SM Bruce: the businessman as Treasurer
John Hawkins
Stanley Melbourne Bruce, a wealthy businessman with an aristocratic air, served as Treasurer in 1922, bringing down one budget, during his meteoric rise to the prime ministership. He stressed the need to bring ‘businesslike’ practices into government and promote development under his slogan ‘men, money and markets’. A number of commissions and inquiries were set up to inform policymaking, and Bruce looked favourably on establishing independent boards to manage some government operations. Bruce established a sinking fund to retire the debt accumulated during the First World War. He also tried to rationalise industrial relations arrangements.

Source: National Library of Australia.

Introduction
Stanley Melbourne Bruce PC CH MC, later Viscount Bruce of Melbourne, preferred to be known as ’SM’ than ’Stanley’. (He was never called ’Stan’.) His wealth and interests set him apart from the average Australian. Even at the time, he seemed like he had stepped out of a Wodehouse novel. He was the only Prime Minister to come to the job already with a valet, a butler and a chauffeur‑driven Rolls Royce. His sports were riding, rowing, golf and royal tennis. He was always immaculately attired, and had impeccable manners and what some regarded as matinee idol looks. The Bruces always dressed for dinner, even when dining alone. He was seen as an Englishman in Australia but an Australian in England.
Bruce prided himself on bringing businesslike processes to politics. He had ’a knowledge of business rare among politicians and a political sense rare among business men’. While a clear speaker, he was not famed for his oratory. He was praised for his ’inexhaustible vitality’ and ’sense of balance and proportion’.
Bruce was one of the youngest treasurers, and did not serve the usual apprenticeship in a junior ministry or as an opposition frontbencher. 
Early career and entry into politics
Bruce was born on 15 April 1883 in Melbourne, the youngest child of John Bruce, a Scottish immigrant who had worked his way up to become a prosperous partner in the softgoods importing firm of Paterson, Laing and Bruce (PLB); and Mary, nee Henderson. John Bruce founded Australia’s first golf club (later the exclusive Royal Melbourne Golf Club). Although PLB struggled during the 1890s depression, the young Bruce still led a comfortable lifestyle. He spent some of his early childhood in England, then attended Melbourne Grammar School, where he was school captain and also captained the football, cricket and rowing teams. Bruce worked in PLB’s Melbourne warehouse briefly before going up to Trinity Hall, Cambridge, where he graduated with a BA in Law. He rowed in the winning Cambridge crew of 1904, and later successfully coached it. But he did not distinguish himself academically.
Bruce worked for a legal firm and successfully read for the bar at Middle Temple, but apparently without any great enthusiasm for the law. In 1908, he was appointed chairman of PLB. Bruce’s reports to shareholders included detailed analyses of Australian political developments. The company prospered under Bruce’s chairmanship. He introduced profit‑sharing into it.
Bruce married Ethel Dunlop Anderson, from an established Melbourne family, in July 1913 and she remained his closest confidante. They had no children and Bruce said ‘she made my career her hobby’.
Bruce enlisted in the British army when the First World War broke out and served as an officer at Gallipoli. Twice wounded (severely enough to still be using crutches two years later), he was the recipient of the Military Cross and the Croix de Guerre avec Palme. In 1917, Bruce returned to Australia to take over as general manager of PLB.

As a gallant wounded returned soldier, Captain Bruce became involved in recruitment speeches and this became his entrée into politics. In 1918, he was approached to run for the Nationalist Party for the by‑election in the federal seat of Flinders, which he won easily, stressing in his campaign the need for business methods in government.
He joined a group of backbenchers known as ’economy corner’ opposed to prime minister Billy Hughes’ expansionism. He was already showing the support for inquiries for which he would later be noted, describing a British commission on income tax as a ’mine of information’ and calling for a similar inquiry in Australia.
In July 1920 William Watt resigned as treasurer. There are reports that Bruce was offered the post, which would have been an extraordinarily rapid rise, but he declined. Instead the post passed to a reluctant Joseph Cook.
In 1921 Bruce served as Australia’s representative at the League of Nations (he was the only Australian MP in Europe, being on a golfing holiday in France while attending to his British business interests), where he spoke movingly of the horrors of war. 
Treasurer
When Cook resigned as treasurer in late 1921, Hughes initially offered Bruce the customs ministry. Bruce pointed out the potential conflict of interest in a large importer being offered that job. But he said it would be hard to turn down the treasuryship. To Bruce’s surprise, Hughes upped his offer, perhaps influenced by a need to appease business donors. Bruce took over as treasurer (the fourth in four years) in December 1921, resigning as managing director of PLB.
