and overseas demand. Nash elaborated these points in a talk [a good year though before Sutch was appointed Nash’s Secretary-Economist] to the Institute of International Affairs held in William Downie Stewart’s239house in Dunedin in 1934. Under the British Agricultural Marketing Act, he [had] said the British were regulating the marketing of agricultural products. The British policy of regulating supply would compel countries exporting to Great Britain to control their exports. (p.134).

New Zealand did of course, in those days, post-Ottawa, have a balancing agreement with Britain of sorts anyway. Generally, since 1932, it had been agreed that New Zealand would not encourage the setting up of any ‘uneconomic’ industries that might 239 New Zealand’s Finance Minister prior to Gordon Coates.

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compete with more economically produced British manufactures. There was always the risk, following Ottawa, that tariffs might be raised against New Zealand food imports to Britain should uneconomic industries be set up in New Zealand and so compete with British exports. The Nelson cotton mill, seen in this light, looks somewhat different. Set up in the manner it was it could always have been argued that the Nelson cotton mill, which would have provided jobs for that other section of the community, was also a new British industry rather than an ‘uneconomic’ New Zealand industry.240

***

Dr Sutch’s time at The United Nations (as Secretary General of the New Zealand delegation from 1947 to 1951) overlapped Evatt’s (he that had been so put out by the Petrov affair) period there also – as President (elected in 1948), of the General Assembly of the United Nations. Evatt had been Leader of the Australian delegation to the founding meeting of the United Nations in San Francisco in 1945241after which, and after three months of political wrangling, the Charter of the United Nations was completed – a Charter that now contains provisions for the protection of the ‘poor’ and the ‘weak’, provisions not considered worth contemplating by many then.

As President (in 1948) of the General Assembly of the United Nations he was party to the passing of the landmark Universal Declaration of Human Rights, a document that along with the UN Charter, he worked hard to achieve.

Sutch chaired the United Nations’ Social Commission in 1948 and 1949, and in 1950 he chaired UNICEF as well. Outspoken on issues of racial discrimination, he played a role in the creation of an Independent International Public Service, and also played a role in the United Nations decision to continue with UNICEF, which it did, despite American determination to close UNICEF down.

UNICEF was created by the United Nations in December 1946 so as to provide food, clothing and health care for children facing malnutrition and disease in the wake of World War II. In 1953, the UN General Assembly extended UNICEF’s mandate indefinitely and UNICEF began a global campaign against yaws, a disfiguring disease affecting millions of children, and one that can be cured with penicillin. This campaign was successful.

In 1959, The UN General Assembly adopted the Declaration of the Rights of the Child, which defined children’s rights to protection, education, health care, shelter and good

240 Ottawa, and Dr Sutch’s involvement in attempting to renegotiate this agreement, is mentioned before in Shallcrass’ introductory piece at the beginning of this work above footnote 1; and its’ ramifications, its imposition also, in main text after footnote 8. Ottawa, and Britain’s ‘rigid adherence’ to this agreement, is also touched on in Edition 214 of The Week – see that in main text after footnote 172.241 Alister McIntosh (Head of the Prime Minister’s Department, 1945-1966) was one of those that attended this founding meeting (from April to June 1945), along with NZ’s Prime Minister Fraser and Carl Berendsen (first Head of Prime Minister’s department – sent to Washington in 1944). Both signed the United Nations Charter on behalf of New Zealand on 26 June. In 1948 the Legation’s status in Washington, was raised to that of an Embassy and Berendsen became New Zealand’s first Ambassador to Washington. Appointed initially for three years, he remained there until 1952 - the incoming National Government (in 1949), finding no reason to replace him.

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nutrition, and in 1961 UNICEF expanded its interests so as to address the needs of the whole child. To that end UNICEF then began to concern itself with education - starting with support for teacher training and also with supplying classroom equipment wherever a need was anticipated. In 1965, UNICEF was awarded the Nobel Peace Prize – ‘For the promotion of Brotherhood among Nations.’

The case that the Americans’ have against Dr Sutch has been gone into over the years and the FBI files concerning Dr Sutch, says Brian Easton (Sutch’s only biographer so far), ‘are not especially revealing’. He has been ‘surprised how little the FBI have on them, although one suggests that what was on his security file in about 1956 was similar to what Marshall recounts242 [in 1989].’243

Another Week in politics?

Except for the least advanced small tribes, there are no societies where government is exercised directly by all in common; it is always in the hands of a minority chosen either by birth or by election; its scope may be large or small, according to circumstances, but it never comprises more than a limited circle of individuals.

Emile Durkheim, Paris, 1950.244

There was another accusation directed at Sutch (directed at this clever man who could also make a good case for almost anything out of practically nothing245) by another British secretary in 1961. This time in New Zealand and at that time not made much of, but also mentioned by Marshall in Volume Two of his Memoirs (1989). And Marshall also mentions the effect this bit of unpleasantness had on him as well:

‘On 6 February 1961, less than two months after we [regained] office, Cabinet met and decided what its basic policy should be if Britain applied to join the EEC...By early 1961, accumulating evidence from statements and comments by British ministers made it increasingly clear that the British Government was on the road to the European Common Market.

So the course was set, but the strategy and tactics remained to be settled. Cables and correspondence flew around the capitals of the Commonwealth and into London. Ministers and officials worked out the offensive [I’ll say] and defensive positions. Then at the beginning of July senior British ministers were despatched to the capitals of the Commonwealth for a full exchange of views before the British Government reached its decision on whether to open negotiations with the Six.

Duncan Sandys, the British Secretary of State for Commonwealth Relations, arrived in Wellington on 1 July 1961. He was a very

242 See before in this work after footnote 92. 243 Correspondence with Brian Easton, 8 April 2004. 244 Leçons de sociologie.245 See Parker and Robson in main text after footnote 30.

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able and distinguished minister, with the background of Eton and Oxford so typical of British Conservative cabinets of the day... We met from 3-5 July. He was supported on his side by the British High Commissioner (Sir Francis Cumming-Bruce) and his chief adviser, Sir Henry Lintott, and some secretarial staff. I was almost swamped on my side by an array of ministers and heads of the departments directly involved. In opening the discussions, Sandys affirmed that he was not seeking our agreement to any course of action, but he did want to identify the essential interests which we would wish to safeguard and the form these safeguards might take.

We asked for an assurance that special arrangements to maintain free and unrestricted entry for New Zealand products to the British market would be obtained by the British Government before ceding to the Treaty of Rome. Sandys insisted that we could not expect to continue to have free and unrestricted entry to the British market in the long term whatever happened. The British population was not increasing at the same rate as New Zealand production. British farm production was improving. If Britain entered the EEC the Common Agricultural policy would gradually take over and New Zealand produce would be excluded...

That paragraph summarises three days of discussions. A minor but interesting sideline was when the Evening Post published a story covering a confidential matter which had been discussed at the meeting quoting words which had been used. Duncan Sandys was upset about it. He told me that he had reason to believe that Dr Sutch had given the story to a reporter, and said he would be more at ease if Sutch did not attend further meetings. He added what I already knew, that the British Government had grave suspicions about Sutch’s loyalty. I said I did not think Sutch could be excluded in the absence of proof without creating an even more embarrassing situation.’ (pp.62-64).

This accusation would of course, have put Marshall somewhat on to the ‘back-foot’ for a moment (he certainly remembered this), this with further meetings due to take place, initial positions having been firmly put, etc, etc…All very familiar to Dr Sutch, probably (this sort of thing), a New Zealand public servant with a long history of dealings with the British stretching back to even before1936-37. An asset we know (thought so by some), and a difficult person to deal with we also know, thought so by others…

It being the case that doubts were being raised by the British again (and in a similar matter), might lead some to wonder if Sandys had arrived in New Zealand ‘forearmed’ as regards Dr Sutch rather than merely ‘forewarned’ as indeed he acknowledged he was (above).

The piece that appeared in the Wellington Evening Post on Friday 7 July 1961, and that led to Sutch’s loyalty being brought into question again, follows:

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‘AUSTRALIA AND E.C.M.

More Assurances By Mr. Sandys

Canberra, July 7, - The British Commonwealth Relations Secretary (Mr. Duncan Sandys) and the Australian Prime Minister (Mr. Robert Menzies) will have their first meeting today to consider the effects on Australia’s trade if Britain decides to join the European Common Market.

Mr Sandys is expected to assure Australia that Commonwealth primary products will continue to have free access to the British market if Britain joins the European Common Market according to the “Melbourne Herald’s” Canberra correspondent.

Trade authorities in Canberra believe that Mr. Sandys gave New Zealand an assurance that Britain would not join the Common Market if Commonwealth produce did not continue to have free access to the British Market, the correspondent said. They believe such an assurance would go a long way to removing Commonwealth objections to Britain joining with the other six European countries in an economic alliance.

The worst Commonwealth fears are that primary products from the six European countries will have free access to the British market, while Commonwealth products will face a tariff.

The Australian Minister for Trade (Mr. McEwen) had described this proposition as “unthinkable.”

This morning Mr. Sandys conferred with advisers accompanying him, and officials of the United Kingdom High Commissioner’s Office in Canberra. They gave Mr. Sandys an indication of public opinion in Australia, the correspondent said.No decision yet

In a brief Press conference at Sydney airport, Mr. Sandys again declared empathically that the British Government had as yet taken no decision whatever on the issue. “We have taken no decision to negotiate, and still further, of course, no decision to join,” he said.

Mr. Sandys said his talks in Wellington had been extremely good and had “cleared the air quite a lot and removed a number of misunderstandings”.

“I hope that as a result of our talks the people will be happier about the whole matter,” he said. “I hope they will trust us that not only will their interests be looked after, but we will consult with them closely at every stage when it is decided – and it has not been decided – to enter into discussions.”

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Mr. Sandys was asked to comment on a report from New Zealand that he had told the New Zealand Cabinet that it was essential for Britain to join the Common Market.

“I would like to know where that came from,” he said. “I don’t recognise that phrase.”’

And so find out where ‘that came from’ he did somehow? Or did he? One thing is for sure, Marshall never knew any more about this than he recounted years later though? And so there is another side to this isn’t there? For if it was not the case that Sandys was ‘forearmed’ rather than merely ‘forewarned’ as regards Sutch, how was it then that Sandys had so much confidence that Sutch had been the source of this? No member of the ‘party’ he was travelling with could have been the source of that information – not first hand anyway! And so this could only point towards another more local source providing that information to that ‘party’ if indeed this was provided?

And so there is yet another side to this as well then? For if Sandys, or some member of his party, was able to have been provided with this information, then why was Marshall not ‘armed’ with this as well?

Given proof, Marshall could have excluded Dr Sutch from further meetings, could have got over his embarrassment, and might even have been able to have dealt with Sutch soon after this as well - a good case being able to be put directly to Dr Sutch, with his only option (resignation) obvious. And this on better grounds as well, than led to his ‘retirement’ three years later and which led to a court case also.

And so was Marshall not trusted as well, or would knowledge of the source, once revealed, have further disturbed him? It is possible then, isn’t it, if that was not the case, that Sandys did arrive forearmed then.

There is also the possibility, of course, that Sutch may have been made sport of by Sandys as well - encouraged to do so by Hankey’s account of how he sorted the New Zealander’s out in 1937, of how he bagged Sutch for want of another perhaps..?

This can be worked towards by considering Sandys’ connections. For not only did Sandys have a close connection to New Zealand (his mother was a New Zealander, and much was made of this in the press at that time - no doubt evoking hope); but through his marriage he was also Winston Churchill’s son in law (not made anything of in the press at that time though, no doubt due to the recent divorce), and because of that he also had a close connection to Hankey - Churchill’s lifetime colleague and friend who was no doubt still receiving and entertaining visitors right up until his death at age eighty-six in 1963. Hankey probably even attended the wedding. Another summisation then – though not such a long shot as Parker’s when he tried to link Sutch with the Cohen’s/Kroger’s arrested in London the same year of Sandys visit to New Zealand in 1961. Why, we might ask, didn’t Sandys also mention that to Marshall as well then? Probably a timing thing we must suppose. Also, the file on all this must be sitting somewhere gathering dust also we must suppose as well…

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To round off again though, or to attempt to anyway, the closest that the Evening Post itself ever came to offering direct dissent as regards Sandys and his visit, was in its editorial the same day as the previous report. No report emanated from the Evening Post as regards the New Zealand Cabinet being told that it was ‘essential’ for Britain to join the Common Market, only that which was picked up on and reported on as from Australia.

We should remember Cockburn’s twin injunctions here then perhaps – that ‘facts do not lay about like pieces of gold ore in the Yukon days waiting to be picked up’; and also that you should ‘never believe anything until it has been officially denied.’ Perhaps that reporter had even read Cockburn’s, In Time of Trouble (1956) – not impossible, not even implausible. The English novelist, Graham Greene (a part-time British spy himself), was of the opinion that Cockburn was one of the ‘two greatest journalists of the twentieth century’ – the other one being G.K. Chesterton as well.246

That editorial then, anyway - from Wellington, New Zealand:

The Evening Post editorial, Friday 7 July 1961:

‘After Mr. Sandys What Next?

The danger of the meaty communiqué issued yesterday at the end of the talks between Mr. Sandys and the New Zealand Government is that it should be regarded as being an achievement in itself. Instead it was a starting point of what could be increasingly difficult and complex discussions in which New Zealand could have to fight harder and harder in the next few months.

These negotiations and the final communiqué are the first occasion, in spite of months and even years of discussion elsewhere, on which New Zealand has really faced up to the prospect that Britain might join the European Common Market. Instead of softening up New Zealand, the talks have toughened us up a little, a process which must be continued as the unqualified “where Britain goes, we go” atmosphere dissipates and we stand more on our own feet.SUCH success as has been attained in the discussions with Mr. Sandys must be measured against the regrettable fact that with the exception of very few voices – none of them in the political sphere – no previous attempt had been made to acknowledge the unwelcome prospects.

There had been plenty of warnings, ignored by those who should have been concerned. Nor would the political leaders allow themselves or members of their parties to be involved in public discussions on these vital matters before Mr. Sandys arrived.

246 See http://www.spartacus.schoolnet.co.uk/SPcockburn.htm for more on this.

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ONE question which members of Parliament should ask themselves, as individuals, is the extent to which they allowed their rights to be taken away, and to which the exercise of national sovereignty has been removed from the elected representatives of the people.

But on this question itself that is a side issue. The important point is that here has been a conspiracy of silence – a conspiracy to which Mr. Sandys was a willing partner throughout his stay.

IT is significant that while he was in New Zealand Mr. Sandys made not a single statement of any consequence outside yesterday’s communiqué. He was never subjected to questions put in public on Britain’s intentions.

Therefore it is only on the basis of what was actually stated in the communiqué that New Zealand can form a policy towards the future. Nothing else.

We are fortunate that the communiqué contained as much as it did, and not all the credit for that is due to those who actually conducted the negotiations. Voices raised and opinions expressed elsewhere played a significant part.

IT has been said that future discussions will be a matter of Commonwealth teamwork, although with New Zealand representing a special case which calls for special treatment. But it must be remembered that this issue is not being discussed at the outset on a team basis – except that a British team is going around the Commonwealth, member by affected member, to put to each individually the British point of view and seek as much support for it as can be obtained.

But we have been in first and our case is the strongest. We are the most dependent on Britain for the very good reason that Britain has fostered development of our primary industries, and we have the most to lose.’

And lose New Zealand did as well – this despite Marshall’s best efforts at circumventing this as well. He travelled repeatedly overseas after Sandys’ visit to lobby British and European politicians on New Zealand’s behalf, and he did gain concessions (with Sandys’ help, finally, as well), before Britain finally became a signatory to the Treaty of Rome - a Member of the European Economic Community - in 1973.

At that point the situation so far as New Zealand was affected was that there would be continued access to the British market for Lamb subject to a new twenty per cent duty, and for butter and cheese continued access for five years, and after that continued access for eighty per cent of New Zealand’s butter and for twenty percent of New Zealand’s cheese.

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Combined, earnings for New Zealand from these products up till that point had amounted to ninety-five per cent of New Zealand’s income from which ‘the imports essential for our domestic industries and for maintaining our standard of living’ were paid for.247 Marshall also explored other outlets for New Zealand lamb – most notably Teheran in 1964 from where he returned having had a health fright hoping for a quieter life, which he didn’t get. One reading for Dr Sutch being retired then could have been that it was the Parliamentary colleagues that shared Marshall’s workload for a while after he returned248 that recommended this.

