Blood and Iron — Manufacturing, War and its Aftermath - UQ eSpace

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Chapter Five 273

Blood and Iron — Manufacturing, War and its Aftermath, 1914-1919

World War I (1914-1918) had a significant impact on the Queensland economy, including the
performance of the manufacturing sector. The war dramatically altered patterns of trade,
internationally and domestically; exports and imports were disrupted, and shortages of skilled
labour, materials, and capital, and reduced demand, all contributed to the unsettled conditions
experienced in the manufacturing sector. The war effectively severed the strong growth trend
in manufacturing activity that preceded the war. The vagaries of the world commodity
markets, and local climatic conditions, severely affected primary processing and metals
production. The outbreak of war shattered business confidence: production stalled, contracts
were not renewed, productive capacity outstripped demand, and inflation increased prices
which further stifled demand. Mass enlistments deprived many industries of much needed
skilled labour and the loss of consumptive demand of the service personnel who left
Queensland was sorely felt by local manufacturers. There was some structural change in the
ratio of male to female employment in the early years as more females entered jobs vacated
by the men. Restricted access to raw materials and manufactured items from overseas led to
acute shortages of materials, especially iron and steel, chemicals, machinery, and machine
tools. Opportunities to establish manufacturing ventures to exploit shortages in imported
goods were reduced by shortages of labour, materials, and capital. The level of successful
import replacement in Queensland was quite low. Despite these difficulties some progress
was made, however, and structural changes and diversification were evident. Although
manufacturing employment decreased and then stagnated, output increased and the sector
solidified its increasingly important position in Queensland’s economy during the war.

Australian Manufacturing and World War I

World War I severely interrupted the patterns of trade within the international economy. Each
nation, and the combatant alliances that evolved, steered production towards a war footing as
their forces of production were mustered for war. World War I presented Australia with as
many economic problems as it did opportunities. Overseas trade in its commodities was
considerably disrupted. Australia’s export trade was not restricted by a lack of demand, but
rather the commandeering of merchant fleets by foreign governments and wartime shipping
Chapter Five 274

losses, meant that shipping was at a premium, and an outlying market like Australia therefore
was particularly vulnerable to maritime transport shortages. At home, restricted imports
tended to stimulate Australian industries to diversify towards the manufacture of goods which
were usually imported. Some areas of the manufacturing sector prospered from Australia’s
mobilisation, such as in food preparation, clothing, textiles, footwear, leatherware, metals,
engineering, shipbuilding, and chemical production.1 While the war stimulated manufacturing
production in some areas, and obstructed it in others, the gains made were often offset by
shortages in skilled labour, materials, and capital which had the effect of generally retarding
the sector.2

The Queensland War Economy

The economic outlook for Queensland had been a positive one in the months immediately
prior to the war: good seasons and strong overseas and domestic demand fuelled an
expansionary phase. As has been previously noted in Chapter 2, the Denham government had
overseen an expansion in rural settlement, immigration, and railway construction, stimulated
by increased pastoral and agricultural exports. Optimistic appraisals of the prospects of the
secondary industries in Queensland were conspicuous by their absence. Local conditions,
such as the small and decentralised population, and higher than average wages, were
significant deterrents to investment in manufacturing.3 The speed with which the economic
dislocations affected Queensland astonished many Queenslanders. The economic confidence
which abounded in July 1914 had virtually evaporated within days of the outbreak of war.
Business confidence collapsed, orders were cancelled, and unemployment increased rapidly.4
The situation was exacerbated by the doubly cruel blow of a serious drought that began with
the failure of the 1914-15 wet season.5 The drought severely hampered the productive
capacity of the pastoral, agricultural and mining sectors.6 The economic crisis exposed many

