“Fascism rears its head.” That was the caption the Commonwealth Security Service (CSS) – the precursor to ASIO – placed on a clipping from Smith’s Weekly dated 27 March 1943. The article discussed the Institute of Public Affairs, recently convened by leaders of business and industry and underwritten by the Collins House group of mining companies.¹

These days the IPA describes itself as “Australia’s leading free market think-tank”. It is a prolific publisher and contributor to the opinion pages, and maintains close links to the Liberal Party which it was instrumental in founding. On the controversial context of its own emergence, the IPA website notes only that the institute was launched in 1943 and that it “remains at the forefront of the political process, defining the contemporary political landscape”. ²

In reality, the IPA was founded amidst a bitter struggle within Australia, largely forgotten in the prevailing celebratory histories of the wartime experience.³ Its formation – in Melbourne in October 1942, Sydney in February 1943, and later in other capitals – coincided with a nationwide investigation of subversive or potentially subversive organisations, into which the fledgling institute was drawn.

Brigadier William Ballantyne Simpson, the new head of the CSS, understood that many leading businessmen had been active in the fascistic extra-parliamentary and paramilitary anti-labour bodies of the 1930s, such as the Old and New Guards in New South Wales and the White Guard in Victoria, and that Military Intelligence in particular had strong links with them.⁴ He provided a detailed pro-forma to CSS state branches and asked for investigations of the following, in order: foreign clubs and organisations including the Lutheran Church, the Communist Party and affiliated bodies, Jehovah’s Witnesses, pacifist and similar bodies and “any other organisation which you consider may fall within the category of subversive or potentially subversive organisations”.⁵

The CSS also began a serious attempt to examine the nature and extent of links between Australian business and Japan prior to hostilities. Simpson called for “a check on indent merchants who formerly carried on trade with Japan. Some of them are known to have visited Japan”. He ordered “a check on advertisements by Japanese shipping companies, banks, Government railways and travel bureaux etc.” and “a check on employees of shipping firms holding agencies for Japanese shipping lines with a view to establishing whether they had any German connections”.⁶

Earlier, Captain Newman of the Intelligence Section, Eastern Command (attached to the CSS) had advised military command, shortly after the Curtin government took office in October 1941, that pro-Japanese agents existed in Australia and could strike at the appropriate moment. Such people would not be from the working class but “amongst those who are holding high government or semi-government positions”. Newman warned that:

in the event of Japan coming in and Russia being practically finished off enemy agents and sympathisers in this country would consider that victory was absolutely in sight and no doubt would then, even if they were lukewarm in the past, make a strike for their own country. It is considered that quite a few come within this category. They might be described as ‘sitting on the fence’ at present.

He noted that “in the event of war with Japan, which seems a very lively possibility, it is reasonable to assume that enemy agents in Australia will become active”. Until then, he suggested, they would be shrewd enough to make no incriminating statements.⁷

Newman himself had joined the intelligence corps in April 1941. Like many others, he had been recruited from the Bank of New South Wales. But unlike the majority of bankers-turned-intelligence-operatives, who tended to identify communism as the major menace and thus exhibited degrees of pro-Axis sympathies, he saw Japan as a looming threat and was concerned about the existence of powerful and well-placed Japanese agents and sympathisers ready to betray Australia if it served their interests.⁸

The suspicions held by Newman seem to have been based on solid foundations. Reporting to Prime Minister Curtin early in 1942, the eminent anthropologist A.P. Elkin noted the popular feeling that Sydney business would do a deal with the Japanese:

There is much unhappiness amongst the people of different groups of our society because of a belief, which some say is based on fact [emphasis in original] that numbers of our leading business and financial folk would sell out to Japan and make peace in the hope of preserving their businesses and profits. I have had this statement made to me by people of all types who are in touch with the business world. Its implications are, of course, serious. Statements made by some of these folk that we just cannot prevent Japan landing if it wants to and therefore we should not waste blood and money over it but come to terms. They say any resistance will be but token resistance. Needless to say this feeling savours of fifth-column activity, but it must be linked up with a feeling of futility to which the events and facts of the last few months have given rise to.

