Australia and the Rise of Asia in the Pre-War Era

In a speech some months ago on the government’s 2020 Defence Strategic Update, Prime Minister Morrison said the “period of the 1930s has been something I have been revisiting on a very regular basis”. He explained that when we “connect both the economic challenges and the global uncertainty, it can be very haunting”. Australia faced an “existential threat” as the “global and regional order collapsed”.

Morrison was probably trying to scare us a little—to soften up the public for some potentially tough times and tough decisions, including with respect to defence spending. Nevertheless, it is worth reviewing the history of the 1930s as we make critical decisions today about Australia’s strategic posture. Some of the lessons will perhaps not be those the Prime Minister has drawn. One further advantage in such a review is that it gives the opportunity to examine conservative foreign policy traditions in Australia.

The 1930s was certainly a period of tense relations. Our region was facing a rising power—Japan in those years, not China—and Australians were worried as to whether they could rely on their powerful Western friends, Britain and the United States. Just as today, Australia was under a conservative government, the United Australia Party (UAP) government led by Joseph Lyons (1932 to 1939) and then R.G. Menzies (1939 to 1941). It is true that Lyons, Menzies, John Latham, Richard Casey, Stanley Bruce and others in the leadership failed in their attempts to keep Australia out of war with Japan as well as Germany, but their endeavours were seriously considered.

We should not of course draw too literally from history to deal with contemporary events. The international rules-based order we have today was less elaborate in the 1930s. The existence of nuclear weapons now affects the calculus of war. Our economies are today more deeply enmeshed. All this should help mitigate the risk of repeating the disaster that followed the economic and strategic upheaval of the 1930s. Still, there are parallels between the 1930s and the present—and the approach taken by the Lyons government was grounded in even earlier conservative policy settings.

It has been suggested that the Coalition (or conservative) tradition in Australian foreign policy can be summed up as an emphasis on “power and alliances”—while Labor is seen to put weight on “collective security and international institutions”. Developments in the 1930s tend to qualify this distinction. Key conservatives at that time believed Australia could not rely on the British connection. Apart from building Australia’s own defence forces, they saw advantages in a more independent foreign policy. They were concerned to achieve an accommodation with the rising Asian power—and proposed to achieve this inside a regional “pact” of “non-aggression and consultation”. Beyond the Japan issue, some of these Australian leaders urged a creative approach more generally to Asian societies. Looking back to the early decades of the twentieth century reminds us that Australia’s “engagement with Asia” has not always been led by the Labor side of our politics.

In thinking about a conservative foreign policy heritage, we probably concentrate too much on Menzies. He was not the lead player in the early and mid-1930s. Also, although he possessed many strengths as a political tactician, he was described by Walter Crocker—who became a trusted adviser of Liberal External Affairs Minister Richard Casey—as “complacent about international affairs”. The post-war Menzies, according to Crocker, relied too heavily on the US alliance and displayed insufficient interest in the emerging states which would be so important to Australia. By contrast, some of Menzies’s conservative predecessors from the 1930s and earlier were far from complacent.

There are strong indications of a positive approach to the Asian region in the first years of the twentieth century, with Alfred Deakin—who, in Menzies’s words, laid down all “the foundational policies” of the Australian nation. Prime Minister three times, Deakin is sometimes denigrated because of his commitment to White Australia. True, like many in Germany, Italy and Japan, he took a race-based approach to nation-building. But he expressed much respect for Asian societies and saw Australia’s future lying in the Asian region.

The Australian colonists, Deakin said, had “made their homes neither in Europe nor America, but in Austral-Asia—Southern Asia”. Australia and Britain had different international perspectives. Having a close relation with a major imperial power could also bring danger as well as reassurance. Australia might be drawn into a European war “in the causing of which we have no voice, and in which we have no desire to take part”. This is an important observation, invoking a long-standing fear in sections of the Australian elite—at least back to the mid-nineteenth century, and the views of John Dunmore Lang. It reminds us that Australians were influenced not only by a “fear of abandonment” (as Allan Gyngell has put it), but also by a fear of entanglement.

In terms of Australia having its own perspectives, as Neville Meaney has explained in his examination of early Australian defence and foreign policy, Deakin saw that as well as its British commitments, the country had to have a “Pacific policy”. The issue of Japan highlighted this. Although Japan’s alliance with Britain might bring advantages to Britain, Deakin saw the potential for Japanese conflict with Australia. This anxiety encouraged him to seek closer and independent relations with the United States, despite British disapproval. He also focused on the development of an Australian navy.