And indeed Dr Sutch had not co-operated with Marshall on the New Zealand-Australia Free Trade Agreement (NAFTA), which Marshall had also had high hopes for. Though Dr Sutch had also been asked by Marshall to do so though, just a few weeks after the Nelson cotton mill project (one of a number of projects that Dr Sutch had previously had high hopes for as well), and with its building work completed as well, had been signed off at a cost of £500,000 in compensation to the new British owners on 13 January 1962. This would also have seemed a terrible waste of money to Dr Sutch – that especially if Marshall was right about him being a ‘miser’ as well as other character faults (from before). Sutch was also of the opinion, according to Marshall, that ‘our proposals for freer trade were a dangerous gap in the wall…Generally it was argued by New Zealand manufacturers that Australian industry was bigger and stronger with a home market five times larger. If we opened up our markets to those long-established, highly-developed and fiercely competitive Australian industries, New Zealand manufacturers would be put out of business, they said…’ 249

When this agreement was finally concluded though (NAFTA - in Canberra in August of 1965), one of the first organisations Marshall thanked at an after dinner speech following his return to New Zealand was the Auckland Manufacturer’s Association for their being difficult to deal with:

‘I thanked them for being “so unreasonable, pig-headed and obstructive”. Their attitude had strengthened my hand to get better safeguards for New Zealand.’250

Interestingly, one of the those that had always advocated to his Ministers on behalf of the Auckland Manufacturer’s Association was one W.B. Sutch – by then removed from the public service under protest and without Marshall stepping in either, to ensure that Dr. Sutch was able to see out his last two years of public service, in whatever capacity Marshall may have deemed fitting, and hence enter a dignified retirement. Rather he became the subject of conversation for a while instead.

247 See before in this work in footnote 67; and from Volume Two of Marshall’s Memoirs, 1989, p.67, as well…248 This is touched on before in main text after footnote 82. 249 In Volume Two of Marshall’s Memoirs, 1989, p.23.250 In Volume Two of Marshall’s Memoirs, 1989, p.28.

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Marshall’s entry into retirement was less than dignified as well though. For he was rolled by Muldoon on American Independence day not having enough support to hang on any longer himself.

And so there must be some irony there – these two influential men whom as young boys lived within coo’ee of each other, both of sober parents, both of whom studied Law at Victoria - one basically Roman Law though, and the other, the Poor Law, and it was there that their thinking parted.

For Sutch there had always been a ‘struggle [in New Zealand] between the strong and articulate who [wanted] the old colonial system, and the rising generations… victims of the philosophic structure of the nineteenth century’,251 and he was articulate also.252

For Marshall nothing could have been further from the truth – Sutch’s second edition of The Quest for Security in New Zealand (1966), an even more ‘biased and bitter version of our nation’s story’ than his first edition…’ Which ‘to his credit’ (not ‘full credit’ though), Marshall also said in the second volume of his Memoirs (1989), Dr Sutch had also ‘had the courage and independence, or perhaps it was arrogance, to stand by…’ 253

And perhaps it was that Marshall had also always expected Dr Sutch to be a little bitter anyway? And perhaps, also, Dr Sutch did become a little so? For it could be argued, after all else has been as well, that Dr Sutch, as often as not, was also always only fighting his own corner, and his compatriots, as he saw it, as well.

Dr Sutch has also been described by Brian Easton as ‘a symbol – a metaphor – on how to think about New Zealand.’254 As indeed we might say Marshall might have been as well. The difference once was though (and at a time, also, that counted as well), that one had far more sway than the other. Critics of a view like that might say that this was not so though - that Dr Sutch was more a leftover anyway, a leftover from within the ranks of the first Labour government as well (and a very left leaning lot they were as well). And so, and because of that, the two were never both symbols during the same time frame if even they could have been anyway. But that is not entirely so though, for Dr Sutch had far more sway in the second Labour government - this a period which also interrupted the extent of Marshall’s influence as well - than he ever did from within the ranks of the first. Though in the second he was close again to Nash, who was by then a very old Prime Minister, it could also be said (and has been), as well.

251 From Takeover New Zealand, 1972.252 With one thousand ‘items’ published and attributable to himself, ‘some of which contain personal reminiscences.’ See mention of this before in this work (p.53) and Brian Easton’s Paper, Trying to understand Dr Sutch, given at the Stout Research Centre Seminar Series, Wednesday 2 September 1998 at http://www.eastonbh.ac.nz/?p=49 . 253 See before in this work in main text after footnote 95.254 See Brian Easton’s Paper, Trying to understand Dr Sutch, given at the Stout Research Centre Seminar Series, Wednesday 2 September 1998 at http://www.eastonbh.ac.nz/?p=49 .

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There is also the question, not now of course, but back then anyway, of Dr Sutch’s involvement with Coates when it came to the setting up of the Reserve bank as well. It was opposition to this and other reforms that Dr Sutch had a hand in as part of Coates ‘brains trust’, that also split the National Coalition of United and Reform prior to the 1935 general election as well255– this which led, after that, to all conservative party members sitting on the opposition benches for the next fourteen years as well (up until 1949 – two years after Marshall first came into parliament as well).

And indeed when Marshall pointed out years later that Dr Sutch never did finish off his biography of Gordon Coates either;256 he could also just as easily have been saying that that showed that Dr Sutch never was non-partisan either; and also then that if he was going to take sides in politics then he might well have expected to have got hurt sometime as well then. And hurt, of course, Dr Sutch did get as well…

A year is a long time in politics as well? 257

There have been some attempts at finding a platform from which a more positive view of Dr Sutch’s life may be advanced, but these have never been very convincing in the main because of what has to be dealt with first – Dr Sutch’s meetings, clandestinely, with the KGB agent Razgovorov.

It has been noted, for instance, that the governments of both Chile and Australia were destabilised at around that same time as well - and so there has been the suggestion advanced that Dr Sutch and Razgovorov were somehow also led into an indiscreet pattern of meetings so that the Kirk and then Rowling Labour government in New Zealand could be ‘fatally’ discredited as well?258 How ‘they’ would have got these

255This mentioned first in this work in the main text after footnote 9. 256 See before in main text after footnote 90. 257 Something close to this expression, uttered by Joseph Chamberlain, is first mentioned before in this work in footnote 147. 258 See the latest, along these lines, in Jim Anderton’s Unsung Heroes (1999) - a rather neat summary (and only a little amiss, perhaps), of Dr Sutch’s life and of his trial, and of his trials before then, as well. In this work an opinion is offered on Marshall and on the part he played as regards Dr Sutch’s trials, as well: ‘Following Sutch’s death in 1975, a fellow senior public servant of the time, John Robson (Robson mentioned before in main text after footnote 29 & in footnote 30), made some public comment on his dismissal [from public service at the end of 1964]. Sutch may have been unfortunate in his minister, Robson thought; and there is some truth in that. Although Marshall is remembered as a gentlemanly figure, not all of those who worked with him endorsed this characterisation. He was known, for example, as a n anti-communist of violent views and for pursuing those with whim he disagreed with some vindictiveness. A different sort of minister who knew how to handle Sutch could have got a great deal out of him, Robson thought. But he went on to say: It is unreal to suggest that senior public servants should behave like a group of palace eunuchs, but if they choose to be identified in the public mind with a point of view then they cannot expect to escape the consequences of such a view. This means that a permanent head who is advocating radical changes in policy will almost invitingly be sailing close to the rocks. Accordingly there has to be careful regard for the climate of opinion and the prudent administrator will take soundings from time to time. Sutch had no wish to be a martyr but he did not seem to hear the raging storm until it was too late. Robson was stating a truth greater than he may have realised. Sutch refused throughout his career to be a political eunuch of any sort and was not afraid to put his job at risk [an over-exaggeration here

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meetings underway, of course, is the catch there? One suggestion has been that Razgovorov was offered an inducement for luring Dr Sutch into this indiscreet pattern of meetings - his defection would be garnered. But he never defected.

Maurice Shadbolt, of the opinion that the trial (that he covered for the New Zealand Listener), was farcical, offers his opinion as regards the trial in From the Edge of the Sky (1999) in like manner. And on what it was all about he finally offers an opinion as well:

‘Witnesses for the prosecution, mostly anonymous men of the SIS alphabetically labelled, were almost endearingly bizarre. No one to rival them had ever testified in a New Zealand court. Most had English accents and martial bearing; it wasn’t difficult to see them as survivors of the Empire, leftovers of Britain’s legions. None had a sense of humour. Their testimony was often weird. Mr Justice Beattie, trying to make sense of the proceedings in his court, eventually felt obliged to ask a question of an agent labelled Mr X; questions the prosecution was failing to ask. Mr X had given evidence concerning his observations of Dr Sutch over a five-month period from May 23, 1974 to September 1974. What time, Mr Justice Beattie asked, had the sun set while Mr X was on watch on May 23? About 6.30 to 6.45, answered Mr X. And on June 20? About the same time, said Mr X. July 25? The same. September 26? The same.

So now we knew. An intelligent schoolchild could have informed the unfortunate fellow that in the southern hemisphere the days of September were longer than the days of May; that there was a difference between winter and summer or autumn and spring. And now we knew why security operatives were better left nameless. Non-men who lived non-lives in non-seasons required no names. They knew no summer or winter, autumn or spring. They lived in the single season of the Gulag archipelagos of this world. It was more than a mental slum. It was, as persecuted and exiled Solzhenitzyn suggested, a sewer. There was no sunrise to be seen from the sewer. Just the sound of society’s plumbing. Just the smell of human waste.

The increasingly dysfunctional trial stumbled on from Monday to Friday. With agents of poor mental capacity, New Zealand’s

probably] as a consequence. In any event, Sutch was partly mollified by a position as industrial consultant to New Zealand Steel, and a member of both the Standards and the Consumer Councils. But there is no doubt that he found this affair traumatic, as he was to tell Robson in 1974, although in Robson’s assessment it had not made him in any way bitter. What is most likely to have infuriated Sutch’s political opponents was the coherence and consistency of his ideas and the eloquence with which he was capable of expressing them…All his life [Anderton also says] Sutch cared for far more than economics.’ (pp.63-65).

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SIS made an indifferent showing. As agent after agent collapsed in the witness box, the head of the SIS, a comic opera character named Brigadier Gilbert, perhaps of Gilbert and Sullivan fame, was reported to be on a heavy dose of valium [Shadbolt was on something himself as he wrote this as well]. He had good reason to be. On the other hand Sutch didn’t look that healthy either. (He would be dead before many months were gone.) There was a faint air of disdain as he looked over the crowded court. He didn’t take the witness box to clear up the mystery of his meetings with Mr Razgovorov of the KGB. His implausible written explanation259 did nothing to advance his cause. He had put himself on trial with so rickety a version of events. On the seventh and last day,260 to no one’s great surprise, he was acquitted. The rest of us were left wondering what the tawdry business had been about.

It would be more than another decade before I met up with something convincingly close to the truth of the matter. Unsurprisingly it wasn’t discovered in a courtroom. It was to drift into my possession from another direction altogether.

In the week I began this chapter, trying once more to make sense of the affair, I had a propitious caller. At my front door was Hector MacNeill, a retired lawyer and old student socialist colleague. Hector shared my fascination with the Sutch trial. He called whenever he turned up a nugget of new material. His timing, that midsummer day, couldn’t have been better. Synchronicity had a field day.

Working through my now dog-eared report of the case for the Listener, Hector had suddenly found all he wanted. The truth of the affair had been looking him in the face for years. I too had dutifully recorded the material without seeing its significance. Hector himself had read through it a dozen times without shouting Eureka. Up to this point we had both surmised that Sutch was, or might have been, clumsily spying on New Zealand on behalf of the Soviet Union. It was easier to accept the defence proposition that Sutch had been involved in a rather childish escapade, an innocent intrigue. Yet it didn’t make sense. Though the prosecution argued otherwise, Sutch had no secrets to interest the Soviet Union. He merely behaved as though he might have. It was not only the equivalent of murder without a body; it was like a murder trial with no known victim. Both the prosecution and the defence were pushing mindless narratives. If a spy, Sutch had not been an especially devious one. He had even recorded the dates and times of his meetings with Comrade Razgovorov in his office diary. Some modest midnight snooping by

259 Sent to Attorney-General Martyn Finlay and read out at court by the prosecution in his, Mr Savages, opening statement: He ‘had been approached early in 1974 at some function by a Russian whose name he did not know, and who said he wanted to speak to him about the Zionist movement in New Zealand.’ (As recounted by Parker in main text after footnote 36).260 The trial, from Monday to Friday, equals five, doesn’t it? So Shadbolt is playing, perhaps, here as well - something about them all resting from their great exertions on the seventh day, perhaps…?

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The SIS would have produced dates and times. Might this distinguished scholar really have been stupid enough to leave s timetable lying around? Stupidity, in any case, wasn’t a punishable crime.

So here we were, Hector and I, still puzzling over the affair twenty years later. Zionism – as Sutch himself had claimed – had been a major subject of discussion in the course of these nocturnal rambles with the Russian. Sutch’s explanation was that he belonged to the New Zealand-Israel association and was energetically involved in that organisation – actively pro-Jewish and with a healthy knowledge of Zionism. ‘There it is,’ Hector said. ‘There is what?’ I asked. ‘A Jewish connection,’ he said.

It all fell into place. Bill Sutch had been up to no good. That was no news. But he hadn’t been, as long alleged, spying on New Zealand and New Zealanders. He had been spying on Israel, if indirectly, and the Jewish community in New Zealand. In short, he had been on watch for the Kremlin, alerting the Soviet Union to the devious undertakings of Zionism in the southern hemisphere.’ (pp. 210-214).

Sinclair (who was also the first to make public the case previous to Dr Sutch being ‘caught out’ in 1974 – in his biography of Walter Nash, 1976), also, suggests Shadbolt, went with something like this as well. And thought also that it was because Dr Sutch had begun at some time supplying the Kremlin with information along those lines (mostly newspaper clippings, Shadbolt thought, and on the sort of thing that Shadbolt and Hector MacNeill have alerted us to now as well), that the Russians had had Dr Sutch ‘on the hook’ (or on the books then), for a long time as well. The only thing wrong with any of that, of course, is that the Russians could have sent their own newspaper clippings back from New Zealand from at least since 1944 probably – when New Zealand representatives (including Paddy Costello), were first sent to the Soviet Union as well.261 Though they couldn’t so easily have researched Jewish links with New Zealand, one supposes, as well

In Sinclair’s’ Penguin History of New Zealand (first published in 1959, but successively updated by himself up until 1991), there is no mention of any of these events that Dr Sutch got caught up in . Some mention, only, of Dr Sutch’s role in the Nash government (1957-60), and of how well suited he was to this as well – with Nash wishing to push forwards towards more economic independence for New Zealand at that time; and with Dr Sutch being his country’s ‘leading economic nationalist’ anyway; and with some mention of their achievements also…

Back to this suggestion that Razgovorov may have wished to defect then - which has also, in part, been dealt with by Marshall (below) - for that could have lured Dr Sutch (who had a lot to lose as regards his reputation then), in?

261 See this mentioned before - in footnote 133.

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‘Some friends of Sutch who could not bring themselves to believe that he was so committed to his socialist views have, in an attempt to explain away the unexplainable, suggested that Razgovorov might have been discussing with Sutch a plan to defect, but to defect merely required a visit to the appropriate authority. In any case if that were so why should he pick on Sutch as his intermediary? It was also claimed that Sutch had no secret information which he could have passed on and that on the face of it would seem to be so, unless Sutch was the intermediary for another mole or unless he was passing on commercial intelligence or assessments of individuals which the Russians considered to be of sufficient interest to justify the elaborate precautions which were taken. But whatever it was, no one has ever attempted to deny the facts and circumstances of Sutch’s association with Razgovorov of the KGB.’262

Michael Wall has also suggested in his novel Museum Street (on, p.149), that Razgovorov might have been working his way up to defecting as well - says that Dr Sutch said this himself two weeks after his trial had ended; says that he said that he had ended up wondering as much himself. The only respects in which Wall differs from Marshall in mentioning this as well though, is that Wall suggests that Dr Sutch suggested this himself (whereas Marshall suggests that ‘friends’ of his did instead); and in that Wall doesn’t then go on to ‘pooh pooh’ the suggestion quite as Marshall did after hearing this as well.

There is another respect in which this is pertinent as well. For if Dr Sutch had been ‘their man’ then they could have helped him out after this suggestion had been made, and that by filtering news back to New Zealand via perhaps the Australian press that Razgovorov had been sacked, or whatever, as he had indeed been trying to defect. And indeed there are precedents for this – leaking whatever always having been an everyday occurrence, everywhere. And the best time to have done this, of course, would have been before the trial actual as well – so that no later jury member, no matter how closeted in his or her daily life, would have missed out on picking up on this. No attempt on the part of the KGB was ever made to help Dr Sutch out though, and so we can presume from that that they were then also quite happy to see our man, or their so-called ‘mole’ as he has also been called by Marshall above, in the hole that he was then in?