These views, and an equally prevalent belief that elements of the military would supervise the arrangement with Japan, were according to Elkin, “by no means negligible” and “did not arise from smoke alone”.⁹

Testimony given by former Minister for Trade and Customs, Eric Harrison, to an in camera hearing held under National Security regulations in March 1942 reveals the extent to which the Menzies government had sought to accommodate Japan. Harrison, Menzies’ most staunch parliamentary supporter, admitted that in the previous year “we were at that time doing all we could to try and appease Japan, but quite a few of us stepped over the ordinary bounds of prudence in that regard”.¹⁰

In the first months of 1942, Australians regularly flew out to Hay in western New South Wales to visit the Japanese interned there, and discussed business arrangements pending an imminent cessation of hostilities. The senior Australian executive of Mitsubishi, Frederick Saunders Boylson, was advised by his superior Kikuchi that, while he could do what he liked with the company office, he was not to “sell the furniture, since we shall be wanting it within the next three or four months, when Australia has been conquered”. Several days later, Australian intelligence was made aware “on most reliable authority” that Mitsubishi staff had been directed by their Japanese superiors to maintain close contact with Mt Isa Mines which had been a major supplier of minerals to Japan.¹¹

Such was the volume of visits to Hay by businessmen as well as clerks, secretaries, housekeepers and girlfriends that an exasperated CSS officer declared “the fact that Japan is now at war with Australia appears to make no difference to these people”.¹²

Brigadier Simpson took the description of the IPA as an emerging fascist group sufficiently seriously to commission a report in March 1943. Rather than provide it, Deputy-Director S.H. Jackson simply forwarded Simpson an IPA brochure, accompanied by the observation that “the committee and others sponsoring the Institute are well known representative people in Melbourne whose integrity and loyalty should be beyond reproach”.¹³

Simpson responded with a blunt statement about the existence of highly placed potential traitors in Australia. “In the records of this service there are the names of a number of persons who can be regarded as potential Quislings,” he wrote to state directors of the CSS in 1943. “In most cases they are persons of some standing and some of them are prominent in their respective spheres. I refer particularly to British subjects whose services would be of value to the enemy, and whose past records and associations lead to a justifiable, mounting in some cases to almost certainty, that their sympathies are with the enemy.”¹⁴

The search for Australian Quislings foundered. Agencies, Military Intelligence and the Commonwealth Investigation Branch refused to share relevant files. Perhaps most importantly, Jackson and other senior figures in the CSS had no intention of following their director’s terms of reference, and in most cases simply provided lists comprised of cranks, foreign nationals or small-time associates of Japanese.¹⁵

The CSS was reviewed in late 1943 and found to be disorganised, unfocused, intellectually deficient for its duties and overly reliant on informants. A new group of special investigators took responsibility directly from Canberra. They picked up the long-delayed IPA report.¹⁶

Though the IPA had initially described its mission as educational, the widespread belief in business circles (especially in New South Wales) that socialism under Labor was imminent caused it to become actively engaged in politics.¹⁷ In April 1943, in the lead-up to the federal election, a series of anti-government radio advertisements entitled the ‘Voice of the People’ was authorised by a body variously known as the Bureau of National Affairs and the Public Relations Committee. Behind both stood the IPA.

‘Voice of the People’ was revived prior to the 1944 ‘Fourteen Powers’ referendum, widely believed by many businessmen to be the precursor to socialism. This second foray of the IPA into political propaganda involved another more potent barb – a radio serial entitled ‘The Harris Family’ which was scripted by an office holder of the Queensland branch and broadcast over 4BK in Brisbane and syndicated in Ipswich, Bundaberg, Warwick, Mackay, Townsville and Cairns. This folksy weekly purported to peel back the seemingly beneficial nature of the government’s program for Australian families to reveal the socialist excesses lurking beneath.