Alongside such security concerns, Deakin saw advantages in Asian engagement. He published two books on India—which in itself makes him exceptional among our prime ministers—and argued that Australia’s future would be at least “partially identified” with the future development of the “Asiatic empires which lie closest to us”. The encounter with Asian societies, he predicted, would “necessarily call forth whatever originality or receptivity the Anglo-Saxon possesses”. One concrete benefit which he thought engagement might bring is strikingly evident today: closer involvement with India could lead Indian students to “come to the universities of our milder climate” rather than “face the winters of Oxford, Paris or Heidelberg”. He also saw the Malay Archipelago as “an enormous, prosperous, fertile and productive region”—and suggested that the issue of which power controlled this region was critical for Australia.

Although he feared Japan, Deakin saw it as one of the “most civilised among the nations of the world”. He insisted as well that his race-based nation-building in Australia was “not based on any claim of superiority”. He pointed out how “high a position” Japan occupied “in art and letters” and noted that even “in the development of European art”, the “knowledge of the art of Japan will form one of the chief landmarks of our history”. One sign of Deakin’s desire to understand Japanese society—which he saw as having “its own independent development”—was his interest in the cultural investigations of the contemporary Irish-Japanese writer Lafcadio Hearn.

Like many others, Deakin was made anxious by Japan’s striking victory over Russia in 1905—but this concern was not driven by racial antagonism. He insisted that had Russia triumphed this would also have presented Australia with a transformed and dangerous power equation in the Pacific. It has to be remembered that in 1905, Australian concerns were all the sharper because the growing struggle for naval supremacy in Europe had led Britain to reduce its Pacific naval fleet.

Deakin’s intellectual breadth was exceptional, and he influenced younger conservative politicians. Frederic Eggleston, for instance, was a minister in the Victorian Nationalist government in the 1920s, who later served Australia in a number of key international conferences and was appointed in 1941 as Australia’s first minister in China. Eggleston saw Australia as “a lonely outpost of European civilisation in a region which is profoundly alien”, and also as a state that could not “defend itself by its own resources”. He acknowledged the argument for the British basis of the Australian nation—as fostering a harmonious society without the racial discrimination and intolerance encountered in such countries as the United States and South Africa. He also understood that the “White Australia” branding would be damaging to the country’s relations with post-colonial Asia.

What Eggleston had no doubts about, as Warren Osmond has pointed out in a biography, was the need for Australia to develop “a Pacific sense”. He complained that the preoccupations of Australians were internal—the development of the continent—and that Australians were not sufficiently aware “of the sea and our surrounding”.

Eggleston’s sensitivity to Asian perspectives was apparent in 1919, when he was part of the Australian team at the Paris Peace Conference. Australia, he considered, made a serious mistake in alienating Japan—opposing the inclusion of a racial equality clause in the Covenant of the League of Nations. Later Eggleston acknowledged the need to make room for this increasingly dynamic power, even expressing respect (in the 1920s) for Japan’s intervention in Manchuria. His appreciation for Japan had developed when he visited the country in 1921 and was impressed not only by the agricultural achievements and governmental efficiency but also by the gardens and temples. In Japan, and in China and the Philippines, Eggleston sensed that “the East [was] awakening” and he worried that, by contrast, Australia was “putting herself to sleep like Japan did three hundred years ago under the Shoguns, behind restrictions and tariffs”.

At an international conference in Kyoto in 1929, Eggleston was impressed by the Japanese and other Asian delegations—and noted that meeting “men of culture and intellectual ability from races of widely different origin” was “an education”, making him impatient with the “narrow racial intolerance” which was “conspicuous in Australia today”. He was also troubled by the British delegates to the conference, finding them closed-minded regarding Pacific relations. It was impossible, he thought, “for some minds to realise the whole world cannot be governed by ideas generated in a small corner of Western Europe”. During the 1930s, Eggleston certainly became troubled by “militarist Japan”—but even in 1935 he felt this rising state had to be “met with more understanding than is being given to it in Britain today”.