And no helping him out with his reputation since then either. And the opportunity did present itself in 1995 when New Zealand’s television presenter, John Campbell, got himself as close to Dr Sutch’s KGB file as any could still probably get.263 So no helping him out ever for either some very good reason then (they will say that he was ‘their man’); or perhaps, even, because our man had dared to intrigue with their man, while their man was intriguing with him?

262 See before in this work, in main text after footnote 99. And mimicking this, maybe, Shadbolt in his text after footnote 258? 263 See footnote 303, later.

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Hard to believe that Dr Sutch could ever have gotten the better of them though? Though also hard to believe that Dr Sutch would ever have suggested about some Russian intelligence officer that he had once also considered a friend that he had also thought that this person might have been considering defecting? And that because of the possible consequences of a suggestion like that for that person back in the Soviet Union.

But then Razgovorov didn’t defect did he. And as Marshall has alluded to above, even if Razgovorov had been holding back because he may have worried that Dr Sutch was a bit ‘iffy’ as an intermediary; he needn’t have held back once he had been apprehended meeting with him, and by more ‘appropriate’ authorities as well. This, if any of this was so, and which could also have helped Dr Sutch out of the hole he was in, would also have puzzled him?

And so of course it could also have been that Dr Sutch felt no compunction about holding back then because of that. For he could have been strung along by Razgovorov by this suggestion as well; and also by the suggestion by Razgovorov that because of this, they had to take precautions when they were meeting as well?

Or, of course, it could have been that with the trial over at last, Dr Sutch was also gaining some perspective again as well? Indeed, he may even have realised by then, if not before then, that the KGB doesn’t easily make friends with anyone unless those persons are also easily taken in as well. And so what more could he have said, really. And he didn’t. And indeed an explanation along those lines also sits in Anderton’s recounting of this whole business as well - that Dr Sutch did not speak up for himself at his trial, as if he did have a fault: ‘it was that he had a vain side; the thought that he had been outwitted [let’s say by whomever, rather than go with the further suggestion that Razgovorov may have been duped by the same party as well] would have been hard for him to swallow [as well].’264

And the dupers, here, could of course have been the KGB – the evidence for that, perhaps, even being this defection question. For Razgovorov had no qualms about returning to the Soviet Union after this either, when surely his behaviour, in New Zealand, must have seemed suspicious when viewed from back there as well?

Unless, of course, he was behaving in New Zealand quite as he was expected to as well? And if Dr Sutch had behaved quite as they had expected him to as well, then why not help him out as well then, either before his trial, or later even, instead?

Unrealistic of us, we know, to have expected more from the KGB; but realistic, also, to have expected less from them as well – less, anyway, than for them to ever have confirmed that Dr Sutch was indeed one of theirs. No matter when, as well?

Marshall, then, has also suggested that even if not particularly active as a mole himself, then Dr Sutch might still have been an ‘intermediary’ for ‘another’ instead (above). Or that he might even have been passing on ‘commercial intelligence or assessments of individuals’ – that an undertaking that would also have justified the ‘elaborate precautions which were taken’ by he and Razgovorov as well (above as well). But even

264 See this mentioned in Anderton’s Unsung Heroes, 1999, p.66.

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if not at it on either of those accounts, these basic ‘facts’, still, cannot be denied (above as well)!

And so no let up, ever, for Dr Sutch by ‘Gentleman Jack’ Marshall either, when conversely we might have expected more from him as well? And that not just because he was a lawyer as well as a politician, but that also because it seems like he often had his ear to the ground as well…

Michael King, in his Penguin History of New Zealand (2003) - this, which succeeded Sinclair’s - does mention Dr Sutch’s arrest. And indeed in this history there might even be the ‘King hit’ so to speak? Prior to mention of Dr Sutch’s arrest (in a footnote, p.427 – one of the few in this history), and in amongst some discourse on others who may have been ‘spies’ as well (Costello and Milner and there is mention of Petrov as well), there is also, therein, the suggestion that while at the UN, ‘Sutch had been conducting clandestine meetings with Russian delegates [there as well].’ (p.425).

Ordinarily this might be enough for us as well then - except that Dr Sutch had not, since then (and for some twenty years after that as well), also been picked up for this in New Zealand?

Some special circumstance then - and also (instance Shadbolt above), agents of New Zealand’s secret service ended up looking a little foolish, and perhaps a little unnecessary as well then, at end of play also…?

***

See they come nowTo lamp me through inscrutable duskAnd down the catacombs of death.265

Other shows in town the week of Sandys’ visit to Wellington were a production of George Bernard Shaw’s My Fair Lady; and there was also a French Rugby team touring. Shaw, we might also like to remember here, was happy to be known as a Fabian. Fabians, so far as Trotsky, a real communist, was concerned, were nothing but:

‘Self-satisfied pedants, drivelling eclectics, sentimental careerists and liveried footmen of the bourgeoisie [and he thought that to] discredit them [meant] rendering a supreme service to historical progress.’266

At least our man was never that, but his arrest, at four in the morning near ten years after he had been ‘retired’, did finally finish him though, and so could this have been a Communist plot?

Well, it could have been, odd as this might seem, and serious consideration was given to something like this (though not as to whether Dr Sutch had been targeted in any way),

265 Sent to Ian Milner by Charles Brasch in May 1973. (Published in Collected Poems, 1984). Milner replied with a poem he penned entitled Wild Flowers.266 See footnote 63, before in this work.

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by the Chief Ombudsmen Sir Guy Powles, whose Inquiry into ‘the functions of the New Zealand Security Service’ [so as to address whether these were] in conformity with both the needs of our country and the character of our society…’267 got underway, after Prime Minister Rowling instructed the Ombudsman to undertake such an Inquiry on 8 August 1975. The ‘Sutch case’, Sir Guy Powles also looked at, he said, only so as ‘to gain further insight into the work of the Service by looking into a recent case… His guilt, or otherwise,’ he said, 'had already been decided by the courts.'268

Though on the case from then on, controversy as it ranged in New Zealand in 1974 and 1975 (beginning with Dr Sutch's arrest), and as it then became Sir Guy Powles business, did not abate. A most difficult new allegation was made shortly after Sir Guy Powles investigation began - this, that a ‘particular’ member of the New Zealand Security Intelligence Service had been targeted so as to ‘discredit’ him.

At the core of this controversy (this which had led, suggests Sir Guy Powles in his Report, p.103, to ‘the decision of the Prime Minister to ask me to undertake my inquiry into the Service…’) was ‘material’ likely intended for publication, but instead handed to Prime Minister Rowling on the tarmac of Auckland International Airport on 15 July 1975.269

Following this, and after a short inquiry undertaken by the Service (completed before Sir Guy Powles was instructed to begin his Inquiry), this ‘particular’ member of the Service had been ‘invited’ to resign by the first Director of the NZSIS, Brigadier Gilbert (nearing the mandatory age of retirement himself by then, which he did after he was knighted in June 1976).

Following that, and after Sir Guy Powles began his Inquiry, it was then asserted by the New Zealand Herald (on 2 September 1975), that, ‘Government authorities’ had, after Dr Sutch was charged (27 September 1974), but before his trial (17 - 21 February 1975), ‘received a warning that [this particular] member of the Security Intelligence Service could be “set up” [so as to discredit him].’ 270

Motives for this were also explored by the Herald, and included the obvious; the less obvious; and the not so obvious:

‘Motive remains a prime mystery. In security terms, the paper [passed over to Rowling] was of no consequence; indeed; it is understood that it carried no formal security classification. Except for the political embarrassment created later, the report was of little importance to anyone. Although in some circles it is still considered that the motive was purely political, there is a growing belief that one

267 From LETTER CONTAINING TERMS OF REFERENCE, addressed to Sir Guy Powles, The Ombudsman, by the Prime Minister of New Zealand, W.E. Rowling, 8 August 1975.268See the Report into the Security Intelligence Service initiated by Prime Minister Rowling on 8 August 1974, carried out by the Chief Ombudsman, Sir Guy Powles, and presented to Prime Minister Muldoon on 6 May 1976, p.102.269 Mentioned before in footnote 73270 New Zealand Herald, 2 September 1975.

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really logical purpose behind the bizarre sequence of events would be to compromise the security service. In recent years persistent efforts have been made to undermine the status of the Security Intelligence Service. Some of these activities have been based on general objections to any form of undercover surveillance or record keeping.From Outside

But other anti-security activities may be differently organised and, wittingly or unwittingly, could derive inspiration and financial backing from outside New Zealand.

The Soviet secret security service, the KGB, has a long record of hitting back at organisations and individuals who trouble it. It has been more than once embarrassed by the operations of the New Zealand security service. Following the exposure of Soviet involvement in events concerning Dr Sutch, two of the Russian Embassy staff in Wellington left New Zealand.’271

A second article, the next day, went a little further – reacting though to Prime Minister Rowling’s reaction to the first article the day before:

‘The Herald is satisfied that the report it published is entirely correct. It has been fully confirmed in the course of long and careful investigation. Whether the Soviet KGB or any other organisation was involved in the proposed “set up” is, of course, a matter of speculation, as the Herald report clearly indicated. Even so, the Herald suggests that it is not a possibility to be laughed off.’

As has been mentioned before in this work one of Sir Guy Powles extra ’recommendations’ when he reported back on 6 May 1976 (extra because this made by way of a Finding272), was that the NZSIS desist from assisting the media with its news gathering activities.

And in this he made it plain that he meant in the main the newspaper Truth which had run a series of defaming articles entitled ‘the Sutch files’ after the failed Sutch trial. This was meant to be the case anyway, following the arrest of Dr Sutch, for though Sir Guy Powles says in his Report that this sort of thing had happened before (instance Milner273), this had also been before a change of policy following Dr Sutch’s arrest:

271 Ibid. 272 See before in main text after footnote 70 & in footnote 71.273 When Ian Milner was invited by the Universities of Auckland and Canterbury to visit to as a temporary lecturer in 1967, the weekly publication Truth published an article on him - ‘…branding [him] an ‘ex spy’ for the Russians.’ This, said Milner (in Intersecting Lines…), ‘sent cold shivers up or down [Milner, forever the poet] influential academic spines’ causing the invitation to be withdrawn. (p.74). Milner did eventually revisit the land where he was also born (from February to December 1971), and gave lectures (well attended), as well. Milner does not say if here was any more of this, but in 1972, the Prime Minister, the Right Honourable J. R. Marshall, told the House [no actual date given, but this mentioned in Sir Guy Powles Report, p.70]

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‘I had ample evidence given to me by a former editor, by journalists, and by agents and ex-agents of the Service, of the Service’s contacts with the media, [though this was] prior to a change of policy made after the arrest of Dr Sutch.’ (p.70).

Sir Guy Powles Finding, finally, was:

‘A change in policy in 1974 under which the Service no longer either directly or indirectly provides stories, background material, or other material to the press, radio or television, except through the Prime Minister, was justified and proper and should be maintained...’ (p.71).

Whether this was a Finding, or was in fact a ‘recommendation’ is not exactly made plain by that, But this further controversy, which came after Sir Guy Powles Inquiry began (before which an agent had also been ‘retired’), and which involved another newspaper, Sir Guy Powles also ‘ranked’ alongside that…

This ‘ranking’ (set into the main body of the Report), was of course also meant to allay ‘public concerns’ (hard questions that had to answered had been put), and perhaps it did as well. Comforting as that may have been to the public, though, Sir Guy Powles then added at the end of the Report that he had little comfort to add for the Sutch family as he had seem some material that tended not to support concerns raised by them:

‘[He had] seen some material on the Service’s files which tends to contradict [allegations made by the Sutch family] that personal information about him [Dr Sutch] and his affairs [which had appeared in the Truth articles] could have been obtained only from the files of the Police and the Service [following] searches of Dr Sutch’s house, office and papers.’ (in Annex A, entitled, The Sutch Case, p.102).

He ended there though by saying that, ‘no further comment can be made in a public document.’(p.102). And that we can also take as meaning that Sir Guy Powles had seen for himself that ‘some’ of that which had been published was not only the property of the NZSIS to share - there having been some scrambling for ‘connections’ to ? in the wake of Dr Sutch’s arrest. Well before this though (in the main body of the Report, p.71), Sir Guy Powles had already said that so far as this ‘personal information’ was concerned (this same matter), he could not rule out the ‘possibility of a leak at some staff level in either of the agencies concerned [Police and the Service].’ Nowhere though, in the entire document, does Sir Guy Powles suggest that he had at hand the answer to this.

Nor was the Ombudsman totally convinced, either, that this particular agent had been the source of the material handed to Prime Minister Rowling on the tarmac of Auckland International Airport on 15 July 1975 – this even though ‘a body of evidence strongly

that ‘there was absolutely no truth [and no pun intended obviously] in the allegation that some (weekly) newspaper had access to security reports, and there was no evidence of such a thing.’

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suggested’ that he had been. Motive for this person having anything to do with this also eluded him:

‘It is far from easy, moreover, to produce a convincing explanation as to the motive [this agent] might have had in sending the documents to [this person]. I considered the possibility that somebody else in the Service was responsible for the leak, and deliberately left a trail of evidence to implicate [this person]. There is no evidence to suggest this. [This person] himself said to me that he believed that none of his colleagues in the Service would have any reason to do this. Finally, I did what I could to discover whether there was any basis for a story which appeared in the New Zealand Herald [suggesting] that [this agent] had been “set up” by the KGB and that advance warning that this would happen had been given to “Government authorities”.274

This ‘agent’ continued to deny long after this that he had anything to with this, and what also complicated this for the Ombudsman was the confidence the editor of the New Zealand Herald (who had written these articles himself), had in this story, the source of which he also would never reveal

***

A motive for the ‘Service’ having something to do with this material finding its way to press is not that difficult to imagine when you consider what these documents handed over to Prime Minister Rowling also suggested. Not just that Dr Sutch had been a member of a ‘secret think-tank’, set up because, these documents also suggested, Prime Minister Kirk did not entirely trust his then Finance Minister, Bill Rowling (this was embarrassing for Rowling later), but also because there was also, implicit in all this, the suggestion of a link (Sutch), between Kirk, when he was Prime Minister, and the KGB.

Though you would have thought, wouldn’t you, that Brigadier Gilbert would have thought Rowling, well remembered as a sensible person, and an ex-army officer like himself (Colonel Commandant also, after his service overseas, of the RNZAEG), a safe enough pair of hands for this anyway. The person who handed these documents to him obviously thought so anyway and Gilbert likely would have as well? No need for this ‘leak’ then?

More likely then, the motive for this ‘leak’ was political, meant to discredit the Labour Party, an action also taken by someone able to – the identified agent. Though ‘suggestions [subsequent to this affair becoming more public] that the leaked documents were part of a National Party plot to discredit Labour were denied totally and angrily by Muldoon.’275 Muldoon also saw all this as incidental:

274 In Annex B of the Report, (pp.103-04).275 See before in main text after footnote 73.

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‘Labour suffered during 1975 from some extraordinary antics. In late 1974 Dr W.B. Sutch, a former Secretary of Industries and Commerce was arrested by the police and charged under the Official Secrets Act. He was finally acquitted, but in the course of the trial and as a result of subsequent publicity, it became known that Gerald O’Brien, Labour member of Parliament for Island Bay and Vice President of the Labour Party, had been in touch with Dr Sutch and various other people on behalf of Prime Minister Kirk to set up a “Think Tank” to give the Government alternative economic advice from that which it was getting from its official advisors. It also became known that the Minister of Finance and now Prime Minister, Wallace Rowling, was not aware of these approaches.’276

Rowling himself though, did become convinced that he had been caught up in a plot. This from his biographer, John Henderson:

‘On 15 July [1975], Bill Rowling was handed, while at Auckland airport, the Police ‘job sheet’ of a Sutch case interview with the Island Bay M.P., Gerald O’Brien. The Police interview had been made available to the SIS and subsequently leaked. In August Bill Rowling released a copy of the leaked paper with two sections excised at his direction. But, confronted with the fact that the media had copies of the memorandum, he later released the excised portions and admitted the earlier excising decision was an ‘error of judgement’.

The first of the excised portions stated:

‘At about this time, Kirk did not think that Rowling was following the monetary policies or the policy of the Labour Party. He wanted to get rid of Bennett, president of the Labour Party, and make him ambassador to Pakistan. He was then going to get O’Brien to take over leadership of the Labour Party.

‘Kirk showed O’Brien a letter he had written to the Governor of the Reserve bank indicating Labour Party policies on money matters as discussed in Cabinet and he showed him a similar letter written on the same meeting that Rowling had written.

‘Rowling’s interpretation was completely different to that of Kirk. Kirk at this stage wanted to get rid of four Cabinet Ministers. O’Brien would not say who because he reckoned that he was the only person other than Kirk who knew.’

The second portion of the excised part stated:

‘His brief from Kirk was to ascertain what the hold up in economic policy was and that Ministers who were responsible for that hold up were Rowling, Moyle and Douglas.’

