The Age -- Melbourne -- Saturday June 10 2006
The secret Howard plantations
There is more to the Prime Minister's family history than modesty, honesty and hard work, writes David Marr.
THE corner of Ewart Street and Wardell Road in Sydney's Dulwich Hill is sacred ground for John Howard and the modern Liberal Party. For nearly 30 years, the Prime Minister's father ran a service station on this spot, setting an example his son thinks Australia should follow.
"I was brought up to believe that about the best thing you could ever do in your life," he said soon after taking office in 1996, "was to start up a business with nothing, work your insides out, hope you earned a bit of money, and pass on a bit of it to your kids."
His mother's church and his father's service station have come to stand as markers of respectability, honesty and the Howard family's deep roots in the suburban heart of the nation. To be the son of a service station proprietor allows John Howard to claim as a qualification for high office that he was and remains an ordinary Australian.
But Howard's father had another life. While this old soldier worked his humble Sydney service station, he was also - on paper - a New Guinea planter with a string of estates where 200 native labourers grew copra in his name. Lyall Howard had cashed in his status as a returned digger to "dummy" for the trading house W. R. Carpenter and Company Ltd. His own father, Walter, was doing it, too. The Howard case provoked secret, official investigations at the highest levels in Canberra, but they and their powerful backer got away with the scam.
The Treaty of Versailles spelt the end for the German planters of New Guinea. Australia took over the colony, stripped them of their land and sent them packing in the early 1920s. The prime minister, Billy Hughes, promised "New Guinea for the returned serviceman" and ex-diggers were offered very generous terms when 40,000 hectares of plantations went on the market in 1926 and 1927.
A hefty catalogue spruiked them as "The Envy of Planters, The Magnet of Copra Buyers" and quoted Shakespeare to inspire investors down south: "There is a tide in the affairs of men which taken at the flood leads on to fortune."
For Lyall Falconer Howard, the tide was well out. He had fought in France, was gassed at Passchendaele and returned home to work as a mechanic at CSR. The Prime Minister remembers his father as "a very quiet, very, very lovely bloke". About the time Lyall married the forceful Mona Kell, he lost his job at CSR. As the plantations came on the market, she was about to give birth to their first son, Walter.
Yet at this nadir, Lyall Howard tendered to buy four plantations on Kar Kar, a high volcanic island with perfect soil off the coast of Madang. He was awarded two: Kavilo for £9800 and Marangis for £30,600 - in today's currency a total of roughly $4 million. As an ex-digger, he had only to stump up a 15 per cent deposit and then pay off the rest over 20 years. Every penny of that £6060 deposit - and more - was provided by Carpenters.
Copra went into soap, margarine, cooking oil and even explosives. The market was always volatile and plantations were prey to cyclones and bugs. But until the industry was ruined by American soya beans in the late 1980s, copra brought prosperity to the Pacific and made fortunes for the two Australian companies that dominated the trade: Burns Philp and Carpenters.
Both were desperate to mop up the old German plantations. Both were using dummies: former diggers who bought in their own names but signed management of the businesses over to their backers lock, stock and barrel. Carpenters and Burns Philp could have tendered for these plantations in their own names, but they had to outlay twice the deposit and pay the balance in half the time. Using dummies slashed their costs and sabotaged Canberra's policy of favouring old soldiers.
It was a scandal from the start. Returning from a tour of New Guinea in 1927, Senator John Chapman of South Australia declared: "Statements regarding dummying are so widely current, so persistent and so serious that I consider the Government should authorise an inquiry into them immediately." It did not happen. Canberra fine-tuned the regulations but never took effective action to stamp out what the Commonwealth auditor-general denounced that year as the "dummying evil".
His portrait of the typical dummy fitted Lyall Howard to a tee: returned soldiers with few or no assets and no experience of plantation life who may never stir from Australia to visit their holdings. There is a legend still alive in New Guinea that a legless ex-digger found himself the owner of the mighty Bopiri plantation but lived out his days pulling the rope in the Burns Philp lift in Bridge Street, Sydney.
