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By 1890 Australian trade unions enjoyed the highest membership density in the world. This success was based upon two main forms of organisation: one transplanted from the 'mother country’, Britain; the other was a unique form of colonial organisation, which eventually proved more important in many respects.

The earliest colonial unions were craft-based. They first appeared in the 1830s and 1840s, but could only claim continuous association from the time of the gold rushes in the 1850s. These colonial craft unions were modelled very closely on their British counterparts, in terms of structure, strategy and tactics, regalia and ritual. Some were even branches of British unions. Coal miners' unions, which began from the 1860s in Newcastle (New South Wales), were also closely modelled on British organisational forms. In both cases this is hardly surprising, since a very high proportion of both skilled workers and coal miners were British immigrants.

By the 1870s craft unions (particularly in the building, printing and metal trades) and coal miners' unionism were well-established in the colonies. Both forms of unionism had flourished in the colonies, at the same time when they underwent considerable growth in Britain. Labour law in Britain became less restrictive in relation to unions by the 1870s, and British statutes were usually enacted in the colonies soon afterwards, whilst decisions in British common law were automatically applicable in the colonies. However, there was always a time-lag in application of British legislation in the colonies, notably with the full legalisation of unions, and some colonial legislation (especially Master and Servants Acts) was actually harsher. On the other hand, the colonial application of such legislation was uneven, and never seriously or consistently hindered the growth of unionism.

In the 1880s colonial trade unionism underwent tremendous expansion amongst unskilled workers, such that in the most populous and industrialised colonies of New South Wales and Victoria it covered over 20 per cent of the workforce. In Britain also, unionism spread to the unskilled soon afterwards. The labour movement in both countries became more susceptible to socialist influences and interested in independent political organisation. However, although the language of ’new unionism' was shared in both countries, by contemporaries and later historians, it did not denote entirely the same thing. Its spread was greater in the colonies, and also covered a greater array of occupations, including rural workers. Political organisation was far more substantial in the colonies, where the Labor Party emerged in the 1890s, and achieved government in 1910. In some respects colonial new unionism was unique. This was best demonstrated by the Shearers' Union, which became the Australian Workers' Union (AWU), and the Amalagamated Miners' Association (AMA), which enrolled metal (but not coal) miners. Both included significant groups of members who were independent from wage labour for part of their working time, either as small farmers or as independent miners.

These unions departed significantly from the previous colonial and British forms of labour organisation. They were the first national labour organisations in Australia. As a consequence of this and the itinerant nature of much of their membership, they developed the first bureacratic branch structures with a comparatively large number of full-time officials, in contrast with the participatory democracy of the localised craft unions. The AWU became the largest and most influential of all Australian unions, especially when it began enrolling beyond its rural base and became a general union from the late 1890s.

The significance of the AWU’s influence was threefold. First, it was dominated by small landholders, unlike any other labour organisation. Secondly, it was dominated by the native-born, and adopted a nationalist and republican ideology, which was hostile to British imperialism. Thirdly, its size and structure allowed the AWU considerable influence in the early Labor Party, which relied upon the AWU to deliver a large proportion of rural seats. This importance to the early Labor Party gave the AWU tremendous influence in determining policy favourable to small landholders. As the major bearer of colonial republican nationalism, the AWU was also largely responsible for imparting this ideology to the Labor Party, which became the traditional exponent of nationalism in Australian politics. Finally, the AWU was the major supporter of a system of compulsory state arbitration in the Labor Party, which adopted this policy at the end of the 1890s. When this system was enacted in the early 1900s with Labor support, it signalled a new, interventionist departure from the role of the state which had been inherited from Britain. This system nurtured unionism generally, and the AWU style of unionism in particular.