1 Helen Hughes, 'Federalism and Industrial Development in Australia', AJPH, 10, 3, (1964), p. 329.
2
A.G.L. Shaw, The Economic Development of Australia (Croydon: Longmans, 1969), pp. 130-5. & N.G. Butlin,
‘Some Perspectives of Australian Economic Development, 1890-1965', in C. Forster, ed., Australian Economic Development in
the Twentieth Century (Sydney: George Allen & Unwin, 1970), pp. 281-2.
3 W.R. Wilkie, Brisbane Chamber of Commerce Annual Report [BCCAR], 1913-1914, pp. 20-2.
4 Ross Fitzgerald, "Red Ted": The Life of E.G. Theodore (Brisbane: University of Queensland Press, 1994), p. 58.
5
Dan Daly, Wet as a shag, Dry as a bone: drought in a variable climate (Brisbane: Department of Primary Industries
Queensland, 1994), p. 117.
6
‘The Report of the Chief Inspector of Factories and Shops for 1914-1915 [F&SR], QPP, 3 (1915-1916), p. 803;
‘Annual Report of the Department of Agriculture and Stock [A&SR], 1915-1916', QPP, 2 (1916-17), p. 645. & ‘Annual Report
of the Under-Secretary for Mines [Mines], QPP, 3 (1915-1916), p. 1435.
Chapter Five 275

weaknesses in the structure of Queensland’s economy, particularly its lack of industrial
diversity. The imbalance towards, and reliance on, rural industries meant that Queensland’s
economy was particularly vulnerable to fluctuations in overseas markets, and droughts and
floods, when it could not fall back on a well developed and dynamic secondary industries
sector as the commodity trade weakened. Opportunities which arose for the manufacture of
new lines, to replace imports, were often missed because of the state’s deficit in
manufacturing enterprises, skills base and capital formation.7 The spectre of unemployment
was exacerbated by the rapid rise in inflation and the cost of living, shortages of capital for
investment, and a corresponding growth in Commonwealth and state taxation.8

Despite these difficulties, some diversification took place and the Queensland Chamber of
Manufactures (QCM) was pleased to note an increase in Queensland manufactured goods on
the local store shelves and which also were supplied to the Australian and British armed
forces. Some of these lines included

... glycerine, prismatic compasses and other scientific instruments, scientific glassware, brass
buckles, harness and leather mountings, brass mounts for military equipment such as studs,
etc., mild forged steel heel plates for boots, knitting needles, strong-room doors, engineers’
turning lathes, dehorning instruments, and numerous veterinary implements.9

The production of these items was more significant, however, than the contribution
Queensland made to the manufacture of munitions.

The economic impact of the war can clearly be seen in Queensland’s trade figures, which
slackened markedly early in the war and then stagnated. Trade, the total value of imports and
exports, fell from £19 million in 1913 to £17.2 million in 1914, with the value of trade only
exceeding that achieved prior to the war in 1915 (£19.4 million), 1917 (£20.8 million), and in
1919 (£18.5 million). The value of Queensland’s exports fluctuated between £8 and £14
million during the war, while imports remained relatively stable between £6 and £7 million,
with a low figure of £4.5 million in 1918. Pastoral and agricultural exports rose and fell
dramatically, mining exports collapsed, while other manufactured and miscellaneous goods
grew steadily. Despite difficult trading conditions, Queensland maintained a positive trade

7 ‘F&SR 1914-1915’, QPP, 3 (1915-1916), p. 803.
8
D.J. Murphy, The Establishment of State Enterprises in Queensland, 1915-1918, M.A. Qual., University of
Queensland, 1965, p. 190.
9
‘Industrial Events for the Month of April’, QIG, 1, 3, May 1916, pp.160-1. & ‘AGM’, BCCAR, 1915-16, pp. 34-5.
Chapter Five 276

balance owing to the value of its exports exceeding that of it imports.10 The total value of
production of all sectors stagnated between 1914 and 1916, and then rose before stagnating
again between 1917 and 1919. However, where the rural industries stagnated, or showed only
marginal increases in production, the manufacturing sector was notable for its steady
growth.11