Bruce was initially shocked by the manner in which Hughes conducted cabinet meetings, which Bruce described as ‘strange and mysterious affairs, where really nothing was seriously discussed’. Bruce’s response was that he ‘ceased to put Treasury items on the agenda, and simply went ahead and did whatever I thought was necessary’. But on one occasion Hughes himself brought to cabinet a large spending proposal and coerced his colleagues into supporting it. Bruce said he would resign. Hughes just replied ‘Oh! Anyway, it’s getting late and we had better catch our trains’, and the meeting broke up. No more was ever heard of the proposal.
Bruce’s only budget, in 1922, was brought down on what was then regarded as the very early date of 17 August. Bruce cut a range of taxes, which some viewed as reflecting electoral rather than economic considerations. He was fortunate in coming to the Treasury at the turning point of the post‑war recession, which enabled him to cut tax rates and still show a surplus.
He started his budget speech by praising his Treasury officers. Their preliminary estimates of revenue and expenditure for the previous financial year were within 0.1 per cent of the final outcome, and Bruce exclaimed ‘I have never seen a comparable feat of accounting’. Bruce then turned to giving a clear exposition of how he saw the nature of fiscal policy. Unlike some conservatives, Bruce was willing to countenance an increase in national debt. He established a sinking fund to redeem the domestic war debt within 50 years, but in a precursor to the Intergenerational Report eight decades later, also gave examples of the implications for the long‑run debt position of alternative repayment schedules, and argued his preferred schedule was a ’fair and equitable arrangement as between the present generation of tax payers and those generations which will succeed’. Other features of his budget speech were a comparison of the increase in government spending since the pre‑war budget of 1913‑14 with the increases in prices and public service wages over the same period; and a comparison of the budget with benchmarks laid down at the International Finance Conference of 1920. 
An innovation was the idea of borrowing for public works by the post office and appointing a board of businessmen to run it. He foreshadowed changes to the maternity allowance which he argued was failing to lower infant mortality. 
Country Party leader Page congratulated Bruce on his ‘lucidity and clearness’ but regretted he had not been firmer in halting what Page regarded as a’ rake’s progress’ of extravagant government expenditure. Labor leader Scullin also called for a greater reduction in government debt. One of his conservative predecessors as treasurer, Watt, publicly attacked Bruce’s budget as involving ‘prodigal spending’ and ’Micawber finance’ and worried that concessions to business was creating a ‘mendicant race’.
Bruce ‘brought about many alterations in the Treasury itself, particularly in the manner of presenting financial statements to parliament’. Some of his contemporaries called Bruce ‘one of the best Treasurers the Commonwealth has ever had’.
He presented his ideas clearly. In a lecture he set out his five principles of taxation:
1.	subjects should contribute in proportion to ability, the revenue they enjoy under the protection of the state;
2.	tax should take out of the pocket as little as possible above what it brings to Treasury;
3.	tax should fall on revenue not capital;
4.	tax should not touch what is necessary for the existence of the contributor; and
5.	tax should not put wealth to flight.
On these criteria he opposed land tax and thought income tax was the ’most just and equitable’, but felt that Australia’s income tax regime ’tried to be too just and too equitable’ and so was ’more complicated and difficult than any income tax system in the world’.
His concern about reducing costs of production led him to take to cabinet a proposal to reduce parliamentary allowances ’to set an example’. Such a suggestion from the independently wealthy Bruce would doubtless have not been well received, and the suggestion was not adopted.
Prime minister: coaching a cabinet
Hughes failed to win a majority for his Nationalist Party at the 1922 election. The Country Party refused to join a coalition under Hughes and so Hughes ceded the Nationalist leadership to Bruce. The Country Party leader Earle Page became deputy prime minister and treasurer. It was the first federal cabinet in which all members were Australian‑born and at 39, Bruce was its youngest member. 
Bruce’s views on managing a cabinet seemed to reflect the lessons he learned as a rowing coach. Among these were that ’many good crews have been spoilt by pandering to men who once rowed well but also require and resent being coached’, and ’never row a man in a crew … whom you feel you cannot trust’; lessons that could be applied especially to Hughes. He also seemed to draw from his coaching the need for careful management and stability in his team.
Bruce had as a goal to increase the population of Australia and the size of its economy, largely on security grounds, an early version of the ’populate or perish’ credo, but also on economic grounds. He saw development as requiring, in his trademark phrase, ’men, money and markets’. And he looked to Britain for all three. He was keen to attract British capital and strengthen trade links, but made little headway in strengthening imperial preference. Despite his urban background, Bruce shared the common Australian view that rural development was of major importance, although by this time the best farming land had probably all been developed.
