1944-46: The Troubled Gestation

Two world wars in one generation, separated by an uninterrupted chain of local wars and revolutions, followed by no peace treaty for the vanquished and no respite for the victor, have ended in the anticipation of a third World War between the two remaining world powers. This moment of anticipation is like the calm that settles after all hopes have died. We no longer hope for an eventual restoration of the old world order with all its traditions… – Hannah Arendt, The Origins of Totalitarianism, 1950

In the theme park version of history, the prosperity of the 1950s arrives as soon as the Second World War ends: The Soviets take Berlin, the Americans war-crime Hiroshima and then poof! It's all white picket fences, Brylcreem and sick fins. But, as it always is, the reality was a tad more complicated. In the cities of Europe, it was estimated it would take at least a decade just to repair all the broken windows, and even far from the fighting the immediate post-war years were more an arduous hand-over-hand climb. The Australia that emerged from the ashes of war was subtly, but significantly, different from the one that had gone in.

 

Ticket to Ride
In the new post-war world, the most salient fact for the Dominions was that Britain was broke. The demands of the war had emptied the U.K.'s coffers and left it bankrupt¹ – and worse, the Exchequer was staring down the barrel of more gargantuan debts to the United States. On top of all the Lend Lease needed for the actual fighting, the U.S. had handed over a final $3.75 billion loan (just over $31.5 billion in 2024), repayable over 50 years, to prime the pump and re-start the British economy – the final £43 million repayment of which wouldn't be made until 2006.²

This had implications for business around the globe, as trade within the Commonwealth was governed by the 1932 Ottawa Agreement, also known as the Imperial Preference System, which put limited tariffs on trade within the Commonwealth but severe tariffs on any trade outside it. Within that agreement was a smaller group known as the "sterling area", made up of countries that pooled their foreign exchange reserves in London and either pegged their currencies to the British pound, or just outright used pounds sterling themselves. Australia was a loyal part of both economic zones, trading largely within the Imperial Preference zone while pegging its currency to the British at a rate of 16 shillings to the pound (i.e. 80 cents to the dollar).

This arrangement had got us through the war, but now it was creating problems. Easy access to British imports had been a boon when Britain had been the world's factory floor, but in the post-war world that honour had passed to the United States, which was now responsible for two-thirds of all manufactured goods worldwide (helped along nicely by that other titan of industry, Germany, currently lying in rubble). But U.S. imports had to be paid for in U.S. dollars, and those were hard to come by within the Commonwealth, as Britain needed every dollar it could scrape up to pay off its war debts. In Australia we were expected to put Britain's needs before our own, so rationing for items like meat, tea and butter remained in place until 1950 – mostly to alleviate similar rationing within Britain itself.

Wartime motor spirit coupons. They ranged from as little as 2 gallons up to 44 or even 100-gallon apportionments. (Source: Museums Victoria)

Crucially, one of the items on that list was petrol. Petrol rationing had been introduced as a wartime measure by the Menzies government in October 1940, when motorists had been forced to apply for a petrol licence, following which they were allocated tickets for "motor spirit" based on their needs. Initially it hadn't been too onerous – private owners had been restricted to about 5,000km of travel per year, which wasn't unbearable in an era before suburbs, when few people had to travel very far to work. But the restriction began to tighten dramatically in April 1941, as it became ever-harder to find replenishment stocks from overseas. During the most severe period, from late 1941 to 1944, motorists were restricted to less than 1,300km of running per year, which only began to loosen after VJ day in August 1945 – first lifting across the board by about 25 percent in September, then increasing to about 190km per month in October, 435km in December, before dropping back to 385km a month in July 1946. This state of two-steps-forward, one-step-back persisted until, in June 1949, the High Court stepped in and abolished petrol rationing entirely on the grounds that it could no longer be justified in peacetime.

This was bad, as Australia's petroleum was now overwhelmingly sourced from the U.S., forcing the leaders in Canberra to regularly go to the British Treasury, hat in hand, and ask them to release enough dollars to pay for it. And with war debts to worry about, there were never enough dollars to go around. In July 1949, Britain convened an emergency meeting of Commonwealth finance ministers and asked them, if they wouldn't mind, to impose restrictions on dollar imports for the common good. Labor Prime Minister Ben Chifley rose to the occasion, working around the High Court's ruling by coaxing agreement from the states instead. After less than a month of unrestricted access to the pump, petrol rationing returned to Australia with a vengeance.