The increased cost of living and high unemployment were the most prominent political
economic issues of the war years, and which gave rise to a rich vein of public dissent that
Labor was to successfully exploit in the 1915 elections. The cost of living rose by 20 per cent
between 1915 and 1918, while real wages declined by 16 percent between 1914-15 and 1918-
19.12 Contemporary research on prices conducted by the Commonwealth Inter-State
Commission (I-SC) during 1917 and 1918 questioned the theory that increased prices
occurred because of higher costs of wages and materials, owing to demand, and from the
sustained high levels of government spending and the subsequent expansion of the currency.
I-SC research found that the inefficient distribution of goods and price manipulation and
exploitation by wholesalers’ associations were the primary causes behind price inflation.
Indeed, the powerful Brisbane Merchant’s Association (BMA) was noted for its manipulative
trading practices and propensity to ignore government price fixing proclamations.13 More
recent research, however, demonstrates that the root cause of wartime inflation was the
contraction of money markets when governments attempted to raise local sources of capital
by offering above market interest rates on government securities. Gold exports were
prohibited, and paper currency was introduced, which in turn prompted sustained rises in
retail prices. While some of this increase can be attributed to the practices of wholesalers and
others it was really a failure by price control authorities to deal effectively with the structural
inflation associated with the fiscal policies of the state and Commonwealth governments that
gave the greatest impetus to price inflation.14 In any event, the economic conditions brought

10
‘Total Exports & Total Imports 1913-1919', Summary of Queensland Statistics, Statistics of Queensland [QSS],
QPP, 1 (1931), pp. 22-5k.
11
‘Production of Queensland Industries - Estimated Gross Value 1913-1920', A.B.C. of Queensland Statistics
[ABCQS], 1929, p. 199; Commonwealth of Australia, Commonwealth Bureau of Census and Statistics, ‘Table 158 - Summary
of Australian Production Statistics for the years 1909-10 to 1919-20', Production Bulletin No. 14, p. 103. & ‘Summary -
Production’, QSS, QPP, 1 (1931), p. 20k.
12 A. Lougheed, The Brisbane Stock Exchange, 1884-1984 (Brisbane: Boolorang Publications, 1984), p. 90. & Shaw,
Economic Development, p.131.
13
‘Inter-State Commission of Australia - Prices Investigation No.6 Report - Groceries’, Inter-State Commission, 22
March 1918, pp. 8, 21-22 & 60-61. & ‘Inter-State Commission of Australia - Prices Investigation No.5 Report - Bread’, Inter-
State Commission, 9 February 1918, pp. 21-23., A2: 1918/871, Australian Archives [AA] (ACT).
14 Shaw, Economic Development, p.131.
Chapter Five 277

about by the war significantly altered international and domestic trading conditions for
Queensland and made the lot of the manufacturers a most difficult one.

The Manufacturing Sector in Queensland, 1914-1919: A Statistical Profile

Factories

World War I did little to assist the development of Queensland’s secondary industries. Indeed,
it effectively halted the strong pattern of structural growth that was evident in the years
immediately preceding the war. In most aspects the sector’s performance was less than
positive, nevertheless the secondary industries survived the economic crisis. According to the
Statistics the number of factories in operation remained relatively stagnant during the war
years. In 1914 there were 1796 factories (with four or more employees) recorded, and this
number declined by 100 between 1913 and 1915 to a low of 1742. By 1917 the number had
grown to 1793, but had fallen to 1754 by 1919. The short post-war boom lifted factory
numbers into another expansionary phase with their number approaching 1800 in 1920.15
During the war, the level of compliance and coverage of the Factories and Shops Act had
improved considerably and the statistics provided in the ‘F&SR’ are therefore more useful.
The ‘F&SR’ series indicates a quite different trend from that apparent in the Statistics figures.
After a decline to 2643 factories by 1914 (a similar trend to that demonstrated in the
Statistics), there was significant growth to 1915 (2832), to stabilise in 1916, before falling to a
low of 2486 in 1917. This was followed by a very strong recovery to 3292 by 1920, the
opposite of the trend recorded in the Statistics (see Fig. 5.1 and Fig. 5.2).16