276 From Muldoon, by Muldoon, 1977, p.109.

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Bill Rowling asserted that he had cut out those portions because they would appear to reflect on people who had no ability to comment. ‘What I was trying to do was to keep out others. At no stage have I attempted to deny that I was named.’

He admitted that he remained ‘bugged’ by the motive for the leak. ‘I have failed to find any motive other than it was intended to embarrass the Government.’

On reflection [circa 1980 presumably], Bill Rowling is convinced that the document was planted and he was being set up. His mistake was not releasing the document in its entirety. It was an embarrassing time for Bill Rowling [having been so-named, and it] once again opened up awkward questions about the O’Brien ‘think-tank’, and Labour’s handling of the economy.’277 So far as there were ‘hold ups’ in economic policy, this was a difficult time not just economically. Following the October 1973 Yon Kippur war, there was an economic slump everywhere due to a rapid increase in the cost of oil. In New Zealand this saw the cost of both importing and exporting increase, and this at a time also when export levels were static and there was uncertainty due to Britain’s entry that same year into the European Economic Community (EEC).278 And as the third Labour Government tried to push forwards somehow anyway, their Parliamentary Leader’s health also slumped after he entered hospital for a varicose vein operation on 9 April 1974. Henderson continues:

‘There was during this difficult period of Kirk’s illness, what Michael Bassett has called a ‘sense of drift’. Caucus met only once between 28 March and 2 May. Hugh Watt, as Deputy Prime Minister, was ostensibly in control, but he lacked the authority of Norman Kirk. Growing disenchantment was evident in Caucus. It seemed that Labour had lost its direction. It was clear that there needed to be a firm hand on the helm. But Kirk no longer had the physical strength.

The combination of Kirk’s illness and the oil crisis presented particular problems for Bill Rowling. He just could not get Norman Kirk to accept the grim situation. In Cabinet he often found himself leading the forces for ‘economic reality’ – assisted by such ministers as Colin Moyle, Roger Douglas and Bob Tizard. Following Kirk’s death Bob Tizard reflected that during the Prime Minister’s illness the economy did not get the priority some Minister’s believed essential: ‘Norman Kirk was a gut politician. But in those weeks he couldn’t get a “feel’ for the way to solve the economic problems so he tended to go round and round them.’

277 From John Henderson’s, Rowling: The Man and the Myth, 1981, (pp.132-33).278 There must have been some ‘conservative resistance’ to Britain’s entry finally into the European community of nations even though Labour was in then, as a referendum was held in Britain (the first ever there - on 5 June 1975, as to whether Britain should continue on that path. Marshall may well have been holding his breath (Dr Sutch even), but the majority decision, by 2 – 1, was that Britain should continue on that path, and it did…

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It was at this time that Kirk started consulting his informal economic ‘think-tank279which included Jack Lewin, Dr Bill Sutch and Gerald O’Brien. The meetings, which were held at Kirk’s initiative, canvassed some radical economic solutions.

Bill Rowling maintains that he was aware of the meetings. He believes that the people involved were asked to prepare a position paper. It was not a permanent advisory group.

Rowling’s view is substantiated [Henderson continues] by Kirk’s former private secretary, Margaret Hayward, who has written that she ‘knew nothing of Mr K initiating anything resembling a ‘Think-Tank’. She added: ‘Mr K may have asked Gerald O’Brien, who was always advocating monetary reform, to find out where the hold-ups were in the implementation of Labour’s finance policy, but it seemed to us extremely unlikely that he would have chosen him to initiate a secret policy-making group.’ Bill Rowling claims that he did not resent the fact that Kirk was seeking independent ‘outside’ advice. Indeed there is merit in the general principle of a Prime Minster seeking alternative advice. But Kirk’s actions in this case were symptomatic of a more fundamental failure, once he became ill, to keep the Labour Government working as an effective team.

It was a difficult, yet crucial period. Changes in the international economy made it essential to make adjustments at home...Meanwhile, as Kirk’s health deteriorated, his concern for conspiracies launched by his colleagues increased until it bordered on paranoia.’280 Hayward, Kirk’s former private secretary (mentioned by Henderson above), has said a little more on the ‘think tank’ affair than he has mentioned as well:

‘Gerald O’Brien was another whose name [like hers] “figured prominently” in Dr Sutch’s diary, and so had been interviewed by the two detectives somewhat earlier [than her]. On 15 July 1975 Prime Minister Bill Rowling had been handed a copy [at Auckland International airport] of a leaked SIS report of the police interview with O’Brien.

It became known as the “Think-Tank” report. Amid intense media speculation, Truth, which seemed to have remarkable

279 In mid-May, according to Michael Wall’s Museum Street, 1991, p.154 (After Dr Sutch’s first ‘open air’ meeting with Razgovorov, then - 18 April, but before, just before, the second – on 23 May 1974). They met before this, according to Wall also, at ‘a cocktail party’ (p.152). Indeed Dr Sutch also said something like this as well (according to Parker before, footnote 259) - in a letter addressed to the Attorney-General Dr Martyn Finlay, he ‘admitted [to] some of his meetings with the Russian. He had been approached early in 1974 at some function by a Russian whose name he did not know [then].’280 From John Henderson’s, Rowling: The Man and the Myth, 1981, (pp.99-101). This paranoia – understood or not – has been referred to earlier in this work in footnote 17. There, Gordon McLauchlan, author, journalist, refers to Kirk as having been ‘a paranoid idealist.’

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knowledge of the secret SIS document, contended that “Four powerful men” – Norman Kirk, Gerald O’Brien, Dr Bill Sutch and Jack Lewin – “together hatched a sinister scheme to socialise New Zealand.” Speculation became so great that on 11 August Bill Rowling released a censored version of the report. Almost a month later public opinion forced him to release the whole report. It revealed that Gerald O’Brien had told police Mr K wanted him to find out why Labour’s economic policies had not been implemented, and that Mr K was unhappy that some of his Ministers, including Bill Rowling, were too close to Treasury thinking when he wanted a fresh approach.

With revelation and counter-revelation, “Think-Tank” became a muddied word and no reputations were enhanced. Rex Willing and I knew nothing of Mr K’s initiating anything resembling a Think-Tank, nor did Joe Walding, who was of all his Ministers the one closest to Mr K.’ Mr K may have asked Gerald O’Brien... (continued above in main text after footnote 279)’281

Muldoon was not involved in any behind the scenes politics leading up to his successfully leading National back into government in 1975. Instance: he could have ended the Inquiry then as well (see the Report, p.15), but he didn’t. Last word here from his also not that well remembered self then - on the ‘hold ups’ for Labour:

‘Bills to implement 1972 [election promises] policy were bogged down at the law drafting stage, and towards the end of the session Bills were introduced for passage which finally had to be abandoned at the select Committee stage, while others were rushed through in an untidy form requiring inevitable amendment after the election.

There is a lesson to be learned from the Labour Government’s three years: it is that a totally inexperienced Administration should take time to find its feet before rushing ahead with new doctrinaire legislation.

One defeated Labour backbencher has claimed that senior officials in the Departments frustrated the Government’s legislative programme, but another explanation could be that those same senior officials knew from their long experience that some of the proposals were unworkable and endeavoured to persuade their Ministers that alternative courses of action should be followed.’282

***

This ‘turning’ of events has, of course, also led to speculation that Kirk was even murdered - one motive for this being that he may have been about to heed extreme advice given him by this ‘think tank’; that he may have been (and as has been

281 In Diary of the Kirk Years, 1981, (pp.316-317).282 From Muldoon, by Muldoon, 1977, (p.106).

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suggested, for example, by one of Michael Wall’s character’s in his novel Museum Street, 1991, pp. 152-56), about to nationalise (in line with Dr Sutch’s known thinking, apparently – same work), all of the banks and all of the insurance companies…this being policy left over from the thirties, apparently, but which the first Labour Government had been forced to back off from because ‘people got edgy, and the capital fund flowed out of the country.’ (p.153).

That Kirk may have been murdered (perhaps they did ‘stop him’ - p. 156 of Museum Street), should be put to one side though, for if he his health had been interfered with his doctor would have said something, and he didn’t and hasn’t since…

And it would have been easier, anyway, to have dealt with this by dealing with one of the others – with Dr Sutch, for instance, or Jack Lewin, or even Gerald O’Brien.

Jack Lewin has never complained of anything, but Gerald O’Brien did, actually, believe that he became the victim of a plot as well – though later after some of the fuss that he became so ‘understandably sick of’283had almost died down.

Like Dr Sutch and ‘Jack’ Marshall, he also grew up in the suburb of Brooklyn, Wellington. Born later than the other two (in 1924), he was young when he went to war and he returned with meritorious mention. Elected to parliament in 1969 his undoing came when he invited two youths back to his hotel room after a night out drinking in Christchurch in June of 1976. Later, one of the youths, wearing O’Brien’s distinctive suit jacket, was arrested elsewhere in the city for drunkenness. The next day the police visited a battered and bruised O’Brien and told him that a youth that had stolen his jacket had excused himself of this – saying that he and his friend had been subject to an unwelcome sexual advance by O’Brien. O’Brien was then read his rights and charged under the Crimes Act 1961, that ‘being a male he has indecently assaulted another male.’ Though in Court the complaint was not upheld, publicity (he identified himself as the person so accused before trial); and continuing friction with Bill Rowling over monetary policy, saw his political career ended – his nomination by his electorate for the 1978 election withdrawn.

As for Dr Sutch - well, while his credibility was damaged earlier than O’Brien’s, that as well, and even more apparently, was by his own hand also.

No argument with any of that then really - though a respective year each in the media glare probably did neither of these persons any good. Indeed, Dr Sutch died after his year in this glare…

The Dancing Bear in New Zealand?

No dancing bear was so genteel,Or half so dégagé [unrestrained].

William Cowper, 1731-1800.

283 Wall’s expression – in Museum Street, p.231.

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Politics being like that, what other type of plot might Gerald O’Brien and Dr Sutch have actually got caught up in? Bill Rowling as well?

The Profumo Affair (1963), only lightly touched on before (p.67), also began at Cliveden House, in 1961,284 when the Conservative Minister for War, John Profumo, was introduced at a weekend party held there to Christine Keeler who was staying on the estate – invited to live there by Dr Stephen Ward, who had been given use of a cottage there by Lord Astor in 1950. What caused Profumo’s downfall was the identity of Dr Ward’s other companion that weekend – Captain Eugene Ivanov, a GRU (Soviet Military Intelligence) master spy, his cover, assistant Naval attaché at the Soviet Embassy in London.

Profumo was soon enmeshed in an affair with Keeler who was at the same time having an affair with Ivanov – an affair that the Director-General of MI5, Sir Roger Hollis was accused of not taking enough notice of. The press, once the affair was fully underway, soon ‘became aware’ of the affair and Profumo was soon, also, forced to resign.

This whole affair, carefully managed, is now seen as having been ‘a carefully orchestrated Russian subversion triumph’ – which resulted in ‘the disgrace of a British Government minister [Profumo], the electoral defeat of his Conservative Party after 13 years in power [in 1964], the death of one of those present [Dr Ward committed suicide], serious doubts about a top spymaster [Hollis], and praise and promotion for a Soviet agent [Ivanov].’285 Thus one of the outcomes of the Profumo affair was also, of course, that Sandys (another Conservative Minister, amongst others, also linked in person to the scandal286), was no longer a Minister for quite some time after Labour, led by Harold Wilson, came into power in 1964, Wilson lasting till 1970 first time round.

We might also recall here, that the author of Spycatcher (1987), Peter Wright, was ‘tempted’287 to help bring into question Wilson’s loyalty during a short Conservative Edward ‘Ted’ Heath period in office again from1970 to 1974.288 That aside aside, one of the major ongoing problems Marshall experienced then when it came to negotiating for continued access to the British and European markets post Britain’s envisaged entry into the EEC, was a continuing change of Ministers and Marshall mentioned this in Volume Two of his Memoirs (1989) as well.

And Marshall also mentioned, alongside that, reading Peter Wright’s Spycatcher later as well (after 1987 then). Reflecting then on the problems he faced with those continuing negotiations, Marshall noted that, ‘in his Spycatcher book’ Peter Wright had revealed that even before the British began negotiating entry into the Common Market, ‘MI5 had

284 Cliveden House, also the residence where Rule Britannia was also first performed in 1770, is now an hotel - popular because of this affair.285 See Roger Boar & Nigel Blundell’s work: …Spies & Spymasters, 1984, (pp. 138-145).286 By Anthony Summers and Stephen Dorril, for instance, in their book, Honeytrap, 1987, p.208.287 Mentioned before in main text after footnote 155.288 Following that defeat Heath stepped aside for Margaret Thatcher (in 1975). Labour, in Government again at the end of 1974 was led, after Harold Wilson ‘unexpectedly resigned’ in 1976, by James Callaghan until 1979. Following Labour’s defeat then, the ‘Iron Lady’s’ (Margaret Thatcher) first term as Conservative/Tory Prime Minister began and ran until 1990.

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broken [in 1960] the French high and low grade ciphers encoding… messages in and out of the French Embassy in London’ (p.91); and that the British were reliant on this information in their negotiations with the French who at first opposed Britain’s entry into the European Economic system.289

What Marshall does not also mention in his Memoirs (1989) though, (and to be fair to him as well there is no reason why he should have), is that ‘in his Spycatcher book’ Peter Wright also revealed that in London in May of 1974, there had been a meeting of the Security and Intelligence Chiefs of the CAZAB group (Canada, Australia, New Zealand, America, and Britain), and that at that meeting, the Director-General of MI5, Sir Michael Hanley, had outlined, to the Intelligence Heads attending, the evidence that had gathered against Hollis (another of the outcomes of the Profumo affair - see page, before), so that damage-limitation action could be taken by each service if they felt that might be necessary.

In consideration of what damage-limitation may have involved in New Zealand then, it is relevant here to add that John Costello (no relation to Paddy Costello), another of the school of thought that also saw Hollis as the likely ‘fifth man’, says in his work Mask of Treachery (1988), that Hollis was as influential in the selection of staff for the new New Zealand Security Service (in 1957) as he had been in the selection of staff for ASIO as well (in 1949):

‘Hollis was later to perform a similar service for New Zealand when that country set up a security organization in 1957. Of the original nineteen officers in the New Zealand Intelligence Service, seven were said to have been recommended by Hollis and were British.’ (p.38).

***

Though the Ombudsman ‘ranked’ the Herald articles alongside the Truth’s earlier articles he never did get to the bottom of this. Indeed, even this ‘ranking’ was meant to ensure that this Herald editor continued to feel some pressure after Sir Guy Powles Report was published in 1976.

This was a bit unfair perhaps, as all the editor of Truth had done to satisfy Sir Guy Powles, was to deny that ‘there had been any information supplied to Truth by the Service or any members thereof’ during this period, and there was been no come back there. (see the Report, p.70).290

289 One of the reasons, incidentally, the French opposed Britain’s entry into the EEC was that Britain and America would not share their nuclear secrets with the French - which led, also incidentally, to their extensive testing programme in the Pacific. 290 Michael Wall, in his novel Museum Street (1991), has the source of at least the ‘think tank’ documents to the Truth as being a ‘PR man’ who worked for O’Brien’s National Party electorate opponent, and the SIS man ‘credited’ with being the source of the document leak.’ (p.231).This doesn’t make as much sense as it might seem to, for why risk putting these documents through other hands? A scattergun approach perhaps, aimed so as to ensure that when Truth received its copy they could have come from anywhere? The post would have sufficed for that though? A possibility, then, is that these documents were being handed about for some other reason anyway - before they were then handed to Rowling ‘by a former acquaintance in the Territorial Army’ of the agent ‘retired’ also (p.83)…and then sent by one of their

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Going for the throat (perhaps), Sir Guy Powles went for this other editor, though this editor may never have realised just where Sir Guy Powles was going with some of this. For it followed, didn’t it, that if this agent had been ‘set up’ by the KGB, then that also meant that the source of this story must also at some point have been KGB also. At what point though?

And so perhaps this editor was a little awake to where Sir Guy Powles was going with some of this then, for that might also explain some of his reticence? And to be fair to this editor here, there was always some scope for his being manipulated as well. This because it was not he that was advised in advance that this agent would be ‘set up’ (he did not claim this); rather it was some ‘authority’ (the story said), that was advised of this. His source also, it may fairly be presumed, was also a person he thought of as above politics or he would not have gone ahead with this story in the first place – would not have allowed himself or his ‘traditionally conservative and careful Auckland paper’291 to have been so used either?

Sir Guy Powles says that he saw this editor first, then ‘later corresponded with him in an attempt to get him to disclose the source of the story.’ (p.104 of the Report). And he also enquired of ‘all conceivable “Government authorities” [and this would have taken some time as well] as to whether any such warning had been given them, but this produced nothing whatever to substantiate the story.’ (ibid).