The radio campaign provoked a response on 23 April 1944 from a person who signed himself in a letter to the directors of the IPA as an “officer of the RAAF”: “I have recently listened to Tokio [sic] Radio on several occasions and for sabotaging our war effort, undermining morale, and straight out fifth column activity they are not to be compared with a Sunday night (7.15 p.m.) play from radio station 4 I.P. called the Harris family.” He expressed his amazement and disgust at “the blind disregard” of the government, accusing the IPA of being worse than the worst type of enemy agents.

“Need and mark well: – I regard you as something more vile and sinister than any Jap. Even a Jap fights his enemy openly. He does not shelter, in wartime, under a Government steadfastly safeguarding freedom of speech and use that very freedom to help defeat it and its people. I can think of nothing so revolting as your Harris Family anywhere on the Earth. I am fighting for freedom and your destruction.”

The anonymous author (“in dealing with this fascist mob, I do not care to use my name”) argued that government tolerance had limits: “If Russia wipes out your type I must say that their belief in exterminating fifth column vermin is an excellent idea and I loudly applaud.”¹⁸

The letter was carbon copied to the Deputy Prime Minister and eventually found its way to Simpson’s desk. His demand for an examination of ‘The Harris Family’ scripts confirmed that the IPA was behind them. All scripts had been submitted to and passed by the censor.¹⁹

It was not until 18 May 1944 that the Security Service report on the IPA finally appeared. The findings reflected the professionalism and focus of the service since its overhaul, with a thorough report on the composition, membership and activities of each branch. The result could, however, never be anything more than exploratory since the service had been denied access to the more comprehensive records of other security bodies, while the objects of enquiry not surprisingly maintained a high level of circumspection about activities that might arouse suspicion.

The investigations describe the IPA as the self-selecting arm of big business and effectively the Right wing of the former United Australia Party and United Country Party. Its “object is to discredit the Labor Government”.²⁰ A report from Adelaide noted that communists considered the IPA a subversive and counter-revolutionary body, and that the protestations of its members about their commitment to the constitutional system were false. The service officer noted, however, that nothing had been discovered on the IPA to suggest it was subversive.

“Moreover the war record of its supporters – by early enlistments, war loans, donations to charity etc. – is very fine and indicates that these persons are sufficiently keen on the present democratic system to make considerable sacrifices for its preservation.” ²¹

It was in that part of the investigations considering the New South Wales branch that the elephant in the room – pre-war associations with Japan – was finally acknowledged. The report noted that IPA council members Charles Lloyd Jones and William Aberdeen Mackay were listed as “being recorded at this Service” as being members of the “Japan Australia Association [sic]”.²²

The Japan-Australia Society and the role of its members in the reorganisation of conservative politics in the mid-1940s requires a more thorough investigation beyond the accounts to date. Australian and Japanese archives demonstrate the extent of support for Japan among Australian businessmen and their willingness to back its rise to regional economic, cultural and military dominance.²³

The Japan-Australia Society was founded in Sydney in 1928 at the behest of the Japanese government and navy. Membership was by invitation only, with associate membership available to those who chose to maintain a more ‘arms-length’ relationship. The society mirrored similar bodies established by Japan across Asia and the Pacific in the 1930s – the Japan-Siam Society, the Japan-Malay Brotherhood, the Japan-Filipino Friendship Society and the Japan-French Indo-China Society.²⁴ Two society members identified in the report on the IPA provide an insight into its composition.