15 ‘Summary - Factories’, QSS, QPP, 1 (1931), p. 20k.
16
'F&SR 1913-14', QPP, 3 (1914), pp. 50-9; '1914-15', QPP, 3 (1915-16), pp. 811-20; '1915-16', QPP, 3 (1916-17),
p. 43; '1916-17', QPP, 2 (1917), pp. 1050-70; '1917-18', QPP, 1 (1918), pp. 1325-7; '1918-19', QPP, 2 (1919-20), pp. 261-70 &
'1919-20', QPP, 2 (1920), pp. 700-10.
Chapter Five 278

The disparity between the two series occurs because the ‘F&SR’ returns include the great
many small factories, with fewer than four employees, that apparently have not been recorded
in the Statistics. The ‘F&SR’ series suggests that there was considerable growth in the small
establishments during this period, at least until 1918, and this, with the differences in
geographical boundaries and census dates, accounts to some degree, for the larger number of
factories recorded in that series. This discrepancy in itself indicates that the manufacturing
sector was larger than is immediately obvious from the data recorded in the Statistics.
Chapter Five 279

Table 5.1

QSS Factories Classified by Number of Employees, 1913-1920

[NB: ‘F&SR’ factory series by number of hands discontinued after 1911. However, a QSS series is available
from 1911 and is used from that year onwards. * = Classifications altered after 1911]

YEAR F&SR YEAR QSS 1-3 4 5-10 11-20 21-50 51-100 101+

1912-13 2905 1913 1838 206 195 635 360 264 93 85

1913-14 2643 1914 1796 214 167 627 338 276 88 86

1914-15 2832 1915 1775 243 172 597 328 262 92 81

1915-16 2824 1916 1782 315 179 577 310 238 83 80

1916-17 2486 1917 1793 343 178 560 309 241 79 83

1917-18 2639 1918 1778 334 165 548 328 242 76 85

1918-19 3180 1919 1778 327 172 545 327 249 78 88

1919-20 3292 1920 1754 319 179 543 326 256 80 92

Sources: ‘Table - LXVIII’, QSS, QPP, 1 (1913), p. 58k; LXIX, QSS, QPP, 1 (1914), p. 58k; LXVIII, QSS, QPP, 1
(1915-16), p. 58k; LXIX, QSS, QPP, 1 (1916-17), p. 58k; LXIX, QSS, QPP, 1 (1917), p. 59k; LI, QSS, QPP, 3 (1919-20),
pp. 40-1k. & LII, QSS, QPP, 2 (1921), p. 40k.

The decline and stagnation in factory numbers was not universally experienced across the
various classifications defined by the average number of employees per factory. In the group
of factories with fewer than four employees there was a steady increase in numbers between
1914 (214) and 1917 (343), followed by a period of stability, with a slight decline after 1918
(334) to 1920 (319). In the 4-10 employee group, however, there was a steady decline from
791 in 1914, to a low of 713 in 1918, followed by a weak recovery in the two years to 1920
(722). The next group, with 11-20 hands, showed a steady reduction in numbers from 338 in
1914 to 310 in 1916 and 1917, with a recovery from 1918 (328) to 1920 (326). The 21-50
group increased strongly to 1914 (276) followed by a downward trend to a low of 238 in
1916, and then recovered to 256 by 1920. The 51-100 group increased from eighty-eight in
1914 to ninety-two in 1915. Factory numbers then contracted to seventy-six by 1918, prior to
another recovery in the years to 1920 (80). In the final group, factories with 101 or more
hands, the trend was opposite to that of the 50-100 group, showing a reduction from eighty-
six in 1914 to a low of eighty by 1916. The group recovered strongly so that from 1917 it had
overtaken the 50-100 group to reach ninety-two by 1920. These figures demonstrate that, in
general terms, the larger firms employing over twenty employees fared better than the smaller
concerns, with the exception of the group with fewer than four hands which expanded up to
Chapter Five 280

