Scullin was indeed aware of the need for credit creation and he proclaimed this only a few weeks after becoming Prime Minister. The arguments above highlight the simple lack of funds to carry out this task. Prior to mid-1931, the level of revenue expenditure was well maintained and the growth of budget deficits tended to compensate for the fall in loan expenditure. Another theoretical debate among government authorities concerned the role of tariffs. Supporters of free trade suggest that protection hindered our exporting industries and reduced are export income.
Protectionists argue that the presence of higher tariffs maintained a larger manufacturing base.
This may be true in the sense that many manufacturing industries were born out of manufacturing protection during depression. Therefore, although modern theory suggests that tariffs reduce national income, in reality it assisted a number of manufacturing firms. In International Comparative Perspective, Working Papers in Economic History, The Australian National University. A Reappraisal , Working Papers in Economic History, The Australian National University. A Macroeconomic Model of the Interwar Economy , paper presented to Seventh Conference of Economists, Sydney.