Finally, in whatever position this editor felt he was in, all he would finally say was that he was ‘feeling bound by professional ethics.’ (ibid).

Sir Guy Powles then found that all he finally could say in respect of this story (this which came after an agent had been ‘retired’, and after also his Inquiry had got underway), was that the ‘absence’ of ‘any denial’ that anyone in the service had been the source of this story (this by this editor), ‘left a cloud hanging over the Service’ – in his view though, ‘an unwarranted one.’(ibid).

And then he added, somewhat incredulously it seems, that the story taken to its logical conclusion also, of course, meant something extra:

‘The ‘implications of this story were obviously extremely serious [for] if [this NZSIS agent] had been “set up” by the KGB, this could presumably [also] only have been done [given that the material handed to Rowling at Auckland International airport was SIS property - marked so presumably] by a KGB agent inside the Service.’ (p.104).

***

Now while Brigadier Gilbert may have ground his teeth a little at this, and while this may have been reacted to generally with incredulity in New Zealand (intended?); some

number (certainly not likely from any soldier just back from Vietnam though) to Truth? A shot in the dark or a story completely missed? 291 Wall’s description - in Museum Street, p.232.

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credulity would have been given this by some in British security. For the possible damage done by Hollis (Head of MI5 from 1956 to 1965), and the question of how to limit/manage this was in the main their problem rather then New Zealand’s. And a problem that continued as well, up until at least 1981.

British security authorities also likely received an advance copy of Sir Guy Powles’ Report as well. As indeed they also later obtained (and this by nefarious means), an advance copy of Chapman Pincher’s book, Their Trade is Treachery, published in 1981 - publication of which just happened to coincide with British Prime Minister Margaret Thatcher’s statement in the House of Commons, that the rumours as regards the ‘loyalty’ of Sir Roger Henry Hollis were unfounded. Further, Thatcher stated, the suspicion that Sir Roger had ‘worked’ for the Russians had been ‘fully investigated’ in the 1970s and that was that.292

That this was a continuing problem for the British was not just because Pincher suggested in this book, in 1981, that Sir Roger Hollis may have been a Russian agent (the fifth man?). But also because, ‘in large part’, Pincher also claims, ‘in-house informants’ had inspired him towards this point of view.

And it follows, doesn’t it, that if MI5 had been a tight, unified and self-confident organisation once again by then (this case having been fully resolved after having been ‘fully investigated in the 1970s’), then Pincher would never have received such assistance with this book as well?

The American’s, also, were not satisfied until 1997 that Hollis had not betrayed the existence of the VENONA project, deciding then that it was more likely that Philby (who had been shown summaries of the translations in Washington in 1949), probably alerted the Russians to this for it was then that the Russians changed their codes around the globe. Hollis, and in this Peter Wright’s Spycatcher (1987) may have assisted as well, had been shown VENONA summaries the year before, in 1948 (and so why not after then the Americans may have thought as well then?)293

When though, just to complicate this for us, though not for the Americans apparently, Wright also says in Spycatcher, that ‘the match suddenly ceased in Australia after he [Hollis] returned from organising the setting up of ASIO [there].’294

Apart from that then, and apart also from the obvious motive for controversy as it arose in New Zealand in 1974 and 1975; do we not also possibly see a fingerprint here perhaps - an indication, maybe, of another hand in all this?

For it was a reasonable conclusion wasn’t it, a point well made, and an indication also of Sir Guy Powles own free hand, that if is this ‘particular’ agent had been ‘set up’ then he must have been ‘set up’ by some person inside the Service then…

292 Mentioned before in this work, in main text after footnote 58.293 See in main text after footnote 157.294 Ibid.

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This reasonable conclusion also indicates that Sir Guy Powles was never told of this CAZAB meeting in 1974 as well. For if he had been he would never have added this, not in a document made public anyway.

What was held back then from the public in Sir Guy Powles Report then? Very little probably, just the prior security concerns as regards Dr Sutch made public by Sinclair in his biography Walter Nash anyway - published at around the same time also as Sir Guy Powles Report was also released - in 1976.

Some mention therein, possibly, that persons in the part-time Army may have been handing around copies of the ‘think-tank’ documents before they became public (see footnote 290 before)…

But no mention therein, of the CAZAB meeting held in London two years before then, and after which it must have seemed at least possible that a KGB agent or two may have been inserted into both New Zealand and Australia’s new security services at their inception - and this because Sir Guy Powles did not hold back on this additional comment in his Report.

How important was this CAZAB meeting then? Not very perhaps? Not even worth a mention?

No, this was a very important meeting, says Pincher in one of his next books on Wright as well as Hollis, A Web of Deception: The Spycatcher Affair (1987). Though important, and with its ramifications still being covered up, he was still surprised though, when Peter Wright reopened the ‘case’ on television in 1984, though at least this confirmed an earlier story of his own:

‘The most sensitive matter which Wright openly discussed on television,295 and which must have caused deep concern in Whitehall, was his description of certain extremely secret meetings between the security and intelligence chiefs of Britain, the US and the white Commonwealth – Canada, Australia and New Zealand. I had written in The Times on 12 December 1981 that, at such a meeting in London, the visitors were given the facts about the investigation into Hollis [he having been given the facts himself by his ‘in-house informants’] so that they could make their own decision as to whether they needed to take any damage-limitation action in case he had been a Soviet agent. It had already been publicly reported by the Canadian Solicitor General that Canada had done so.

Government spokesmen had told inquirers that there was no truth in my statement in The Times and that such meetings did not occur – another deception – but Wright confirmed the essential details of the meeting.’ (pp.72-73).

295 In Britain, on Monday 16 July 1984, on a World in Action programme: The Spy who never was. Granada – 3 yrs also before Spycatcher was finally published in Australia in 1987.

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Perhaps it is still just we though, that are scrambling to make a connection here? For in this, there has been no queue before us?

In New Zealand though, we have not been the first. For in Michael Wall’s novel, Museum Street (1991), there is this from the trial of Dr Sutch - this, which at first reading just seems another attempt at smear as he does not get/go anywhere with this?

‘On Wednesday morning [19 February 1975], Dr Sutch is recovered sufficiently for the trial to continue...A former Labour Cabinet Minister to whom Sutch had once been responsible,296 who is now Ambassador to Italy,297 has been called as a character witness...298 Then comes the cross-examination. Has the witness any information as to Dr Sutch’s acceptance to other countries as far as classified information is concerned? He has not. Is the Ambassador aware of the British spies (and defectors) Philby299 and Blake?300 He is aware of them. Has he ever met Philby and Blake? He has not. Since neither side explains the significance of either Philby or Blake to this particular trial, Erin concludes that the questions have been triggered by rumours. The prosecution is on a fishing expedition.’(p.141). This ‘fishing’ with Holloway, also refers to the inexplicable (so far as both the National Party and the Service were concerned anyway), elevation by Nash of Dr Sutch to Head of Industries and Commerce after Labour was re-elected in1957 – this the Department that Holloway became Minister of then. This though, had been Nash’s decision solely, and he had not discussed this with Holloway - that revealed not by Wall though, but by Sinclair also, in his biography, Walter Nash, published one year after the trial and near the same time as Sir Guy Powles’ Report was released also (with very little excision, we are led to believe, also.

Sitting in at Dr Sutch’ trial was also, according to Wall, an observer for MI5 brought out from retirement and sent to New Zealand to observe proceedings. Probably so actually, even if this character was only added in for his story…

***

296Philip Holloway - former Minister of Industries and Commerce in the Nash led Government 1957-60.297 Alister McIntosh had been the previous Ambassador to Italy – New Zealand’s first, appointed in 1966, serving there for 3½-years.298 As was Sir Guy Powles also albeit under subpoena though – albeit, the albeit being Parker’s albeit though (see before in main text after footnote 39).299 Philby - the greatest spy ever it is said, and an admirer of Labour’s next Prime Minister, David Lange, as well, he said, in his biography, Philby (1988), a work by Phillip Knightly - this for his stand against nuclear proliferation (p.257 of Philby).300 George Blake, linguist (less well known of than Philby), joined MI6 in 1947 and was sent to Seoul to join with the small British Legation there in 1949. He was captured after Seoul was overrun by North Korean troops in 1950, four days after the Korean war began. Then, while a prisoner along with his colleagues kept in Chinese controlled Manchuria, he was recruited after volunteering his services to the KGB who had a base near where he was imprisoned provided for them by the Chinese. He was unmasked in 1961 (by another defector), and sentenced to 41 yrs in the Old Bailey (one year for every agent he betrayed to Moscow). He escaped from Wormwood Scrubs in 1966; and finally settled in Moscow where he wrote his memoirs, No Other Choice (1990). In this memoir he refutes that he was sentenced to 1yr for every agent he betrayed – pointing out that he actually betrayed many more than that.

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More apparent in New Zealand in 1974 was the hand of the KGB in the lead up to the arrest of Dr Sutch. This began all the controversy; and this following repeated meetings between Razgovorov and Sutch all out in the open and observed also by the NZSIS. And these, also, with these observers apparently not ever being noticed within the vicinity either?

In fact, so far as this finished Dr Sutch, this hand (of the KGB) seemed so apparent to some that allegations were also made (and considered as well), ‘that Dr Sutch was “framed” as a result of collusion between the Service and the KGB.’

There was ‘not a shred of truth’ in this though, and what’s more this was ‘damaging’, along with other allegations made, to ‘morale within the service,’ said Sir Guy Powles on, p.102, of his Report.

Yet there was something odd about all this, anyway, wasn’t there? For Razgovorov was a professional, apparently, and experienced (51yrs of age), as well: ‘…a member of Russia’s secret service’ according to Parker (before); ‘a career KGB intelligence officer’ according to Gustafson (before); ‘a KGB agent masquerading as a diplomat’ according to Marshall (before); and yet he was careless in his dealings with Dr Sutch?

That Razgovorov was careless could be countered though, by the fact that the NZSIS always knew in advance where and when the meetings were going to take place and so were roughly able to get into place (apart from the first time, presumably). This because, as Rowling has said in his biography by John Henderson, the NZSIS had ‘someone’ close enough to Dr Sutch to know this.

This leaves Dr Sutch, perhaps, behaving in an unprofessional manner then…

An instance, anyway, of just how much more care might have been taken by Razgovorov has been described by Sergei Kondrashev - the KGB officer assigned to George Blake (see footnote 300 above), in London:

‘First, true to his cover as cultural attaché, he accompanied a departing delegation of Soviet chess players to Heathrow airport. After returning to central London he then spent the day shopping and going to the cinema while a fellow KGB officer checked to see if he was being followed. [Then] he met up with Blake.’301

Other methods can and have been used by the KGB to throw watchers off as well. Such as deploying personal to behave as if they are involved in clandestine activities when in fact they are not. And by these persons, as well as actual agents, regularly engaging complete strangers in conversation as well (a new type of stranger danger – no joke now either!).302

301 In D.E. Murphy, S.A. Kondrashev and G. Bailey, Battleground Berlin: CIA vs KGB in the Cold War,

New Haven and London, Yale University Press, 1997, (p.216).

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Betrayed, not caught, Blake mentions, in his memoir No other Choice, (1990), that just how this came about was confirmed for himself by Peter Wright in his Spycatcher book:

‘In the course of further questioning it became clear to me that they must have a source in the Polish Intelligence Service at a pretty high level. Many years later, I found confirmation of this in Peter Wright’s book Spycatcher, in which he relates how one Michael Goleniewski (codename Sniper), allegedly a deputy head of the Polish Intelligence Service, who defected in 1959 to the Americans, had reported to the CIA that the Russians had two very important spies in Britain, one in the British Intelligence Service and one somewhere in the Navy. This report eventually led to the arrest, first, of Gordon Lonsdale and his group [which included the Krogers/Cohens] and then, a few months later, of myself.’ (pp.196-197).

Blake also says, in his memoir, that his resolve to continue to deny that he was this Soviet agent only weakened when his interrogators gave him (though the title for his memoir is all that might support this), an ‘out’ (though he describes this as more of an ‘in’ really):

‘The questioning went on...in ever decreasing circles [with his interrogators] revealing little bits of additional evidence in the process [until] whether by luck or planning, they hit upon the right psychological approach. What they said was this: ‘We know that you worked for the Soviets, but we understand why. While you were their prisoner in Korea you were tortured and made to confess that you were a British intelligence officer. From then on, you were blackmailed and had no [other] choice...’303 (from No other Choice, p.198).

That Blake might have been the ‘fifth man’ (he was also a Cambridge man) can be dismissed as well – and this because of detail that Wright reveals in Spycatcher also. For when Anatoli Golitsin, the first Russian Intelligence officer to defect to the West during the 1960s began to talk, the information that he supplied struck a chord. He said that although he couldn’t identify them, ‘he knew of a famous “Ring of Five” spies, recruited in Britain in the 1930s.’ (p.164). Blake, of course, was recruited much later - in 1947 (see footnote 300 above). MacLean and Burgess had already run by then as well (in 1951), and so this would, if you went with Golitsin, leave three others...

Following Golitsin’s defection Philby (no.3) soon came under suspicion as well - having apparently been assigned the code name ‘Stanley’ by Russian intelligence.’ ‘Stanley’, accordingly, was also able to be ‘connected with recent KGB operations in the Middle East.’ This, Wright says in Spycatcher, ‘fitted’ Philby perfectly for Philby was working then in Beirut for the Observer newspaper. (p.164).

302 This description comes from Games of Intelligence (pp.142-43), by Nigel West, Weidenfeld and Nicolson, London (1989).303 There is an introduction in this work, also, by Philby’s biographer, Phillip Knightly.

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And while Philby ran early in 1963 (confirming suspicion of himself), Blunt (no.4) was not ‘outed’ until 1964, until after he was betrayed by another he recruited into his group at Cambridge. This was Michael Straight, a wealthy, literary-minded American whose family was politically well connected in America, and whom feigned a nervous breakdown so as to return home and get away from the influence of Blunt. Offered the Chairmanship of the Advisory Council on the Arts in the US by President Kennedy, he was also offered a stark choice. For this job, which he wanted, also required an FBI security clearance. Rather than be investigated he came fully clean knowing full well that his previous association to the two Cambridge spies that had already run would be uncovered. One must suppose that he still thought he might land the job. He didn’t.

Michael Straight could, one also supposes, have been the fifth man, though he was never active as such. He also put pen to paper later, and in After a Long Silence (1983), he also excused himself from not coming forwards after he read of Burgess and Maclean running in 1951 - saying that he tried to contact British authorities about Blunt as well after this, but that this proved too difficult. He admitted also that this difficulty had a personal dimension to it. Blunt, apparently, was also not surprised when told that Straight had turned him in - expecting him, he said, to have done so sooner. They met again soon after this, this at Blunt’s request, and presumably Peter Wright had something to do with allowing this.

This leaves one still unknown? This according to Golitsin anyway - circa 1961 (above). And others since – like Pincher, 1981.

Hollis, while we are at it this, was not a Cambridge person - rather he went up to and left Oxford in the early 1930s. But Golitsin did not say that all ‘five’ had been anyway (above).

***

Does Peter Wright, who was the first to mention that this CAZAB meeting had taken place in 1974 (and on television as well – near ten years later), also, in his Spycatcher book, touch on these ‘events’ in New Zealand in 1974 & 1975?

No he does not. Though he does mention that in 1974 the Hollis affair ‘flickered briefly’ back into life.’ And though he does not say exactly why this was, this could have been (as he mentions this next), because a ‘fear of scandal’ still existed as regards the Profumo affair - this affair excused by Hollis?304

And at that time also because it seemed that Blunt might be dying and that he might also leave a testament to be read after his death:

‘More than a few reputations stood to be to suffer if their sexual peccadilloes from that time [the 60s] were circulated on Fleet Street, not least...Anthony Eden.’ (from Spycatcher, pp.372-73).

304 See the case against Hollis again if you wish in main text after footnote 58.

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Blunt, it seems, at some time and at the behest of his ‘Soviet controllers’, had once pursued the ‘hand’ of Winston Churchill’s daughter, Clarissa (Sandys married another – Diana). And Clarissa had, apparently, been a little impressed by Blunt as well. She had though, married another whom she’d been friendly with at the same time as well – Anthony Eden. He that had, as British Foreign Secretary, ‘publicly crossed over to Mr. Jordan’ at the League of Nations meeting that Dr Sutch had also attended with him as a stand-in delegate as well, and, ‘flourishing a pencil’ had persuaded him to modify a speech critical of the British Government policy as regards the League of Nations.305 He that had also succeeded Winston Churchill as Prime Minister, in 1955.