Bruce consistently favoured making decisions based on good information and expert advice. He appointed many commissions and inquiries. At the Imperial Conference of 1926 Bruce arranged a visit by a British Economic Mission. Bruce established the Council for Scientific and Industrial Research, for which he took a personal interest in finding top British scientists, and the Development and Migration Commission. Another indicator of his interest in basing decisions on information was placing Frank McDougall and future treasurer Richard Casey in London to act as his ’eyes and ears’ there. He also devolved some responsibilities from parliament to boards of experts, mostly drawn from the business community. 
Unlike many politicians, Bruce saw value in the work of economists, declaring ’economic research is not less important than scientific research’. In 1929, he produced a Bill to establish a Bureau of Economic Research. He welcomed the promise of economics expertise by commissioning economists to inquire into the optimal level of protection. The Brigden Report on the Australian tariff was the first time economists advised upon a major policy issue in Australia and was well regarded overseas. Internationally, a proposal by Bruce at the 1923 Imperial Conference to establish an advisory Imperial Economic Committee was adopted at the meeting but later rejected by the British government. 
However, he became less impressed with Australian economists towards the end of his time as prime minister, perhaps because he felt they had not succeeded in raising Australian prosperity to the extent to which he aspired. He commented, ’If one is completely a master of a subject it is never necessary to be completely unintelligible. Practically every economic writer, however, is.’
As described in the essay on Page in the next Economic Roundup, other economic initiatives of the Bruce—Page government included establishment of the Loan Council, abolition of the 25 shillings per head payment to the States, introduction of tied grants, and creation of an independent board for the Commonwealth Bank. How much of the economic reforms of the Bruce—Page government were due to Bruce is not clear, although some writers claim Page took excessive credit. It has been suggested that Treasury had prime carriage of much policy work when Bruce was prime minister.
Bruce wanted to remove the overlap between federal and state responsibilities for arbitration. When a referendum to centralise power with the federal government in September 1926 failed, he tried to give responsibility exclusively to the States. When a parliamentary vote was narrowly lost, Bruce requested dissolution of parliament. At the subsequent election, in October 1929, not only was the government defeated, but Bruce lost his own seat to a trade unionist, the first sitting prime minister to do so.
By late 1928 Bruce believed ’a very serious financial and economic crisis on an almost unprecedented scale was looming’ around the world. But he ’didn’t deliberatively commit political suicide to avoid being in power during the Depression’.
Bruce’s subsequent career
Bruce won back his seat of Flinders in December 1931, despite having spent the entire election campaign in England. In the interim he helped guide PLB through the 
Depression, but made few public comments on economic issues. Joseph Lyons formed the United Australia Party from the Nationalists and Labor defectors and led it to a decisive victory. Lyons took the Treasury himself but appointed Bruce as assistant treasurer from January to June 1932. One suggestion was that as the election had ’centred on finance and honesty … Lyons determined to take personal responsibility for its implementation’. Another view was that Lyons took the title to reassure the public as Bruce was ’having to live down his reputation for reckless expansion’. While ’assistant treasurer’ sounds a lowly title for a former prime minister, Jack Lang thought that ’Bruce was the Prime Minister, but allowed Lyons to adopt the title’, and Bruce said he had to ’hold Lyons’ hand’. 
In September 1932 Bruce became resident minister in London. He resigned from parliament in October 1933, staying in London as High Commissioner, a post he held until 1945. He used his links to the British establishment to good effect, helping attract support for Australian borrowing in the London markets.
He also represented Australia at the League of Nations from 1932 to 1939 (serving as its first Australian‑born president in 1936 and in 1939 chairing the League’s special committee on the development of international cooperation in economic affairs), at the World Economic Conference in 1933 and in the British War Cabinet.
There was talk on a number of occasions of a political comeback but nothing eventuated. In 1947 he became Viscount Bruce of Melbourne. He spoke rarely in the Lords, usually on Australian affairs or on doing more for the third world. He joined a number of company boards in London, chaired the World Food Council  from 1947 to 
1951 and achieved various honours. In 1959 he was best man when fellow septuagenarian and former treasurer Earle Page remarried. In 1951 Bruce became the inaugural chancellor of the Australian National University, serving until 1961. While as a London resident, his involvement with university affairs was limited, when he died in London on 26 August 1967, shortly after Ethel, his will provided a generous endowment for the University and his ashes were scattered over Canberra.

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