Charles Lloyd Jones was managing director of David Jones and had been a leading promoter of closer trade, political and cultural relations with Japan. He provided lavish entertainment at his Woollahra mansion to foster these ties with visitors from rural New South Wales and Japanese consular staff and businessmen. He was sponsor of a jointly Australian and Japanese funded tea house to be erected initially in Hyde Park opposite his store and eventually on the grounds of the Japanese consul-general’s Point Piper residence. The tea house was to commemorate the 2600th anniversary of the founding of the Japanese empire.²⁵

In June 1940 Jones sponsored and hosted an exhibition of ‘Exclusive Japanese Products of Industrial Arts’ on the sixth floor of David Jones’ George Street store in Sydney, after which it transferred to Melbourne. It was organised by the Australia-Japan Society, Tokyo, the ‘Society For International Cultural Relation’ [sic] and the Japan Foreign Trade Federation, and ran concurrently in Lisbon, a city regarded as the focal point of anti-Allies propaganda in non-occupied Europe. ²⁶

William Mackay was the managing partner in shipping firm McDonald Hamilton, a director of Burns Philp, the Queensland National Bank and the AMP Society and a powerbroker in conservative politics. In November 1930 he returned from a business trip to Japan and immediately became one of the seventy representatives of financial, pastoral and industrial capital who met in Sydney to discuss means of staving off the impending economic disaster they perceived under Premier Lang. They formed the Producers’ Advisory Council which in turn directed the operations of the fascistic Old Guard. Mackay was one of several society members on the council; he was also a member of its central executive of ten leading citizens. This group, and a similar number representing rural interests, formed the basis of a number of plans for an emergency, non-elected government if circumstances required. According to Andrew Moore, “the plan reveals the point where the Old Guard assumed a proto-fascist disposition”. Mackay was a subscriber to the Lloyd Jones’ tea house.²⁷

Other members of the IPA council had similarly close contact with Japan. T.H. Kelly, a director of the Bank of New South Wales and other major companies, was a regular confidant of visiting Japanese naval squadrons since 1910. Through the Sydney Smelting Company (of which he was managing director), he was involved in tin exports. Kelly donated to the tea house appeal. O.D.A. Oberg, president of the Employers Federation, was also a member of the Sane Democracy League which had shared information with the Japanese Consulate on anti-communist activities and alerted it to the fact that Australian authorities had planted an agent in its local staff. The Commonwealth Investigation Branch regarded the organisation’s single-minded hostility to Bolshevism to be “almost a hatred” and described it “as a common ground on which to establish relations with anyone with Nazi sympathies”. Scrapmetal dealer A.G. Sims also traversed membership of the Japan-Australia Society, active engagement in trade with Japan and participation in the formation of the IPA.²⁸

The Japan-Australia Society should be seen as one of a spectrum of organisations formed by business to protect and re-focus, where necessary, its interests during the turbulent interwar period. Australians were drawn to it as a forum where their interlocking businesses could sit comfortably with a partner who shared their obsessive fears of Russian Bolshevism, hostility to organised labour and its political representatives, and fervour for centralised and non-representative political systems.

The society became operational when Japan abandoned any pretence of democracy domestically and adopted a military solution that became steadily more violent and aggressive. As the decade progressed, the society’s leadership unfailingly heeded Japanese colleagues’ requests to dismiss as propaganda claims of military atrocities. Japan’s entry into the Axis brought no reconsideration of the appropriateness of the continued existence of the society, nor individual resignations. Not even the outbreak of war caused the immediate winding up of the society or any statement on the part of its leadership.²⁹

The issue now is not the paucity of information that has previously hindered examination of Australia’s Japan lobby. Rather, by looking at a range of newly identified material from company records, treasury papers and security files, we see the Japan-Australia Society more fully. It was far from a one-dimensional organisation. Some members were simply company representatives, pitching for business. Some were so amoral in their doing of Japan’s bidding that other members registered their disapproval to the authorities. Some were open about their membership, listing it in their Who’s Who entries, while others like Menzies’ Treasurer and Minister for the Army, Percy Spender, declined to mention it. A very small number later admitted they had been used or were naïve.³⁰

Most continued their successful business and political careers after the war. As for the IPA, the investigation into it did not proceed any further. Each time the pre-war activities and connections of well-connected Australians looked like becoming the subject of systematic enquiry, their supporters within the agency concerned or rival bodies moved to discredit and scuttle the enquiry and its proponents. The role of prominent Australians with strong pre-war support for Japan escaped scrutiny.³¹