Buying petrol with coupons, Brisbane, 1949. (Source: UNSW)

The outrage was sharp and instantaneous. About one in ten Australians now had a car in the garage, and they found it harder to fuel up now than it had ever been during the war. The matter became so acute that it brought down the Chifley government, flipping Parliament from Labor to the Liberal-Country coalition of returning Prime Minister Robert Menzies. Menzies had campaigned on a promise to do away with rationing (achieved by dipping into strategic defence reserves instead), and so won a dominant 74 seats to Labor's 47. Country Party leader Arthur Fadden later wrote, "I am inclined to think that petrol rationing was the rock on which the [Chifley] government finally foundered." Rationing was finally repealed for good in February 1950 and, coinciding as it did with the outbreak of the Korean War in June, resulted in a sharp spike of inflation (up to a record 23.9 percent), as had long been feared.

This was the messy, uncertain context into which the Holden was born, in November 1948.

The Business Case
The idea of building an Australian car was not new. Even before the war, the Menzies government had put out feelers for someone that might be willing to take on the challenge. A number of proposals had been put forth – some realistic, some less so – but most of the interested parties were British, who'd hitherto refused to invest in anything beyond the most elemental of assembly plants. The whole point of a colonial empire was to enrich the homeland, after all: Colonies that wanted factories of their own needed to get with the programme already. Ergo, the British marques all insisted they got first dibs, while also refusing to chip in any money of their own unless guaranteed what amounted to a monopoly.

Desperate for a solution, in December 1939 the Menzies government had passed the Motor Vehicle Engine Bounty Act, under which the government would subsidise the manufacture of engines to the tune of £30 per engine in the first year, £25 in the second year and £20 in the third year, provided the recipient hit a minimum of 20,000 units per annum. Going further, in May 1940 they also passed the Motor Vehicle Agreement Act, which granted Australian Consolidated Industries Ltd the exclusive right to manufacture cars in Australia. ACI made a bit of noise about building a truck plant and maybe cars at some stage as well³, but nothing much was ever done, and no wonder: Although one of the major industrial concerns in the country, with interests in steel, packaging, tools and engineering, ACI was best known as a glass manufacturer, with glassware factories in both Australia and New Zealand. They had no previous experience with motor cars.

ACI glass factory in Spotswood, Victoria, in 1958. (Source: Museums Victoria)

Fortunately, there was still John Jensen, Chair of the Secondary Industries Commission, which had been set up by the Curtain government to ensure none of the technical skills learned during the war went begging in peacetime. Local car manufacture was one of the prime targets of the Commission, so Jenson arranged a meeting between Lawrence Hartnett and Curtain's Minister for Post-War Reconstruction – Hartnett's old friend from the Munitions board, Ben Chifley. Chifley was determined that there be would an Australian car industry, and if no company could be found to provide one, then the government would establish one all on their own. Indeed, in October 1944, J.J. Kennedy (Comptroller-General of the Department of Customs and Excise) made the first move toward that end, inviting all companies involved in the importing or assembling car bodies to express their interest in taking part in a plan to build cars locally.

But Hartnett was already moving. By 1944 it was clear the Allies were going to win the Second World War, and this prompted industry heads to start thinking about post-war strategy. The end of the fighting would be a major opportunity for an embryonic manufacturer like General Motors-Holden's, as thousands of imminently-returned service personnel had either learned technical trade skills over the course of the war, learned to drive and would be keen to continue doing so, or both. The key was that GM-H would have to move quickly, as factories in the U.S. and Canada were in the same position they were – busy rotating from war to peace and keen to meet several years of back-demand. For a few short years, there would little thought of exporting: Time was of the essence.

One of the most popular cars of the period was the Buick 8/40 Special, one of which was the last car down the Fishermans Bend line before the plant switched over to the Holden. Chifley had one, and Menzies was still driving his when he was sacked in 1968! (Source: Unique Cars and Parts)

Under Hartnett's guidance, GM-H made a detailed study covering all the logistics of manufacturing in Australia, including available steel, component supply, possible engine sizes and types, fuel economy, and what the post-war family was likely to be able to afford. It didn't hurt that Hartnett and his people had been thinking along these lines for a while now: "Mr Hartnett," recorded the minutes of a meeting held in his office, 20 December 1943, "was of the opinion that the present day U.S. automobile was a bit too grandiose for Australia's actual needs, and, on the other hand, European cars were a little bit too much the other way. Perhaps a solution to the problem would be a car somewhere between the two types … Desirable features in an Australian made car included 30 miles per gallon performance, light weight and comfort for long distance driving…"