***

Peter Wright does, in his Spycatcher book, mention the Petrov affair in Australia in 1954, but this also, is only in keeping with ‘affairs’ in Britain:

Mention of the Petrov affair comes only in respect of Wright’s suspicion of another MI6 officer. This person being an Australian who also took early retirement shortly after Philby came under suspicion (that following ‘the first defection’ of the 1960s, of Golitsin, who ‘walked in’ to the American Embassy in Helsinki, Finland in 1961 – above).

Following retirement this ex-officer of MI6 then settled in Australia where he then took up a job with the Australian Overseas Intelligence-Gathering Organisation, ASIS (the equivalent, almost, of MI6). At that job, Wright says, this person learnt of the expected defection of Vladimir Petrov. This disturbed him, suggests Wright, because he had dealings before the war with a double agent named Vladimir Von Petrov, and he worried this might be him…

One of the very first Russian defectors (Walter Krivitsky, in 1937),306 had said, Wright recalled, that Vladimir Von Petrov (a white Russian émigré settled in Paris), had been an important agent for the GRU (Soviet Military Intelligence), with ‘good sources in Britain as well as in Germany.’ (p.125). The Germans had also thought highly of this person as well - and at the end of the war an Abwehr (German Intelligence) officer’s report on this Von Petrov also reached Philby’s desk. This report also named Von Petrov’s very good, but not direct, source in Britain - this Australian, Wright says….

On reading this report Philby is said by Wright to have then asked whom this person was by name (his office, apparently, was then just a few doors down the corridor), and

305 First mentioned in this work by Ian Milner in main text after footnote 161.306 Murdered by the KGB in Washington in 1941, though the verdict, at first, was suicide. In 1937, Krivitsky, a Soviet Intelligence Officer stationed in the Netherlands, offered, after his defection, the first hint that Philby had gone over to the Russians when he said that, ‘the Russian intelligence service had a young Englishman working for it in Spain under cover as a journalist.’ (in Phillip Knightley’s biography, Philby, 1988, p.57). Though this was read as obviously being Philby, this was not taken seriously then, ‘as the British security service had more pressing things to do than to work on this slender, and at that time, unimportant lead.’ (ibid). It is said that Philby may have provided the KGB with Krivitsky’s address – that he arranged this ‘intervention’ (ibid, p. 177).

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to have then marked the file ‘NFA, meaning no further action, before burying the report in the files’ (p.326), and wandering off down the corridor…

‘Years later’ this person, when he learnt of Vladimir Petrov’s307 expected defection, returned ‘almost immediately’ to Britain (Wright says), and contacted Philby. This despite having been warned also, not to have any further dealings with Philby after he left MI6 - that because of suspicion of Philby then, not of himself…

This contact did arouse suspicion of himself ultimately (Wrights) - as Petrov, Wright says, ‘from that date onwards…fell under suspicion in Australia, and when he noticed his safe had been tampered with [not exactly so actually] in the Soviet Embassy, he defected earlier than anticipated [not exactly so either] eluding by hours two burly KGB officers who had been sent out from Moscow [maybe] to bring him back.’ (p.327).

***

Very little of that which Wright has added here is exactly so, actually, and there is even a ‘maybe’? Petrov was even a little casual on the day of his defection – stopping off to see a colleague about to set sail for New Zealand?308

While it is unlikely that Hollis was a Soviet agent (for this hasn’t been confirmed yet; while the ‘fact’ that Dr Sutch was has been confirmed by the KGB - so why not Hollis we might ask, or even Ian Milner and Paddy Costello as well while we are at this - surely not because the KGB can be trusted now);309 unlikely also that Hollis had inserted

307 Vladimir [not Von] Petrov lived the rest of his life in Australia, and died of natural causes the same week as Ian Milner - in 1991.They would both, probably, gladly have swapped final resting places. Milner’s final resting place is not known though (this according to McNeish in the Epilogue to his Dance of the Peacocks, 2003). Could it be possible that he was cremated and his ashes returned to New Zealand? 308 See before in this work in main text after footnote 130, and see Nest of Traitors, 1974, pp. 135-43 also, for another reading of the lead up to Vladimir Petrov’s defection in Australia in 1954). 309 In a 20/20 documentary screened on Television 3 in New Zealand on 1 May 1995, an officer of External Affairs (formerly the KGB) in Moscow fronts, after Razgovorov wouldn’t, and says that Dr Sutch was ‘one of theirs’. In this programme, fronted by John Campbell, Razgovorov is said to be 72yrs old at that time (which made him 51 in 1974). Sir Wallace Rowling (‘Bill’ Rowling) also appears on the programme and says that the whole business never did ‘square’: ‘…within a few days of my becoming Prime Minister I was advised by the Security Intelligence Service that they had information that suggested there were to be a meeting at a certain place and such was the conviction that that was right; that they were informing the Police because the Police would be the appropriate people to intervene.’ Campbell then: ‘Sutch’s major contribution was an extraordinary foresight: Fearing the consequences of an over dependence on agriculture, Sutch promoted diversification.’Rowling again: ‘[The whole business] did not square up with what he [Dr Sutch] had done; with what I knew he had done for the country. When I think back on it years later he actually laid the foundation for a balanced economy in New Zealand. Today, we’ve only got to look at the statistics to see the worth of that, and of course, the social worth was immense…because these were the industries that gave jobs to New Zealanders.’ To add balance ourselves here, Chargé d’affaires, Alexei Makarov, also appears on the programme, and says that he saw a ‘package’, about ‘a ¼ inch thick’ that Dr Sutch gave Razgovorov, and that Vitaly Pertsev (listed as Embassy Superintendent), Razgovorov’s driver that night, handed him ‘in an agitated state’ for ‘safe keeping’. This whole affair, he said, also came as a complete surprise to himself. He had only just arrived back at the Embassy himself when Pertsev handed him this - his having been ‘earlier that evening at Parliament discussing the upcoming visit of a delegation of Soviet MPs.’ Asked what he believed was in this package (and he said enough in this programme to satisfy this person that he knew

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an agent into New Zealand’s professional intelligence service at its inception; that does not mean that having the loyalty of Hollis brought into question in the way that it was back then would not have pleased Russian Intelligence Heads immensely though. And we need not doubt, also, that they would have learnt of these ‘questions’ also…

And while not anticipated some of these ‘doubts’ about Hollis arose as a result of the Profumo affair as well (above).

But this (which did happen), may also have meant that Russian Intelligence Heads may have had to take some damage limitation measures of their own as they moved these doubts along?

Any investigation in New Zealand, for instance, may also have touched once again on the circumstances that led to Holland finally deciding to proceed with the formation of New Zealand’s more professional security service in 1956/57.

That New Zealand may once have had a serious security concern of its own was more than hinted at by Vladimir Petrov when he defected in Australia in 1954 - who said then that there was at that time a Russian point of contact in the Prime Minister’s Department in Wellington. This person, it was assumed at the time, must have been Dr Sutch, even though he was not part of the Prime Minister’s Department, and even though this was never thought by Lochore, nor by Prime Minister Holland either, to have been a satisfactory conclusion to that investigation.

This may have seemed confirmed though, when Sutch was finally observed meeting Razgovorov on more than one occasion in 1974.

And as Parker put it (in The SIS, 1979), this had ‘irked’ for years as well:

more than he let on that he did), he said: ‘I think it was a general consideration of Dr Sutch about the political and economic situation of New Zealand.’ Others have pointed out since, that although perhaps he shouldn’t have done this, if he did do this then he was only doing for the Russians what he had done for others as well and had been paid for – this in his capacity as a private consultant. It occurs, but this is not necessarily right, that Dr Sutch may have handed Razgovorov a wrapped up copy of his booklet Who owns New Zealand, published in 1973. In this booklet Dr Sutch expressed concern as to the level of foreign ownership in New Zealand. Foreign ownership and control then was very strong in new Zealand - in shipping, life insurance, car assembly, glass, nylon, wallpaper, watches and other steel items, aluminium, steel drums, stationery, electrical cables, lamps, bread, soap, chemicals, pharmaceuticals, toilet preparations, and spark plugs. None of this was very secret either though: A survey done in 1965 had indicated that 35% of manufacturing was foreign controlled (including dairy factories and meat works); and in 1973 another survey (by the Reserve Bank), had measured overseas influence again. Of sixty-three of the largest undertakings in the country then, eleven were 100% owned and controlled by overseas interests; and twenty-three were controlled but not totally owned by overseas interests (53% then). Further to this, which Dr Sutch obviously also thought too influential a situation politically, he argued that foreign-controlled firms could frustrate attempts by the New Zealand Government to set its own credit policy as well – this by dealing directly with overseas banks. Instead of foreign investment (leading to the risk of more foreign control), the New Zealand Government, he argued, should borrow money from overseas itself and re lend this itself within the country. This sort of thing had worked, it could be argued, in the 30s, and may have formed the core of his and Levin’s ‘think tank’ report - wherever that ended up?

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‘Where, then, had the information been coming from? Soviet intelligence operatives in far-off posts do have a way at times of over-stating the importance of their sources to raise their own status in the eyes of their Moscow Control. If a public servant had access to the PM’s Department and to some of its decision-making process, it may have been no large step in Legation eyes to “a contact in the Department”.’(p.22).

They had settled for Sutch then and years later had they settled for him again?

***

Preposterous to link the CAZAB meeting with Sutch’s arrest as well?

Well, not really when you consider that it probably should not be presumed that the Intelligence efforts of the Russians were at that time being directed any more independently than was the NZSIS operating at that time. Hollis, we might say (and we might also say that this may have been something that Lochore had foreseen as well), had at least seen to that. Instance, for example, Sandys having information, possibly, that Marshall did not have in 1961.310

We might even here, before we leave this CAZAB meeting, also add some perspective as to why Gilbert, who on the one hand is said to have suggested to Prime Minister Kirk (on 2 August 1974), that Sutch be merely asked about his meetings with Razgovorov; to his on the other hand (and spooked finally by this meeting in London three months before this), also leaving the Prime Minister with the firm conviction that they had a much bigger problem on their hands:

‘Friday, 2 August 1974. Brigadier Gilbert has been to see Mr K about “something serious in New Zealand’. After he left, Mr K looked as stern as I’ve ever seen him. Brigadier Gilbert had told him about a sinister figure who had been concerning the Security Intelligence Service for years. A “Mr Big” – who was Dr William Ball Sutch.’

I couldn’t believe it. But it seems from his own absolute certainty that they have told Mr K enough to convince him completely. He told me that for more than 20 years the SIS had suspected Dr Sutch of being a spy.311

If Dr Sutch ever had been that ‘big’ though, all that ever would have been noticed, surely, on the streets in Wellington that Dr Sutch traversed in 1974, would have been the odd chalk mark here and there, and that only noticed by the local kids.312 Continuing

310 Review the ‘Sandys affair’ above, if you wish, in main text following footnote 244.311 From Margaret Hayward’s, Diary of the Kirk Years, 1981 – see before in this work, also, in main text after footnote 74.312 This point is raised before in this work, in footnote 125, following citing of document D23: CONCERNING SECRET HIDING PLACES FOR DOCUMENTS.

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meetings, after the first between himself and Razgovorov (an introductory meeting perhaps),313 would have been unnecessary, and bad ‘tradecraft’ (as it is called), at that…

Confirmed (Dr Sutch), as that possible contact in the Prime Minister’s department in 1954 (it was Brigadier Gilbert, above, who mentioned in 1974 that Dr Sutch had been suspected of being a spy ‘for more than 20 years’ - though it couldn’t have been for much more than that as the NZSS only came into being in 1956314), we might ask: could this confirmation, for Russian Intelligence Heads, have also become an imperative then?

***

In consideration of that possibility, it seems worthwhile recalling here that Margaret Hayward (Prime Minister Kirks Secretary from March 1968 up until he died while in office on 31 August 1974), also mentions in her Diary of the Kirk Years (1981), that the ‘overseer’315 that Kirk had had in mind for some years for the NZSIS was Sir Alister McIntosh - Head of the Prime Minister’s Department in 1954:

‘[Mr K] has long suspected that the SIS uses the news media to get its propaganda across, and considers Truth its main outlet. For some years he has advocated the appointment of a person of integrity as an overseer of the SIS, someone accustomed to dealing with secret documents; a sort of ombudsman-guardian of civil rights. He has in mind the former Secretary of External Affairs [and head of the PM’s Dept], Alister McIntosh.’(p.127).

Sir Alister McIntosh was also one of those whom along with Foss Shanahan, and with Reuel Lochore, had drawn up the list for investigation into whom it might have been that was that Russian point of contact in the Prime Minister’s department in 1954.316 This list, it can be presumed, did not include themselves either?

Some leap, we know. But can anything be added to this apart from the fact that Lochore, Head of security in the Prime Minister’s department back then; and whom had known McIntosh over a long period of time also, had also, we could say, developed a ‘strong feeling’ about the man;317 and a feeling that he was also starting to make fairly plain by then as well (beginning in 1971318).

313 Michael Wall has suggested in his novel Museum Street (1991), that they met before this - at a ‘cocktail party’; and Sutch also said something like this (see footnote 279 before).314 See before in this work, in main text after footnote 42.315 This idea of Kirks is first mentioned before in footnote 72 & then again by Hayward in main text after footnote 76. 316 See mention of this before, in main text a page up from footnote 21.317 Review King though, on this, beginning, in main text, just above footnote 54.318 In main text after footnote 47

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There is this, which is only relevant in that McIntosh’s personal life may have been complicated,319 thereby opening up possible avenues for blackmail, which as blackmail goes can be occasioned by intimidation:

Some time in 1960 (he does not say exactly when), Maurice Shadbolt (who also covered the Sutch Trial in 1975 for The New Zealand Listener), recalls in his last memoir, From The Edge of the Sky (1999), that he received an unexpected visitor whose presence at his home, next door to Alister McIntosh’s weekend getaway property, he was sure would attract attention:

‘I had a mystery visit from a Soviet diplomat by the name of Lutsky. What did he want? He wasn’t disposed to make it clear. His wife and my wife [Gillian] talked about child-rearing in Russia and New Zealand. Mrs Lutsky clucked over Sean. Perhaps something I said early in the encounter suggested that I was unlikely to be a useful contact for Mr Lutsky. So there we were. I would never know what the meeting was about. I later learned that Comrade Lutsky was the KGB man in the Soviet legation. He left behind some Soviet magazines and a puzzled New Zealander. No doubt he was followed to Te Marua by some dedicated employee of the New Zealand Security Intelligence; Soviet diplomats were always followed. In this case they had a poser. The weekend cottage next to our dwelling was owned by the civil servant most concerned with New Zealand’s foreign affairs. He had been under a cloud as a left-leaning liberal. The cloud would be even murkier, with Mr Lutsky visiting Te Marua in his KGB limousine. It would surely be seen as suspicious...’ (p. 64).

And McIntosh had, in 1960, also accompanied Walter Nash overseas that year, on a tour, which had also included a visit to the Soviet Union.320

And in defence of Dr Sutch 14 years after then, Bungay also summed up some of the circumstances of the meetings between Dr Sutch and Razgovorov in 1974 – not very clandestine:

‘At the Hopper Street meeting the men had been standing in a doorway that was probably the most well lit place in the area. At the Upland Rd meeting a witness had agreed that Sutch had not been trying to hide himself in any way. A third meeting had been at Karori on a late shopping night, when the accused had been walking up and down probably the busiest part of the area. Meanwhile Russian vehicles had been doing everything they could

319 See McGibbon, Ian. 'McIntosh, Alister Donald Miles 1906 - 1978'.  Dictionary of New Zealand Biography, updated 11 December 2002. http://www.dnzb.govt.nz/dnzb/Find_Quick.asp?PersonEssay=5M13 In this update McGibbon reveals that McIntosh’s life was somewhat complicated by his homosexuality – ‘that glorious indiscretion’, as he [McIntosh] once described it… in an era when even the suspicion of homosexuality could destroy a career.’ Homosexuality, incidentally, in New Zealand, did not cease to be illegal until 9 July 1986, with a bill passed in parliament by 49 votes to 44. 320 Ibid for this also.

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to draw attention to themselves – such as jumping red lights, stopping outside the Karori tunnel and turning many corners.’321

***

This is a bit ‘thin’ this ‘fitting’ this with that of course. Allowing for a ‘distracting action’ on the part of Razgovorov (perhaps even from boredom), does though also allow for two significant loose ends left over from this whole business known solely up till now, and likely forever more as well, as the ‘Sutch [as his] affair’:

For the apparent lack of caution shown by Razgovorov (a professional apparently); and for the fact, also, that there would have been very little ‘business’ that the KGB could have transacted with Dr Sutch by then - his having been ‘out’ of government service for near ten years by then, and hence from access to anything meaningful by then as well

This is perhaps unfitting though, in that we do not have much other evidence of another person’s disloyalty. But then again it was only by a process something like this that Dr Sutch’s loyalty was brought into question in the first place as well (arguable perhaps, but see preface at our very beginning anyway).