Although by no means a trained Asianist, Eggleston had a genuine interest in other societies, other cultures. His intellectual openness was apparent perhaps most of all in 1941-42, when he was Australia’s minister to China. Apart from travelling with the Sinologist Joseph Needham, he engaged with a wide range of Chinese intellectuals. One account describes Eggleston in his official residence, “surrounded by Chinese paintings”, talking with “professors and merchants”—sitting on a “great chair, one gouty foot stretched forward, and behind him like a curtain all the yellow smoke of Chungking rises into the air”.

An important word in Eggleston’s thinking was pattern, which meant something like the sociological concept of “culture”, and seems to have been influenced by American cultural anthropology. He did not see social “patterns” as unchanging. Australia’s “pattern”, he said, was a liberal tradition—though not one dominated by “rugged individualism” of the American kind—and he suggested ways in which it might be altered over time. He argued the need to understand the Chinese “pattern”—especially the role of Confucianism—with an eye to assessing the possible future characteristics of Chinese politics and society, including how far China might be susceptible to Western influence. He did not anticipate that China would become imperialistic.

Looking beyond the 1930s, Eggleston saw that developments in Asia, particularly with the onset of the Pacific War, had urgency for Australia. In 1942 he concluded that the British failed to realise they had “lost the prestige by which [they] governed in the Far East in the past”. Australia, he thought, was ideally placed to explain to them that “vast new forces have been released in the Far East which will not subside quietly after the war”. Looking to the post-war period, he suggested the possibility of a “Pan-Asiatic movement in which India, China, and possibly Japan develop a common interest against European races”. Such observations had obvious educational implications, so that in 1944 he was proposing the creation of an “Australian School of Chinese, Indo-Chinese and Pacific Cultures”.

Eggleston warned against alliances—arguing that they did not promote world order. Over a long period, he was a supporter of international institution-building. At an Institute of Pacific Relations conference in Kyoto in 1929, for instance, he had proposed a regional disarmament conference—which would aim to give Pacific nations “the feeling that they are meeting and discussing their own problems and deciding them free from the dominance of Western interests”. In the last years of his life he continued to encourage Australia to “espouse heartily the cause of international security through world organisation”.

Over time, Eggleston’s foreign policy concerns even led him to revise his views on immigration policy. In the 1940s, he saw that the Labor government’s determined adherence to White Australia created problems for Australia’s Asian relations. What is more, he began to believe that a “nation needs to be enriched with foreign strains and foreign ideas”—and that Australia would benefit from the “ideas … and blood of Oriental peoples”. One reason for optimism regarding future Australian engagement with Asian countries, he suggested, was that Australian society had “more affinity” with those societies than did the American “school of rugged individualism”.

Returning to the 1930s, the influence of Deakin was also evident on the Lyons conservative government (1932 to 1939). David Samuel Bird has pointed out, in his study of Lyons’s foreign policy, how Lyons followed Deakin (and Eggleston) in his concern to develop a “Pacific Policy”—reflecting Australian rather than British interests. Lyons did not doubt the importance of the British navy in protecting Australian security—but he also understood that there were differences between Australian and British interests. He knew the British priority was Germany, not the Asian region, and he saw the danger of Australia becoming entangled in a European war which it did not favour. Lyons spoke of the “Near North”, not the “Far East”.

Like Deakin, Lyons was also willing to take independent action. He surprised the British government in 1934 by dispatching an Australian Eastern Mission—a mission of “friendship and goodwill”, led by External Affairs Minister, and former leader of the conservative Nationalist Party, John Latham—to the Dutch East Indies, Singapore, Vietnam, the Philippines and China, as well as Japan. Lyons said “something positive should be done to cultivate friendship with our neighbours” and that this was the first “official visit” by Australia to the region. He added that in foreign relations what mattered was to “understand one another’s point of view”. Latham was well aware of the economic benefits that could arise from Asian engagement. In 1932 he had expressed strong interest in expanding trade relations not only with North-East Asia but also with the Dutch East Indies.

Latham—who, like Eggleston, had been influenced by Deakin—respected Japan, with its “vigorous efficiency”, and worked to promote Australia–Japan cultural as well as political relations. He tried to get Japan to return to the League of Nations and sought a way to make space for this ambitious state—steering it away from military confrontation. Latham’s determination to avoid alienating Japan was in part economic. Early in 1933, he had suggested that the people of Australia:

would hardly be able to exist to-day if it were not for the purchase of Australian wool, wheat, flour, and minerals in the East by Chinese and Japanese … it ill becomes us to speak in derogatory terms of people who are now important and, indeed, vital buyers of our goods.