By happy coincidence, 1944 also saw General Motors Overseas Operations forward a detailed questionnaire asking its non-American divisions for information on the impending post-war world. New York was merely looking for the best way of marketing American cars overseas, but it was the thin end of the wedge GM-H had been looking for. Hartnett put together everything they'd already learned and presented a 76-page report to GMOO in September. The original questionnaire, as far as he was concerned, was merely a point to open negotiations for an Australian-designed car.

Once again, Hartnett liked to tell this story as if this initial toe-in-the-water proposal almost saw him lose it to frostbite, but in fact GM was broadly in favour of the idea – in the abstract, at least. Company chair Alfred P. Sloan Jr wrote that, "...our Overseas Policy Group … had concluded in June 1943 that Australia was probably the only country in which we would want to consider establishing a new manufacturing base after the war." It was just the gritty details that needed to be thrashed out, so that's exactly what Hartnett had his people working on.

1775 Broadway, head office of General Motors from 1926 to 1968. The building still exists, but it's now clad in a modern façade that everyone hates.

The proposal they cooked up was titled Case for An Australian Car, and it contained ideas for a five- or perhaps six-seater family sedan, with tough suspension and comfortable seating suited to Australia's unsealed country roads, an aesthetic style suited to Australia's conservative tastes, and a price tailored to the Australian wallet – between £480 and £525 (between $42,000 and $45,500 in 2023). The initial presentation was made in GM's head office in New York on 20 September 1944, and it was made to GM's Executive Post-War Planning Committee, which comprised the vice-presidents in charge of Engineering, Finance, Marketing and Production. It was a big deal, rehearsed for three weeks in New York and involving eighteen stenographers, seven photographers and photographic reproduction men, two statisticians, and experts from GM finance, materials and manufacturing – all with the sole aim of convincing the Committee to let us build a motor car.

The key detail was that Alfred Sloan was a John Galt-level capitalist who reserved a malignant hatred for all forms of socialism, no matter how mild. By the halfway point of the presentation he was moaning about Australia's damnable socialist government, which ran even the railways and the phone company. Hartnett pointed out, patiently enough, that the government had stepped in to run these things because no private investors had been found to do it for them, and reminded the Committee that Chifley was threatening to do the same with the motor industry if Ford and GM refused to step up.

It was a decisive moment. On one hand, Hartnett was simply stating the plain facts of the matter, but on the other he was already suspect in Sloan's eyes. He was British and not American, for one thing; he was cocky and belligerent in meetings; he'd been involved the Commonwealth Aircraft Corporation scandal (putting private GM money into a military project for what was, in the end, a foreign government, was intensely controversial as far as the Americans were concerned); and worst of all, he was overly chummy with Ben Chifley. In the eyes of the Americans, Hartnett was tainted by association with a socialist government, and there were serious questions about his loyalty.

Alfred Pritchard Sloan Jr, c. 1937. A brilliant businessman, apparently, but not exactly a barrel of laughs.

Despite Sloan's whining, Hartnett had enough friends in the room for the Committee to approve the project. The next step was to get it through the Executive Committee, comprising all GM's vice-presidents and directors, company president Charles Wilson, and company chair Sloan himself. It only took a few minutes for the meeting to put a seal of approval on the plans, and Hartnett returned to Australia with permission to build an Australian motor car – before the socialists could.

If the project seemed to be coming together too easily, then Hartnett and his people were brought back to earth when they met with the Finance Committee. Three weeks after the executives had approved the project, Finance nixed any thought of funding it out of GM's savings account. If the project was to go ahead, GM-H would have to find the money elsewhere. Fortunately, this was the easy part as far as Hartnett was concerned. When he got back from New York, he immediately met with Chifley, who was unfazed by the Finance Committee's decision – he was too amazed Hartnett had managed to talk the rest of GM around. To show his gratitude, Chifley set up a meeting with the Governor of the Commonwealth Bank, Mr H.T. Armitage – and, on the strength of GM's credit rating, Hartnett walked away with £2.5 million loan (over $217 million in 2023), to be paid off by GM-H at commercial rates of interest. To that was added a £500,000 sweetener from the Bank of Adelaide, thanks to Edward Holden being a director of that institution as well.⁴

Hartnett had the funding, and he had permission from his bosses in New York. Now all he had to do was actually build the thing.