This began with Lord Hankey in 1937 whose allegation was that Dr Sutch had leaked secret defence information, but who was wide of the mark by a day.322 Hankey may in fact have liked to have winged the imaginative Nash flying a bit high at that time perhaps? But as he couldn’t he may have aimed just a little lower down so as to discredit Nash a little anyway? Whatever - much of the fuss for Dr Sutch, not an entire innocent ever probably, but probably not ever guilty of very much, very often, either, followed on from that though…

When Duncan Sandys arrived in New Zealand in 1961, to confer as regards Britain’s possible entry into the Common Market, he, who also knew of this story (possibly even from Hankey), used this against him. This reminded Marshall of this allegation (he also said that he knew of this?) and this also ‘embarrassed’ him.323

Marshall also, the same year as Sandys’ visit, began socialising with Australian Prime Minister Robert Menzies when visiting Australia during NAFTA negotiations (they attended the cricket together). It is conjecture, but Menzies likely also asked Marshall at some time if they had ever worked out who had been that Russian point of contact in the Prime Minister’s Department in Wellington in 1954. If this did happen, this is something that Marshall may not have known of before this; may have enquired about when he returned to Wellington, and may also have been told what had been assumed?

The Americans, though they also worried about whom Dr Sutch talked to when he was at the UN in New York, also followed Lord Hankey’s lead, we suggest, in that they communicated to New Zealand’s security service that should Dr Sutch’s career proceed further they would regard New Zealand’s security (because of ‘defence

321 New Zealand Herald Saturday 22 February 1975.322 See before in main text after footnote 232 & in footnote 229.323 In main text after footnote 245.

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arrangements’324), as ‘suspect’. This harkens, we suggest, directly back to that which Hankey accused Dr Sutch of in 1937 – to the leaking of defence arrangements then between the Dominions and the United Kingdom.

Though Holland’s National government took notice of that and blocked Dr Sutch’s promotion between 1949 and 1957; Nash, in whose company Dr Sutch had been in 1937, didn’t. And on becoming Prime Minister himself in 1957325promoted him to Head of Industries and Commerce anyway.

And there he remained also until he became Marshall’s problem as well, and until, after that, he was finally eased out of public service in 1964. That two years before he would have had to retire anyway, but that, also, at the same time as New Zealand signed on for the American led conflict in Vietnam - that by sending twenty-five New Zealand Army Engineers (advisors, was the American term then) there.326

In ‘retirement’, but not completely retired, Dr Sutch finally also attracted the attention of the KGB? Their attention, possibly, so that the finger would be pointed at him just once more again? And then with the ‘fuss’ that ensued in the media, their man also pressed into a better position…?

The leaps may well be getting bigger, we know, but even the editor of Truth was not aware of where half (maybe all), of what Truth published during that period was coming from (to the Ombudsman’s direct question as to whether ‘there had been any information supplied to Truth by the Service or any members thereof’ during that period, he had replied that this was not so - see the Ombudsman’s Report, p.70).

And even if we are completely wide of the mark in some respect here, Sir Alister McIntosh’s appointment, as ‘overseer’ of the SIS in New Zealand, would have caused damage to relations between New Zealand and British Security in any case (probably, between New Zealand and the American’s as well, eventually…).

For though he came to be regarded ‘more favourably’ by the Americans after 1949 (this because he seemed to have a change of ‘heart’327 after Prime Minister Fraser returned from the Commonwealth Prime Minister’s conference in 1948 - returned and soon gave great offence to the ‘left wing’ in New Zealand by pushing through peace-time conscription so as to counter Chinese Communist expansion after the Communists

324 From Sinclair’s Walter Nash, 1976, pp.341-342: ‘After he became Prime Minster, Nash was informed by the Security Service that the National government had blocked Sutch’s promotion to the head of the Department of Industries and Commerce because the Americans said they would regard New Zealand’s security as suspect. (The United States communicated secret information to its ANZUS and SEATO ally.)…’ 325 The Nat’s swung back into Office in 1960 – until 1972.326 See before footnote 86.327

Before this apparent change of heart, Sir Alister had apparently (immediately after the Second World War), always been ‘reluctant to accept the notion that the Soviet Union was set on any more of an expansionist course than it had been before the war. Indeed, at the meetings and conferences that he attended on behalf of New Zealand post war, he often questioned the motives of the American and British representatives attending as regards policy being advocated by them so as to contain the Russians.’ (first mentioned before in main text after footnote 47.

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‘swept to power after one of the longest revolutions in history’328), he was never regarded so by the British.

And when he was ‘nominated by New Zealand as a candidate for the position of Commonwealth Secretary General in 1965, he withdrew before the ballot on the grounds of poor health – it apparently also being ‘evident’ that the British would appose his appointment on security grounds.’ Those security grounds being those already touched on directly above, but more so, apparently, those as in footnote 319 before.

Even after Kirk died (McIntosh’s appointment as ‘overseer’ of the NZSIS being what he had in mind329), there is no reason to believe that Rowling may not have agreed with his choice for ‘overseer’ of the Service either and for the same reason…

For McIntosh was a person who would have been seen by many then as a person above politics: his having been the senior advisor to four Prime Ministers (both National and Labour); also described ‘as New Zealand’s most influential public servant for more than twenty years – from 1945 until 1966.’330 Indeed Rowling was a person also affected by media controversy (embarrassed by the ‘think tank’ documents - this in the lead up to the next election as well), some of this laid at the door of the NZSIS then (an agent ‘retired’), some of this sort of thing though, having been laid at the door of the NZSIS long before then by Kirk, before, also, he became Prime Minister.

That this did not become the situation does not discount this as a factor worthy of inclusion here. For a game begun does not always ensure an outcome no matter what the press says. Indeed an even more serious situation may have prevailed then, than has been imagined before.

For though McIntosh was no longer part of the Prime Minister’s Department by then, some person just as comfortably part of the government’s bureaucracy as he had been, may have advanced notice to Razgovorov of the day on which Marshall’s knighthood was going to be announced?331

The only evidence that could ever be advanced for any connection between these two events though, is that the last meeting between Dr Sutch and Razgovorov (26

328 See Dryden on this before, in main text after footnote 16.329 Above in main text after footnote 315, before then in footnote 72 & in main text after footnote 76. 330 See bio details re: McIntosh before in main text after footnote 47 and for more see footnote 48.331 This knighthood conferred on Marshall was a good one at that. For Marshall was ‘the first person in New Zealand to be created a Knight Grand Cross (this the highest award in the Order of the British Empire.’ - see before at end of introductory piece by Shallcrass – above footnote 1). This conferred by Kirk not because he was a ‘warrior’ though, as in ‘knights of old’ (though Brian Easton has sensed in his appraisal of Marshall’s last word on Dr Sutch, that Marshall’s showed his near hidden ‘cold [war] warrior’ hand there (See In Brian Easton’s Paper, Trying to understand Dr Sutch, given at the Stout Research Centre Seminar Series, Wednesday 2 September 1998 http://www.eastonbh.ac.nz/?p=49 ); rather because Kirk thought he deserved it - ‘for his service to the country [and because this wouldn’t] hurt the Government.’( In Margaret Hayward’s, Diary of the Kirk Years, 1981, p.392). Hardly the impulse of a ‘paranoid’ person then (see Gordon McLaughlan before in footnote 17); an idealist, yes (the other part of what McLaughlan thought).

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September 1974), was brought forwards a week compared to the general pattern of the meetings up till then (that is once every five weeks).332

Alternately, it could have been Dr Sutch that was advanced notice of the day on which Marshall’s knighthood was going to be announced. This because the timeline, bearing in mind that the next meeting between Razgovorov and Dr Sutch was probably arranged at the conclusion of each meeting, was fine. Too fine probably…

On 28 August, the date of the fifth meeting between Razgovorov and Dr Sutch, the entry in the Diary of Kirk’s secretary (Margaret Hayward), concerns itself with Kirk’s deteriorating health (he died three days later). It is in the entry the day after 28 August, that there is first mention of Marshall’s knighthood:

‘Before putting himself to bed [the day before, the 28th] he had arranged for Jack Marshall to get a “good” knighthood, he says, and had told Jack, on the quiet [by phone presumably], what was coming up for him.’ (in Diary of the Kirk Years, 1981, p.302).

Thus this timeline is too fine probably. But provoked though (and possibly by this conjunction of events as well), it was this action finally taken by the NZSIS that as well as confirming for any that still doubted that Dr Sutch had been a Russian contact for many years, that also ‘kicked off’ more ‘media fuss’ than usual. And it was this ‘media fuss’ that also highlighted such contact as the NZSIS had had with the media for a long time before then as well (see main text after footnote 272 and footnote 273).

This did not see McIntosh promoted to ‘overseer’ of the NZSIS, though this must have been considered again.333 This did though, finally bring such contact as still existed between the NZSIS and the ‘media’ (this not in keeping with, ‘either the needs of [nor] the character of our [or any] society’ going forwards334), to an end.

***

Entries in Hayward’s Diary of the Kirk Years (1981) cease on Black Friday 13 September 1974. Obviously then, there is no entry for Thursday, 26 September 1974 - the date of the sixth and final meeting between Dr Sutch and Razgovorov, the meeting at which they were also finally apprehended (five days, before, also, Kirk died).

There is mention though, in the Afterwards in the Diary (after Kirk died), of Dr Sutch’s arrest, and also mention that before depositions were taken (on 23-24 October 1974), that two senior detectives questioned Hayward at her home as well

332 Prior to then though, there had been one exception to this – this being the meeting on 20 June 1974, which also occurred four weeks after the meeting of 23 May – see before footnotes 32 – 36.333 Prior to this the NZSIS had ‘vetoed [Kirk’s] suggestion that a person of good standing be appointed to oversee the Security Intelligence Service...’ (see Hayward on this before in main text after footnote 76). This would still have been Kirk’s or any Prime Minister’s prerogative though – given enough reason, or provoked enough…!334 This which Rowling directed the Ombudsman to settle as well -see in main text after footnote 266.

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‘Before Dr Sutch’s trial began on 22 October in the Magistrates Court, two senior detectives came to my home. They wanted to talk to me about Dr Sutch as I “figured prominently” [like O’Brien of the ‘think tank’ affair] in his diary. They knew where I had gone with Dr Sutch for coffee of lunch and which table we had sat at [?]. Why had I met Dr Sutch?

I explained what I had already recorded in this diary, that Dr Sutch wanted Mr K to make his Ministers take action on his proposals for the Broadcasting and Queen Elizabeth II Arts Council Bills, and the school for the Performing Arts. Mr K had asked me to listen to him. The detectives questioned me for some time in a gentlemanly manner. It belatedly occurred to me that I was suspected of being a go-between, passing information from the Prime Minister to Dr Sutch.’ (p.316)

Hayward is referring here, when she says that she ‘explained what I had already recorded in this diary’, to the entry of 23 May 1974 (the day, also, of the second evening meeting between Razgovorov and Dr Sutch) - not all of which she shared with these two senior detectives…For in that entry (that same day, and preceding the second meeting between Dr Sutch and Razgovorov by a few hours), Dr Sutch also alibied himself (it could be argued), so far as Prime Minister Kirk may have been concerned about him meeting with a Russian that evening:

‘Thursday, 23 may. The Press Gallery knew that there was a special meeting before Caucus today, and journalists speculated whether it was to present a Cabinet reshuffle to Caucus for approval or whether it was about the boss’ health, maybe even his resignation.

In fact it was about electricity charges. Mr K says Bill Rowling is pushing for charges to go up. But in spite of various electrical supply authorities recommending a 25 per cent rise, Mr K wants to hold charges because of his promise to the electorate in the 1972 campaign. If electricity costs go up, everything else goes up.

Often Rex335 and I agree we’d love to be flies on the wall at some Cabinet and Caucus meetings. Today was one such time. Afterwards Mr K gave us some idea of what had happened. In Cabinet he and Joe Walding had come out strongly against electricity charges. They had all had their say before Cabinet voted. The decision was to hold the price of electricity, but by a majority of only one vote

335 Rex Willing (first mentioned before in this work in main text after footnote 280, and in respect of the ‘think tank’ controversy as well), is formerly introduced in the introduction to Haywards Diary, entitled, ‘How it began’: ‘The Opposition office in the old General Assembly Library wing of Parliament Buildings had a staff of five. The private secretary was Dr Malcolm McNamara, in his 30s and with Labour sympathies, Rex Willing, was in his 40s, also loyal to Labour, and had worked in both the Industries and Commerce, and Statistics Departments [Sutch’s and Lewin’s previously]. There was one research typist, Mollie Bennett, an elderly messenger, Gordon Charteris, who had formerly been a tram driver, and I became the secretary-typist.’ (p.x).

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But Bill Rowling was quite prepared to lose his seat over the economics of it. Mr K said he’s frustrated by Bill’s conservative economic thinking. He himself would like to revise the whole financial structure. And he reminded us that the Labour Party’s financial policy, both in 1969 and 1972, said that for “the central decisions on credit policy it is essential that there should be one authority, with full information on world trends and a wide view of the New Zealand situation. The Reserve Bank336 must have this role.”

The policy also stated that other financial institutions would maintain their roles in the normal banking and exchange business except where this involved alterations in the level and cost of credit.

The Government has increased the Queen Elizabeth II Arts Council grant by 127 per cent, from $660,000 to $1.5 million. Henry May will be pleased with that. And I see he has also managed to get the Historic Places Trust and extra $63,000...

One person I hope will be grateful to Henry May for the big increase in his grant is the chairman of the Arts Council, Dr Sutch. Last month [April] he constantly phoned me in attempts to get appointments with Mr K, but now he seems to realise that Mr K is a sick man and deserves consideration. Sometimes, because Dr Sutch has been so persistent, I’ve lunched with him and listened to his concerns, to try and stop him bothering the boss. Then I’ve reported to Mr K.

I’ve wanted to know Dr Sutch better because of his books and his reputation for advanced thinking as an economist and as former head of the Department of Industries and Commerce...

Yet I’m puzzled. Having lunch with him, I see little evidence of the great man he is reputed to be. And he’s so transparent. He makes it obvious he feels infinitely superior to me, which is fair enough, but then he will flatter me because I’m from the Prime Minister’s office – or perhaps because he hopes I may echo some of Mr K’s thinking. None of it adds up to the great egalitarian I’ve heard so much about over the years. It’s as though some craving for status and recognition has affected his judgement.

The bill to re-shape the Arts Council has been greatly changed by the Caucus Arts Committee – that’s Michael Bassett,

336 This, Coates, on the advice of, and with the assistance of his ‘brains trust’ (Sutch and Lewin included), first set up in New Zealand in 1933. (Before, in main text before footnote 1 & in main text after footnote 8. Hayward also says in her Diary that she discussed Dr Sutch’s upcoming book on Coates with him [Sutch] as well. He admired him, he said, and said that he was ‘greatly misunderstood.’ (p.249 of The Diary…). Marshall, whom when he was young, had gone from Brooklyn in Wellington to live in Coates’ electorate of Kaipara for a while, bagged Sutch for not finishing this as well, was not impressed by that either - referred to before in main texts after footnotes 91 & 256.

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Russell Marshall, Rufus Rogers and Kerry Burke – from the original draft Dr Sutch put forward. It was introduced into the House on the very last day of the 1973 session, and over the recess a Select Committee has heard submissions.

Dr Sutch now tells me he is far from happy with what is happening to what he thinks of as his own bill. He is also unhappy because no action has been taken about his plan for a school for the performing arts, which he mooted about a year ago, although he knows the proposal is now with the Minister of Broadcasting Roger Douglas.

Dr Sutch is also annoyed with Mr K. he tells me he can’t understand why a Prime Minister can’t say to his colleagues “Do this,” and its done...There is one thing he’s pressing for. The Government of the USSR has suggested a cultural exchange between Russian and New Zealand writers. It has been proposed that some of Russia’s leading writers should visit New Zealand, and some of New Zealand’s best writers (led by himself, Dr Sutch explains) should visit Russia. The proposal is currently being considered by Foreign Affairs.

I’ve passed these points on to Mr K...’ (pp. 247-49).

Wondering often where this might ‘fit in’ we could conclude that Dr Sutch did want his day in Court. This because he did not, by way of an explanation for these meetings, mention this in his ‘letter’ sent three weeks after he was charged to the Attorney - General, Martyn Finlay. This which could have been checked with Hayward as well, and which may also have given him the ‘out’ that Finlay, he an old flatmate of Ian Milner and no ‘die hard’ conservative either, would probably have liked to have given him as well?

Instead, he said in his letter to the Attorney-General (this brought up by the prosecution at the opening of his trial), that ‘he had been approached early in 1974 at some function by a Russian whose name he did not know, and who said he wanted to speak to him about the Zionist movement in New Zealand.’337

This, which gave Dr Sutch no ‘out’, really (no matter even if this may have been truthful, and this may well have been Razgovorov’s actual form of approach to him as well – for whatever reason), also placed Finlay in an invidious position. For this was not, really, any sort of real explanation for the continuing, and clandestine as well, meetings?