At that point, of course, Australia’s trade with Asia was nowhere near the level it has reached in recent decades. The 10 per cent of exports going to Japan in 1932 was considered a high figure—but it is small compared to the one-third of Australian exports which today go to China.

Key to Prime Minister Lyons’s own independent diplomacy was his attempt to create a Pacific Pact. Deakin had argued for a form of Pacific agreement in 1909 and Prime Minister Stanley Bruce, in 1923, had proposed a “league of nations of the nations of the Pacific”. Lyons wanted a “pact” of “non-aggression and consultation between all the countries of the Pacific”—and saw it embracing “a general declaration of economic and cultural collaboration”. He proposed this at a time when Australians were engaged in a range of multi-lateral networks—from the United States-based Institute of Pacific Relations forum to regular science and medical conferences. To achieve his objective of a pact, Lyons engaged in personal advocacy with representatives from Japan, China, the United States, the Netherlands and France. He also won support in Australia, including from Eggleston. The British government, however, was not keen. As Robert Menzies, another member of the Lyons government, pointed out in February 1940, soon after he replaced Lyons as Prime Minister, there was a feeling in Australia that “British authorities [were] indifferent to the problems of the Far East and in particular to our own vital concerns to maintain friendly relations with Japan”. Nevertheless, Menzies himself

look[ed] forward to the day when we will have a concert of Pacific powers … [with] increased diplomatic contact between ourselves and the United States, China and Japan, to say nothing of the Netherlands East Indies and the other countries which fringe the Pacific.

Partly because of the frustrations in advocating the Pacific Pact, having to rely heavily on British diplomacy, Lyons decided to appoint Australian diplomatic representatives in Asia. After Lyons’s death, Menzies, his successor, chose Latham for Japan while Eggleston went to Chungking. The appointment to Japan was made in the face of British Foreign Office opposition.

It is important to recognise the different planks in the Lyons government’s approach to the region. Lyons himself was devoted to promoting what he called “international co-operation leading to political and economic stability”. He was even willing to “allow” the Japanese to “expand in their own area”, and to agree with Casey and Latham that it was best to come to terms with the Japanese advance into Manchuria. Bruce, then the government’s High Commissioner in London, also recommended a range of economic and legal concessions to Japan, aiming to avoid conflict. Especially after mid-1936, Lyons saw the task as finding a way to conciliate Tokyo “before any new alignments solidified into alliances”. Yet there was contradiction in the Australian policy—which Lyons came to regret. The development of trade diversion in 1936—which entailed favouring British over other imports—angered Japan, damaging Lyons’s peace-making endeavours, and led to a costly Japanese boycott of Australian wool. Another plank in the Lyons approach, as explained below, was solid defence expenditure.

In addition to support from Australia’s conservative elite, Lyons sought assistance from intellectuals who he believed could assist this conciliatory diplomacy. He and his leadership circle may have been attracted to the thinking of Norman Angell, who was influential in the 1930s and argued that it was possible for competing national interests to be reconciled through rational deliberation. Lyons was certainly impressed by Thomas Baty, the British-born legal adviser to the Japanese government—noting his “love of humanity” and refusal to make “distinctions of colour, creed and caste”. Such “men of wide sympathies”, he said, were needed “to promote friendships between nations”. In Australia, Lyons sought the advice of academics, including A.C.V. Melbourne—who had close connections with Japan and believed Australia had a greater need than Britain to “maintain friendship” with that country.

Melbourne (as James Cotton has explained in his historical study of Australian thinking about foreign relations) encouraged Lyons to develop a specifically Australian foreign policy—and this was also a growing theme in conferences of the Australian Institute of International Affairs, an organisation in which Latham and Eggleston were prominent. Australia, Melbourne said, was not a European but a “Pacific country”—and in the event of war with Japan he questioned how far Britain would help Australia. Melbourne wanted to see Australian trade officials despatched to Asia—and argued that they needed to establish “good relations with people of Japanese and Chinese race rather than with the foreign residents”. Australia, he said, should help China with technical advice and remember that Australia “may someday need China’s help”. Melbourne also argued for more visits to Australia by Asian business people, students and tourists.