Project 2000
If Hartnett seemed a touch over-motivated in getting the Americans to green-light this project, there was a solid reason behind it: He and his crew had already started.

Opinions on this thing are mixed, to say the least: Some say it looks cool, others say it makes their eyes bleed. I think it looks fine, like a 1950s Citroën maybe, and given the durability of the DS it's not impossible Holden could've become Citroën Down Under instead of Baby's First Chevrolet.

Hartnett's technical and design team were already working on a design when the war ended, a vehicle they called Project 2000. Based in the Woodville plant, this design was much more modern than the hand-me-down Chevy that would ultimately become the Holden, featuring straight sides with integrated bumper bars, square headlights and an overall streamlined style that was far ahead of most Detroit ideas of the time. Some of these ideas made to the full-size prototype, which was built on the chassis of a second-hand Willys-Overland and was known as Project 2008. The final 1946 version, Project 2200, was a simplified version fit for mass-production: Practical, minimal, full of straight panels that were easy to manufacture, the Holden engineers were brimming with confidence when they arrived in Detroit with body design models and drawings.

Unfortunately, it turned out Hartnett had kept the programme a secret from New York, and the uproar when it came to light was unprecedented. The Americans had already chosen a mothballed Chevrolet as the basis for the Australian project, so the discovery that Hartnett had a vehicle of his own halfway to completion was the final betrayal. A theme that would become familiar to the entire industry in the coming decades was that the Australians would want one thing, but the Americans would usually want something else: For obvious reasons, the Australians would better understand local market, but the bosses in the U.S. would nevertheless take a patronising "father knows best" approach and, since they controlled the purse strings, could not be gainsaid. Thus, the easiest solution was not to bother telling them until a project was too far along to cancel, something Ford and Chrysler would each learn in the coming decades but Hartnett seemed to know instinctively. Now he'd paid the price.

The GM brass shelved Project 2000 and, quite firmly, informed the Australians that the stillborn Chevy they were working on would be the Australian model. Then, in December 1946, one Harold E. Bettle arrived in Australia with a letter from Edward Riley, general manager of GM Overseas Operations, addressed to Lawrence Hartnett. The letter instructed Hartnett to stand down as managing-director of GM-H and hand the office over to Bettle, a reliable GM money man Sloan felt he could trust – then report to New York for a term of "indoctrination" at head office. It wasn't totally unexpected, but still a bit of a shock at a time when the company was deep into development of its first car, and Hartnett flew to Manhattan to protest. He found little sympathy, and rather than accept the transfer, Hartnett elected to remain in Australia⁵ and resign from General Motors instead. His friend Ben Chifley, now Prime Minister, suggested he manufacture cars of his own with government support, and he took up the challenge only for the business to fail and cost him a considerable amount of money... but that is a story for another time.

The most mercurial⁶ managing-director Holden would ever know had seen his career come to an abrupt and ignominous end. It was quite a legacy he was leaving behind – Pagewood, the Bend, the Australian car itself – but there was no disguising that the GM half of GM-H had won this round. The Holden would not now be the all-Australian project Hartnett and his retinue had dreamed of, but instead just a cast-off piece of Americana.

¹ Just as an example, Britain had spent the war buying up any and all tungsten, regardless of the how inflated the price became, just to deprive the Wehrmacht of access to good anti-tank ammunition.

² Britain was a bit put out when the assistance came in the form of a loan rather than a gift, which is kind of understandable. On one hand, Britain had stood alone against the Nazi war machine for a year, and felt the Americans (as usual late to the party) owed them a certain amount of deference for that solo effort. On the other hand, the idea that the British felt they were owed a huge gift to return them to the unnatural level of dominance they'd gained from three centuries of pillaging around the globe says a lot about entitlement issues of the Imperial ruling class.

³ They acquired the old Cord body dies from the Graham-Paige plant and intended to reinstall them in an Australian factory. So, in an alternate universe, Australia's Own was a Graham Hollywood.

⁴ Amazingly, that's despite GM-H getting the upper hand over Ford by keeping their demands for taxpayer support to a lower level. One wonders how much Ford actually asked for!

⁵ The right decision!

⁶ If you'll pardon that expression...