When the third and last tranche of plantations was offered for sale in July 1927, Lyall Howard put up his hand to pay £60,100 for a big place on a remote island near Manus. Agita had 150,000 palms on more than a thousand hectares worked by 80 labourers. And his father, Walter - the grandfather of the Prime Minister - tendered £25,100 for Enuk spread over a number of sandy little islands near Kavieng, the capital of New Ireland.
For the father-and-son team, 1927 was a remarkable year. Here they were, planters on a great scale with estates scattered all round the Bismarck Sea, but their hearts were set on Dulwich Hill. In July that year they took over the Wardell Garage and Service Station at a weekly rental of £4 and began the long slog that was to make them bywords in this country for enterprise and the virtues of work.
Old Bill Middleton, a famous New Guinea planter, established his family's fortunes by winning the tender for one of the Kar Kar plantations in 1926. Middleton is dead now, but his son, Sir John, remembers him accusing the big companies of corrupting the sale of the expropriated plantations. "There were politicians involved back home. He threatened that if he didn't get Kulili he was going to blow the lid on the whole thing."
Kulili was another of the plantations Lyall Howard was after. Middleton beat him to it - he bid more - and went on to become one of the biggest producers of copra in Papua New Guinea. The difference was that the Middletons had capital. "If you didn't have money the companies would take you over," said Sir John on the phone from Kulili a few weeks ago. "My father worked for the Bank of NSW on the Samarai goldfields from 1910 to 1914. And he was a very good poker player."
Sir John knew of a couple of soldiers who "lucked out" and kept their plantations but they seemed to have family connections with the Carpenter family. The rest of the soldiers lost out. "The tenderers were bound hand and foot to the companies. Carpenters were pretty good and fairly ruthless running the plantations. You know what they called W. R. Carpenters before the war? 'Would Rob Christ.' Burns Philp they called 'Bloody Pirates'."
Only a few pages of the fat files on the Howard holdings in the National Archives carry their signatures. All the business of Kavilo, Marangis, Enuk and Agita - along with at least 20 more plantations - was conducted by Carpenters. Those files survive because, until the last penny of the purchase price was paid, title to the plantations remained with a Rabaul official called the Custodian of Expropriated Properties.
Oddly, the custodian could not be persuaded to take allegations of dummying seriously. By early 1929, the administrator of New Guinea - the custodian's great rival in the territory - was fed up with the lack of action and decided to challenge a particularly blatant case. He sent a coded cable to Canberra: "Walter and Lyall Falconer Howard apply consent purchase property valued at £25,000 and £100,000 respectively. Strongly suspect dummies for Carpenter and Coy. Could Investigation Branch enquire into status and financial circumstances these men and report the result urgently?"
The branch - which would one day turn into ASIO - got to work and within a week reported on the financial position of the father - "was chief fitter at the Zoo, Taronga Park" - and the son. "The personal financial position of Howard Senior was and still is presumed to be modest: he had an equity of about £100 in land at Bankstown, and no other item is known. The son had an equity of £750 in a cottage at Marrickville."
The branch thought the garage a well-run little business. "It no doubt provides a living for the proprietors, but could not be regarded as a foundation for such transactions as those mentioned in the passage from the Mandated Territory, and there is no reason to suppose that the private resources of the Howards could make any difference in that regard."
The facts were sent to the attorney-general, John Latham (later the chief justice, Sir John), who wrote an opinion for Treasury: "Unless [the Howards] can show that they have some further property of substantial value, and that they propose to take a real interest in managing the plantations, it appears to me to be very difficult for the Custodian to satisfy himself that their intention is to acquire the property in order to hold and use it for their own exclusive benefit."
These opinions, investigations and cables were all secret. But the auditor-general wrote of the Howards in his 1928-29 report that he had "no doubt whatever that dummying exists" in their case, though he found "the offence is not so open and the pretence is better maintained" than in other schemes he had examined. The auditor-general also reported that Lyall Howard was applying to have transferred to himself two more plantations financed by Carpenters - Koka and Katu, worth £40,000.
At this point, the government changed and the new Labor attorney-general, Frank Brennan, seems to have decided to introduce fresh regulations "for the future control of dummying" rather than pursue the motor mechanics of Dulwich Hill.