The IPA today wields more influence and power than ever before. On its webpage, it endorses “the free market of ideas, the free flow of capital, a limited and efficient government, the rule of law, and representative democracy” on the basis that, throughout history, these are ideas that “have proven themselves to be most dynamic, liberating and exciting”.³² In the 1930s and the 1940s the link between freedom and the “free flow of capital” didn’t seem so apparent. Prominent founders had no difficulty in associating themselves commercially and philosophically with Japanese totalitarianism. The story of the compromised and murky milieu from which the IPA emerged is still important.

1. ‘Institute of Public Affairs’, ASIO File, NAA, A6122, 1443.
2. www.ipa.org.au/about.asp.
3. Mark McKenna, ‘The Anzac Myth’, Australian Literary Review, June 2007, 3; D.A Kemp, ‘The Institute of Public Affairs – Victoria 1942-1947′, Fourth Year Essay, Honours, University of Melbourne, Department of History, 1963, i, 1-3.
4. Jolyon Horner, ‘Simpson, William Ballantyne (1894 -1966)’, Australian Dictionary of Biography, vol. 16, Melbourne University Press, 2002, 249-50; Barbara Winter, The Intrigue Master: Commander Long and Naval Intelligence in Australia, 1913-1945, Boolarong Press, Brisbane, 1995, 178. Simpson would himself later be active in the postwar anti-communist group ‘the Association’.
5. ‘Survey of Subversive Organisations’, Investigation Branch File, NAA, A8911, 122.
6. ‘Subversive Organisations – Nazis and Japanese’, Investigation Branch File, NAA, A8911, 10.
7. ‘NSW Security Service file – Prospects of sabotage by enemy agents”, Security Service NSW File, NAA, C320, J145.
8. J.S. Legge (ed.), Who’s Who in Australia, Herald & Weekly Times, Melbourne, 1959; ‘Seventh Report of the Royal Commission on Intelligence and Security (contains a history titled “Australian Intelligence/Security Services. 1900-1950” by Jacqueline Templeton)’, Royal Commission on Intelligence and Security File, NAA, A8908, 1, 157.
9. Elkin to Curtin, 5 February 1942, cited in Drew Cottle, ‘The Brisbane Line: A Reappraisal’, PhD Thesis, Macquarie University, 1991, 196-7.
10. ‘Objection No 33/42 – Gulson Leonard Ashworth, Advisory Committee’, Investigation Branch File, NAA, A367, C18000/614.
11. ‘NSW Security Service file – Mitsubishi Soji Kaisha Ltd – staff’, Security Service NSW File, NAA, C320, J146; ‘NSW Security Service file – Reports of Japanese Activities’, Security Service NSW File, NAA, C320, J5.
12. ‘Security Service weekly reports 11-32: week ending 16 Oct 1941 – week ending 12 Mar 1942′, Security Service NSW File, NAA, C128, 1.
13. ‘Institute of Public Affairs’, ASIO file, NAA, A6122, 1443.
14. ‘Potential “Quislings” in the event of an invasion’, ASIO File, NAA, A9108, Roll 22/59.
15. ‘Potential “Quislings”‘; Frank Cain, The Origins of Political Surveillance in Australia, Angus & Robertson, Sydney, 1983, 291-3.
16. Templeton, 205; Horner.
17. Kemp.
18. ‘Institute of Public Affairs’, ASIO file.
19. Ibid.
20. Ibid.
21. Ibid.
22. Ibid.
23. For example, Osaka Mainichi carried an eighteen-part report in June 1935 of a 26 April round table at the Hotel Australia in Sydney between leading Australian businessmen and conservative politicians (many of whom were members of the Japan-Australia Society) and a Japanese delegation on the promotion of closer relations between the two countries. The discussion was not reported in the Australian press. Likewise, Birt & Co., speaking for the wool industry and associated shipping and other activities, saw the Japanese invasion of northern China as a boon for their interests: “From Japan too, there are prospects, especially if the political and military situation in North China should develop, so that the Japanese require larger quantities of the crossbred wools used for army uniforms.” Monthly Trade and Shipping Review, vol. 1, no. 4, 31 October 1931, Birt & Co., Sydney, 73. Managing director Thomas Gordon was an office holder of the Japan-Australia Society, agent for the shipping line Osaka Shosen Kaisha and a tireless promoter of closer relations with Japan.