There can be no doubt about the commitment of Lyons and his advisers to a positive involvement with the Asian region—including a determination to find ways to accommodate the aspirations of the rising power in the region. Those who argue that the Labor side of politics in Australia has a monopoly on Asia initiatives fail to acknowledge the work of Lyons, Eggleston, Deakin and others in the first half of the twentieth century—as well as such post-war achievements as McEwen’s Australia–Japan Commerce Agreement of 1957, Casey’s and Holt’s pan-Asian diplomatic missions, Fraser’s support for Vietnamese refugees and Downer’s determination to engage Asian regionalism—via Australian membership of the ASEAN-led East Asia Summit. Labor Prime Minister Keating, who made his own substantial contribution to Australia–Asia relations, has over-estimated the degree to which Australia’s “conservative parties” have been guided by a “fervent wish to remain under the wing of imperial protection”, and also by a “deeply ingrained fear of what would happen to us—socially and culturally, as well as economically and strategically—if we dared strike out on our own”. 

Pacific diplomacy was critical in Lyons’s thinking but it was only one dimension of the pre-war conservative heritage. Apart from trade policy, the approach to defence was critical. Recall Deakin’s part in founding the Australian navy—and his initiative in inviting to Australia the US Great White Fleet in 1908, a dramatic celebratory event which anticipated the forging of the ANZUS Pact of 1951 with the United States. Similarly, alongside Lyons’s passion to promote “international co-operation”, he invested heavily in Australia’s defence. Today, in the face of growing regional turbulence, with the Morrison government time and again employing strongly critical language towards China, we designate about 2 per cent of our GDP for defence—or some 5 or 6 per cent of our national government expenditure. By 1938-39 the Lyons government was spending almost 20 per cent of the national budget on defence. The British government at that time was moving more slowly. In 1936 Australian Treasurer Casey, commented that “we are the only part of the Empire … that is making any serious attempt to deal with Defence”.

The Lyons government, of course, failed to prevent Japan from joining Germany—but the attempt made a degree of strategic sense, especially when combined with determined rearmament. Like Deakin before him, Lyons appreciated the value of Australia’s relationship with a Western power—but they both also saw the dangers. Given our geographical positioning, Australia was seen to have special interests. The Asian countries were of vital significance to Australia and in the early decades of the twentieth century conservative (as well as Labor) leaders appreciated the power shifts that were under way—and in particular the far-reaching significance of the decline in international leadership of Australia’s great friend in that period, the United Kingdom.

Asian developments in the first half of the twentieth century certainly caused concern in Australia, but we should not ignore the optimistic elements in the Australian response. True, a “felt threat from Asia” (as Meaney has put it) was an influence on Australian thinking—but it is something of an exaggeration to sum Australia up as an “anxious nation” (in David Walker’s words), driven by a “fear of abandonment”. As Eggleston pointed out, Australians tended to be far more concerned about internal matters—internal development—than external relations. Also, to the extent that members of the Australian leadership did look outwards, some of them—including some on the conservative side of politics—viewed the emergence of a new Asia with a degree of optimism. They saw not only economic benefits but also the possibility of inter-cultural stimulation. With respect to strategic challenges, the Lyons government appears to have acknowledged that a dynamic Asian power, no less than a rising Western power, could be expected to demand greater elbow room in the global order.

The emergence of a specifically Pacific policy took place at a time when many Asian societies were still governed by European colonial powers—and yet Deakin, Lyons and others were realistic about the coming decline of Western influence. They saw that Australia and the mother country had to have different external relations perspectives. Although Britain might retreat from Asia, Australia would remain—and would be surrounded by independent and perhaps assertive Asian states. Today those states, even some of the smaller ones in South-East Asia, are increasingly powerful vis-à-vis Australia—and Australia’s international perspectives must again differ from those of a great-power Western ally.

One message from the 1930s, as Prime Minister Morrison’s speech on the Strategic Update made clear, is the need today to enhance Australia’s defence capacity. But another message concerns crisis diplomacy. Crafting our engagement not only with China but also with India and all the other protagonists in the region in which we “have made our home” (as Deakin put it) will demand more and more diplomatic skill—especially if US hegemony is passing. The Coalition government is seeking to build Australian relations with a range of states in Asia and might gain from an examination of the heritage of conservative engagement with the region—noting the record of independent Australian action, and in particular examining strengths as well as limitations in the way governments of the early twentieth century approached the task of handling a rising Asian power.

Anthony Milner is International Director, Asialink (University of Melbourne) and Emeritus Professor, Australian National University. He wishes to thank Tomoko Akami, Don Greenlees and Nick Tait for their generous advice