Parker might have wondered at this later also? For he had Dr Sutch down in The SIS (1979), as a very imaginative person: as a ‘fugacious’ person (fleeting, evanescent, hard to capture or keep), who had ‘no doubt’ suggested ‘ideas to his counsel on ways to combat the charge [having] always been a man of ideas...’ Dr Sutch’s personality also, so Parker thought, rather neatly summarised by another friend of his (of Dr Sutch’s) by ‘the former Secretary of Justice Dr J. L. Robson, writing in the New Zealand Listener in

337 See before in main text after footnote 36

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October 1975 [and getting perhaps] as close as anyone would publicly to explaining the mind of Sutch: “A point with a flimsy factual base [could] be put by Sutch with such eloquence as to be irresistible, at least for the time being...”’338

Turnovsky also thought his friend wanted his day in Court – that he seemed bent on a ‘show’; that he had engaged ‘in a game of cloak and dagger without thought of guilt, or without even considering the consequences of his conduct drawing attention to him, because this was precisely what he sought to achieve.’339 But this for him though, could only possibly have been so because he was ‘a man with an obsessive urge to be acknowledged, feeling slighted by those he believed owed him recognition and respect.’340 But this was not totally so though, was it, as Kirk had been giving him attention, had sought his economic advice even (‘think tank’).

It being so that Dr Sutch may well, in the end, have wanted his day in Court, what might he have wished for, say, to begin with – say, on 23 May 1974 for instance, after his meeting with Hayward, before his second meeting with Razgovorov that evening, and at a time, also, when he may have felt favoured by Kirk because of this think tank initiative341 as well?

Nothing more, it is likely, than that the NZSIS go to Kirk then and tell him of these meetings then - this being as good as an admission, so far as Dr Sutch may have been concerned, that they had been watching him off and on for years as well. Dr Sutch may also have thought that his phone was ‘tapped’ as well and that Kirk might put a stop to that as well? (This he had complained of before in New York, to Turnovsky - and he had been right then as well342).

Some hope of that though, so Hayward says, as Kirk had been on at them about that sort of thing already, ‘unhappy about the way they tapped phones while assuring him they were not.’343

Gilbert did go and see Kirk eventually though, but some time later on 2 August 1974, and after two further meetings between Dr Sutch and Razgovorov, also observed, and after also, the NZSIS had given up trying to find some sort of context for these meetings themselves. It was then, also, that Gilbert is said to have suggested that they ‘seek an explanation from him [Dr Sutch] for his contacts with Razgovorov...’344

That these meetings between Dr Sutch and Razgovorov had taken place did not alarm Kirk as much as Gilbert may have thought they should have though - with Kirk known to have a good memory;345 and with Kirk, possibly, also being in possession of a

338 See before in main text after footnote 30.339 See before in main text after footnote 105.340 Ibid.341 This initiated since at least just before then – see footnote 279 and main text around this. 342 In main text after footnote 53.343 See before in main text after footnote 75.344 According to Gustafson before, in main text after footnote 70. 345 Said by Hayward to have had an exceptional memory: ‘It still amazes me, even after years of working for him, that he can memorise so much with just a brief glance.” – see, p.167 of the Diary of the Kirk

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possible context for the meetings as well then (that is, that meetings could have been taking place, albeit foolishly, re: this proposed visit by Russian writers to New Zealand and so on in return…above).

Prime Minister Kirk was left very annoyed as regards what Gilbert said about Dr Sutch’s ‘past activities’ though - none of this which he seemed to have known about either, this despite the notorious ‘K Files’ as well346 and he no doubt also wanted time to think. He was also very unwell.

The meetings between Razgovorov and Dr Sutch begun, continued…Kirk, who died just short of a month after this meeting with Gilbert, gave no warning to Dr Sutch then. Dr Sutch caught out and about finally was then charged after refusing to explain himself to Police and SIS agents (who did try and give him an out), that same evening.

Three weeks later he offered his explanation which was no explanation really (above347). The trial begun, ended inconclusively - the ‘Crown’ unable to ‘show’ just what it was that Dr Sutch may have had access to over and above that which the average citizen also had access to as well? And Dr Sutch, it seems, may well have wished for this finally as well - for a trial that would ‘show’ his countrymen and women their secret service as well.

And the Service had shown up as well. And the Service had stuck to the facts also. And while this was indeed, high drama, there was though, no (unless this is actually impossible) exaggeration (nor any new evidence as promised at the Deposition hearings either348).

Details, but no more than that, were given of the meetings. The agent who said that he saw Dr Sutch, ‘while with Razgovorov...raise his right knee and balance on it a briefcase, which he was carrying, for about 30 seconds’, at the fifth meeting349 on 28 August, did not say that he saw Dr Sutch hand anything over.

Dr Sutch’s secretary, who also appeared for the prosecution, and pointed out ‘cryptic entries’ denoting meetings with Razgovorov in Dr Sutch’s diary and in his hand, also said that Dr Sutch, ‘did take left-over milk350 at the office home with him at night.’

Bungay, in defence, pointed out that ‘ten years had elapsed since Dr Sutch was Head of the Department of Industries and Commerce.’ He said, ‘if the accused did obtain information... where [then] did he get it from...Doesn’t the trial stop there, really, in the practical sense?’351

It did in the end, and at some point Dr Sutch’s ‘alibi’ also surfaced – though Maurice Shadbolt, who recounts this in One of Ben’s (1993), does not say exactly when:

Years (1981).346 See in main text after footnote 100 and in footnote 101.347 In main text after footnote 336.348 See Parker in main text after footnote 31.349 In Hopper Street - not close to, but not that far away either, from Dr Sutch’s home in Todman Street.350 See this first mentioned in main text after footnote 1.351 See Parker in main text after footnote 39.

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‘Sutch unconvincingly explained that he had been interesting himself in the fate of Soviet writers. But why on wintry street corners? Why not before a log fire in a warm home? No one would have thought it exceptional for the chairman of the New Zealand Arts council to be entertaining a Soviet guest.’(p.231-232).

Could he have though? For though Marshall has said something like this as well,352 he has also said that after Dr Sutch’s term at the United Nations, he also remained under suspicion and passive surveillance all his ‘official’ life:

‘Back in New Zealand, from 1951 and for the rest of his official life, Sutch remained under suspicion and passive surveillance. Perhaps because he was aware of this, he himself maintained a passive political position, no longer “a very active member of the labour Party” and carefully discreet in his political contacts and comments. A security check, not long before his retirement in 1964, did reveal visits to the home of a member of the Communist Party, but no more than that...’353

And for the rest of his life as well - ‘for more than twenty years…’ said Gilbert before to Kirk in 1974354 (from Petrov’s defection in 1954 and up until 1974 then?? Remembering, also, that the Service wasn’t formed until two years after that as well…).

Whatever, but this interest in himself, and it seems that Dr Sutch would have been aware of at least some of this (instance his early retirement on what he may well have suspected was security advice as well), would have got to most; would also have affected the balance of his mind over time as well; would also have engendered fear at times as well.

How far might ‘they’ go, to ‘get’ him, for instance? That an argument, really, for him taking fewer risks also, rather than for him risking more? That in itself an argument also for him also having lost the full powers of his reasoning by at least the time of the first ‘clandestine’ meeting as well then? Or that in part anyway…

***

The trial over the ‘Service’ withdrew again from public light, but as it did a hidden hand was also revealed. For ‘some party’ also ensured that the focus remained on Dr Sutch. The damage to the Sutch family had already been great, Bungay had already said: ‘There had been publicity and gossip and the impact was tremendous.’ 355 But this was just the beginning, and this damaged the Service as well: Instance, the focus on the Sutch family was so great that the Sutch family alleged after the trial, ‘that personal information about him [Dr Sutch] and his affairs [and which appeared in articles in Truth] could have been obtained only from the files of the Police and the Service

352 See before in main text after footnote 98.353 Before, in main text after footnote 97. 354 In main text after footnote 74.355 New Zealand Herald, 21 February 1975.

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[following] searches of Dr Sutch’s house, office and papers.’ And then there were the ‘think tank’ documents, which could only have come from the Service.356

This led, in the end, not to the appointment of McIntosh as ‘overseer’ of the NZSIS, but rather to an Inquiry, for there was simply, in the end, too much of this, and so something had to be done about it. And even after the Inquiry began (after also, an agent had been ‘retired’), there was still more of this? Tough the Herald articles were the last of that? Presumably then, after that, ‘some party’ was satisfied then in some way? And then went away?

The one person, of course, who may not have been ‘interested’ in McIntosh being appointed ‘overseer’ of the NZSIS at that time may have been McIntosh himself though. For he told Kirk that that was it for him (Public Service), when he agreed late in 1973 to his ‘appointment’ as Chairman of the Broadcasting Council of New Zealand (this for a ‘difficult’ eighteen-month period357), after which he retired mid 1975, no doubt, so that he could also spend more time at his ‘getaway property’ (mentioned before by Shadbolt in main text after footnote 319), by the river at Te Marua, where he also had an extensive garden.358

That being so, then something was/is amiss here then..?

Not totally ‘amiss’ though, this could still leave us - if much of this was not just politics, and even if Dr Sutch had, along with many other New Zealanders then, hoped for some sort of intervention as regards the Service when Kirk was PM - with the possibility that the KGB did then ‘hit back’ after Prime Minister Rowling initiated his Inquiry instead of ‘this’ intervention?

356 All before in main text between footnote 268 & footnote 281.357 See in main text above footnote 48.358 McIntosh had always found the demands of his political masters considerable leading to him seldom being able to take annual leave, and so he had escaped when he could, to Te Marua, by the river, where he found relaxation in creating this extensive garden (this mentioned by, McGibbon, Ian. 'McIntosh, Alister Donald Miles 1906 - 1978'.  Dictionary of New Zealand Biography, updated 11 December 2002. http://www.dnzb.govt.nz/dnzb/Find_Quick.asp?PersonEssay=5M13 McIntosh’s ‘practice of discretion [McGibbon also mentions] which became integral to McIntosh’s private life, served him well in the public world. Accustomed to confiding his own innermost feelings and emotions to only a few people, he was well suited to being the moulder of New Zealand’s diplomatic service and a confidential adviser to governments and prime ministers over a period of more than two decades.’ This seems a reasonable suggestion to this person…except that McIntosh also sent Lochore, who could not keep his innermost thoughts to himself (see Turnovsky on these before), overseas to represent New Zealand’s interests? Perhaps McIntosh felt though, that sending Lochore overseas was in his country’s interests – bearing in mind that Lochore, prior to this, had also wished the run of the NZSS. This appointment, which did come closer to Lochore than we might think (that because of Parker’s work, The SIS), may well have also worried McIntosh, who always did have influence. In fact, although Michael King has provided an adequate explanation for Lochore finally going so far as to suggest that McIntosh may well have been an agent of the KGB, it might not be going too far here to also suggest that Lochore may well have got wind of McIntosh’s hand in his not getting the run of the new Service in 1956. And that it was this, actually, that led finally to this accusation, this because of what that added up to finally, for him? Sir Alister died at Wellington on 30 November 1978, and is well remembered, and he probably should be as well.

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Not totally ‘amiss’ this would also see our Herald editor near the mark as well then. Remarkably well informed also? But still a little ‘amiss’ though, in that the ‘story’, rather than the stories suggestion (that an agent had been ‘set up’), would have been the ‘hit back’.

With that suggestion leading in the end to the conclusion then (and well drawn for us by Sir Guy Powles and from outside the circle as well), that if this agent had been ‘set up’ by the KGB, then this could only, also, have been done from within the ranks of the Service as well. That given that the material handed to Rowling was Service property also?

Not totally ‘amiss’ then, we are also then left with the possibility that the KGB, having not succeeded in at least damaging relations between British and New Zealand security, was then finally ‘satisfied’ to just add to the doubts raised about Hollis in the wake of the Profumo affair – this before they left it at that, for then again, in New Zealand.

But not just at that though, for Hollis, Director - General of MI5 between 1956 and 1965 - as well as having had a hand in setting up the new New Zealand service in 1957 had also had a hand in ‘setting up’ the new Australian service, ASIO, before then in 1949 as well…359

The Empire strikes back?

Seven months after his trial (in Court), ended, Dr William Ball Sutch passed away at Wellington on 28 September 1975. His funeral was well attended and by Prime Minister Rowling as well. As Dr Sutch’s casket was being carried from the church an NZSIS officer who had given evidence against Dr Sutch was spotted ‘focussing with a camera, telephoto lens affixed, on the casket bearers and mourners’, and was chased away (in Parker’s work, The SIS, pp. 155-156). Returning to his office in Parliament buildings, Rowling, it is also said (in the afore mentioned work - same pages), to have also muttered that ‘an intolerable intrusion has been committed on the family’s private grief.’

This was that all right. But again, like so much that had happened in the past year not so pure and simple as just that perhaps? For the person that this photographer (able to be recognised by mourners that had attended the trial), was chased back to was not the Boss (Parker, in The SIS, also suggests). Rather he was the person who had run this ‘case’ from its beginnings - a ‘fairly small, intense, bespectacled man in his fifties, British-born, the professional’s professional, the closest example New Zealand [had] to John Le Carre’s Mr George Smiley, though with less of Smiley’s redeeming qualities. His tough mind, with its minimum of the Englishman’s natural humour, is not much given to thought of outsiders sensibilities.’ (pp.156-157).

Nor would he have missed his mate then, we must suppose, on the outside by then and whom had returned to whence he came from as well by then? Though you still would have thought, wouldn’t you, that by then no person from within the Service would have

359 See before in main text after footnote 289

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dared to have provoked the Prime Minister any more than he had already been up till then as well then?

Two weeks later Bill Rowling responded to this in a measured manner as well: It had ‘not been possible to establish the full facts of this distressing incident [Gilbert had been told that the Service had no cameras out that day]360 with absolute finality.’ He would, though, ‘impress on the Director of Security that his officers must exercise a proper sense of responsibility and [more] regard for the privacy of individuals.’

This was though, exactly that which Sir Guy Powles had already been asked to ‘ensure’ in the first place - that the ‘functions of the New Zealand Security Service [were] in conformity with both the needs of our country and the character of our society and our democratic form of government…’361 And so we might quite rightly have expected some comment in this Report on this as well then. For there was comment on whatever else might have been untoward Service not only from before then, but also of late as well? And yet no mention of this again?

Presumably then, some comment on this, and a possible recommendation or two as well (just so as to make sure), is appended to mention of this in this Report then. This entire matter though, kept back from the public then (and forever this will be as well), but not kept back then from Gilbert’s British and Australian counterparts as they went into damage control mode as well then, just in ‘case’ Hollis had been the ‘fifth man’, and as they also went about dealing out from play his most likely hands as well, from this, the greatest game of all time, as well.

This matter not only investigated in the 1970s then (as Thatcher said it had been362), but also dealt with then as well perhaps…? Hence Pincher’s ‘in-house informants’363 perhaps as well then, speaking from the outhouse..?

***

Postscript:

Following publication of the work Spy (2006), by the ex-NZ security service agent Kit Bennetts, and by the same publisher that had declined this work twice before then as well, an editorial and then a number of letters appeared in the New Zealand Herald. The letter that we found most interesting was published 9 October 2006:

“While the body of the Herald editorial [of 4 October 2006] on the Sutch case was measured in tone, the headline “Enduring study in treachery” was anything but.

360 See The SIS, 1979, p.157. 361 From LETTER CONTAINING TERMS OF REFERENCE, addressed to Sir Guy Powles, The Ombudsman, by the Prime Minister of New Zealand, W.E. Rowling, 8 August 1975 (see mention of this before in this work, in the main text after footnote 266, and in the Report…also, p.4)362 See in main text after footnote 58. 363 Ibid.

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If you read the transcript of evidence of the trial in the Supreme Court, there is a total absence of “treachery” on the part of Dr William Ball Sutch.

Certainly he made it clear to Razgovorov, the Soviet intelligence chief in New Zealand, that he had concerns about the Jewish writers Daniel and Sinyavsky in the Soviet Union, but how that can be interpreted as “treachery” against his own own [sic] country defeats me.

Three face to face meetings between Dr Sutch and the KGB chief took place, but always at places that had been chosen in advance by the Soviet.

Maurice Shadbolt, writing about the 1975 trial, recalled that he was astonished by the fact that one meeting took place in central Wellington, at a spot about 10m from the windows of a permanent Security Intelligence Service base. There is much else that is anomalous about the conduct of Razgovorov, which leads one to think that he had set out to falsely implicate Dr Sutch as a spy against his own country.”

Hector Mac Neill [mentioned in our main text following footnote 260](Mangonui) [New Zealand]

***

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