24. Sydney Morning Herald, 19 July 1928. The rules and structure of the society are noted in the preamble to its membership list. ‘NSW Security Service file – Japan-Australia Society’, Security Service NSW File, NAA, C320, J168; Cottle, 150.
25. Cottle, 167-8. Donors to the tea house list are contained in ‘Japan-Australia Society, Sydney’ Department of Trade and Customs File, NAA, A1539, 1942/W/445.
26. Far Eastern Economic Trade Bulletin, 1 June, 1 July 1940, Japanese Chamber of Commerce, Sydney; ‘For Exhibitions at Lisbon and Sydney’, Osaka Mainichi, 1 May 1940.
27. Legge (ed.), Who’s Who in Australia, 1935; Sydney Telephone Directory, Postmaster-General’s Department, Sydney, 1935; K. Buckley and K. Klugman, The Australian Presence in the Pacific: Burns Philp, 1914-1946, George Allen & Unwin, Sydney, 1983, 243-4; Andrew Moore, The Secret Army and the Premier: Conservative Paramilitary Organisations in New South Wales 1930-1932, University of New South Wales Press, Kensington, 1989, 100.
28. Kelly, Sydney Morning Herald, 22 March 1910; Legge (ed.), Who’s Who in Australia, 1935; ‘Sane Democracy League [Correspondence with the Japanese Consul General in Australia]’, Investigation Branch NSW Security Section File, NAA, C443, J191; ‘Sane Democracy League’, ASIO file, NAA, A6122, 1398; ‘Export of scrap steel to Japan – Albert G. Sims Pty Ltd’, Department of Trade and Customs File, NAA, A1539 1941/W/899.
29. T.S. Gordon replied by telegram in November 1937 after the Rape of Nanking that “anti-Japanese impressions have only come from a small, vociferous but unimportant section of the people”. Gordon, who was well connected in politics, offered to use his influence. “Matters are quietening down. As a matter of fact, there is no anti-Japanese feeling among people generally. I am placing before the press and ministers the position as explained and as I saw it in Japan.” Sir Thomas Gordon [Correspondence with the Japanese Consul General in Australia] C443, J32, NAA, in early February 1942. Society treasurer and Kanematsu employee, J. Gunton, advised members that “partly due to uncertainty as to location and partly on account of delays in obtaining suitable plans, specifications and construction of the Tea House was greatly delayed and the funds raised were currently frozen”. In response to commonwealth pressure Gunton eventually moved to wind up the society. ‘Japan-Australia Society, Sydney’, NAA, A1539, 1942/W/445.
30. Menzies government minister Percy Spender’s membership of the Japan-Australia Society in 1937 is contained in ‘Japanese Society of Sydney’, Security Service NSW File, NAA, C320, J79 but is not mentioned in contemporary or later Who’s Who in Australia entries. For the member of the Japan-Australia Society whose actions cause concern to another member, see the file on tinplate exporter Fred (Dutch) Stallman, Security Service NSW File, NAA, C123, 11142. Neither Mackay nor Lloyd Jones listed their membership, while Gordon always supplied both his membership and office.
31. ‘Examination of German and Japanese consulate records’, Investigation Branch File, NAA, A373, 11104; ‘Jackson, Colonel S H’, ASIO File, NAA, A6119, 1613; ‘Pre-war activities of Japanese in Australia. Investigations by United States Intelligence in Japan (Ken Sato)’, Department of Defence File, NAA, A5954, 428/3.
32. www.ipa.org.au/about.asp.