The administrator kept on the case for a few more months, discussing it with the new treasurer, Ted Theodore, but finally - after another confrontation with the custodian - declared himself "satisfied with the bona fides of the Howards". They never got Koka and Katu, but the Enuk and Agita contracts were finally approved in March 1930.
The custodian was to disappear under a cloud soon after and turn up as Carpenters' London representative. But however it happened, the Howards' tropical empire scraped through intact just as the Depression crashed down on copra, Carpenters, New Guinea and the motor trade. An officially approved elaborate sham was now in place from which the family would not shake itself entirely free until the early 1960s.
John Howard declined to be interviewed about his family's adventures in New Guinea, so several questions remain unanswered. It is not clear how they were recruited by Carpenters, whether the family ever expected to own these plantations or what they got out of putting their names to these deals.
They appear to have been paid up front. Records in the National Archives show Carpenters paid Lyall Howard every penny he needed to put down deposits on the first two plantations - plus £540 more. The money came through in June 1927 and may have been the seed finance for the Dulwich Hill garage which father and son took over the following month.
Dummies were often paid an annual fee for the use of their names. And if the opportunity ever came to transfer their holdings to their backers, the dummies were usually paid a premium.
The best of the plantations in the Howard name, Marangis, was transferred early on to a Carpenters subsidiary. The custodian approved the transfer in 1931 on the ground that Coconut Products Ltd "may be expected to have more stability than a private purchaser".
Backers also advanced money to their dummies in return for even bigger mortgages over the businesses. In late 1930, the Howards signed new mortgages over Kavilo, Agita and Enuk for a total of more than £17,000. It is not known how much of that huge sum was invested in the islands and how much - if any - ended up in Dulwich Hill.
While it is not certain how the Howards benefited, it is very clear the family remained useful to Carpenters all the way to the end. That these plantations were conducted in the name of a couple of mechanics from Dulwich Hill allowed the trading corporation to cry poor through the Depression, the war and its aftermath. The files are fat with pleas from Carpenters for concessions of one kind or another because their "clients" the Howards could not pay.
Rent due to native title holders on Enuk was not paid from 1932 until 1935 while Carpenters brawled with the new custodian for a cheaper lease. The company was adamant that Walter Howard could not pay. The custodian demanded proof: "If he is in such a bad financial position that he cannot pay anything at all, Mr Howard should produce figures showing his revenue and expenditure." Carpenters eventually got the lease it wanted.
But Enuk and Agita proved poor investments. After the war, Carpenters decided to abandon these sandy, remote plantations along with a dozen others "because of their uneconomic value today". In 1950, a rare letter to the custodian in Lyall Howard's hand backed Carpenters' decision: "I have not the money to carry on and therefore am unable to meet my obligations under the contract."
Abandoning the plantations was not easy. Lyall owed £5500 in unpaid instalments for the purchase of Agita, and his father's estate - Walter had died in 1948 - owed a further £2500 for the purchase of Enuk. These debts might have wiped the family out, but after a few months of pursuing the poor Howards of Dulwich Hill, the custodian threw in the towel and the contracts were cancelled in 1951.
That was almost, but not quite, the end of the story. In 1949 the Howards had sold the last of their holdings to Carpenters. But the transfer of Kavilo was never registered, an omission only discovered by a baffled custodian in 1960. Month after month, letters demanding action from Lyall Howard went unanswered by solicitors. Finally the custodian wrote to the Howard family home in William Street, Earlwood.
But Lyall had died of chronic bronchitis in 1955 and only his widow and son John - law graduate and Young Liberal - were left at home. The paperwork for Kavilo's transfer was at last completed in 1962. Then for many years a long silence fell on the story, broken by occasional references in histories and academic papers on the lost plantation world of New Guinea. Strangely, these plantations never seem to feature in the Prime Minister's repertoire of stories about the ethos of his family.
In February this year, launching a book that celebrates his 10 years in office, John Howard once more harked back to the role of the garage in forming his fundamental values. He was myth-making again. "The whole idea of doing something with your life was about personal achievement, and starting a business. That has influenced my attitude, because my father had a garage … I guess working for yourself, working for private enterprise, and not working for the government, was something I was brought up to believe in."
That's one version, but as always in politics, real life is more human, more complex and more interesting