Ideology and the Economy: Capital Issues Controls,Inflation and the Menzies Government, 1950–51

The Defence Preparations Act 1951 was conceived as a solution to an ideological as much as the constitutional dilemma the Menzies government faced as a result of the inflationary crisis of 1950–51. Drawing on Cabinet Notebooks, we argue that the government used the Act to facilitate peacetime access to capital issues controls under the defence powers, but also to reassure its supporters and the public that turning to direct economic controls was not a vindication of the “socialism” it promised on election to stand against. While the Act enabled the government to convince the High Court that imposing anti‐inflationary controls was linked to defence preparations, it was also a way for it to maintain ideological coherence as it sought to breach a principal tenet of its political philosophy.