1917.17

Employment

Employment in the manufacturing sector declined markedly from a peak of 43,280 in 1914 to
40,150 by 1916. A soft recovery occurred through to 1918 (40,990) and, after stalling in 1919,
the recovery gained momentum through to 1920 (43,200) (see Fig. 5.3).18 The ‘F&SR’
figures, although lower than the Statistics figures, reflected the different census dates and
coverage of many smaller factories, but nevertheless revealed a similar trend.19 The
employment trends experienced by male and female manufacturing workers were quite
different during this period. Male employment increased from 34,175 in 1913 to 35,717 in
1914 (82.5 per cent of the total workforce), but with the outbreak of war the male workforce
had declined to a low of 32,365 by 1916. A steady recovery was experienced after 1916 and
by 1919 male employment had exceeded the 1914 figure (33,851 or 82.7 per cent of the
manufacturing workforce) and by 1920 had reached a total of 36,011.

17 Table LXVIII, QSS, QPP, 1 (1913), p. 58k; LXIX, QSS, QPP, 1 (1914), p. 57-8k; LXVIII, QSS, QPP, 1
(1915-16), p. 57-8k; LXIX, QSS, QPP, 1 (1916-17), p. 57-8k; LXIX, QSS, QPP, 1 (1917), p. 58-9k; LI, QSS, QPP, 3
(1919-20), pp. 40-1k. & LII, QSS, QPP, 2 (1921), p. 40k.
18 ‘Summary ’, QSS, QPP, 1 (1931), p. 20k.
19
‘F&SR 1913-14', QPP, 3 (1914), pp. 50-9; '1914-15', QPP, 3 (1915-16), pp. 811-20; '1915-16', QPP, 3 (1916-17),
p. 43; '1916-17', QPP, 2 (1917), pp. 1050-70; '1917-18', QPP, 1 (1918), pp. 1325-7; '1918-19', QPP, 2 (1919-20), pp. 261-70 &
Chapter Five 281

Female employment decreased slightly to 7565 in 1914, but unlike their male counterparts
female employment gradually increased and reached a peak of 7783 by 1916. However, this
trend was temporary: female employment slumped from 1917 onwards to reach a low of 7040
in 1919. A recovery, however, was evident by 1920 when a figure of 7185 was recorded (see
Fig. 5.4 and Fig. 5.5a and Fig 5.5b).

'1919-20', QPP, 2 (1920), pp. 700-10.
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This disparity is important because the sexual division of labour in manufacturing indicates
that the trades which were dominated by women, trades such as clothing, textiles, and
some food preparation, fared better in the early years of the war, a trend that was later
reversed. Indeed, the percentage of females in the manufacturing workforce increased from
17.5 per cent in 1914 to 19.4 per cent by 1916, and then returned to 17.2 per cent by 1919.20
This trend strongly suggests that there were two key issues affecting female manufacturing
employment. First, clothing and food production were, to some extent, essential items and
were less exposed to drastic cuts in demand during war. Second, the viability of these
industries was enhanced by the lower wages paid to their predominantly female workforce
and to some extant insulated these industries from reductions in demand and from price
inflation.

Statistics on the sexual division of labour in manufacturing are incomplete, but some
examples of the scope of female employment in secondary industries are useful. There was a
significant increase in the intra-sectoral activity of females in the manufacturing industries
during the war. Industries dominated by female employees had increased by 1914 to include,
textiles (85 females out of 129 employees), clothing and shirt making (3773 out of 4861),
dressmaking and millinery (1408 out of 1425), hat and cap making (88 of 127), paper box and

20
Table LXVIII, QSS, QPP, 1 (1913), p. 57-8k; LXIX, QSS, QPP, 1 (1914), p. 57-8k; LXVIII, QSS, QPP, 1
(1915-16), p. 57-8k; LXIX, QSS, QPP, 1 (1916-17), p. 57-8k; LXIX, QSS, QPP, 1 (1917), p. 58-9k; LI, QSS, QPP, 3 (1919-20),
pp. 40-1k.