page_title: History of Australia
section_title: Great Depression
hierarchical_section_title: History of Australia / Inter-war years / Great Depression
context_page_description: The history of Australia is the story of the land and peoples of the continent of Australia. Aboriginal Australians first arrived on the Australian mainland by sea from Maritime Southeast Asia between 40,000 and 70,000 years ago, and penetrated to all parts of the continent, from the rainforests in the north, the deserts of the centre, and the sub-Antarctic islands of Tasmania and Bass Strait. The artistic, musical and spiritual traditions they established are among the longest surviving such traditions in human history.
  The first Torres Strait Islanders - ethnically and culturally distinct from Aboriginal Australians - arrived from what is now Papua New Guinea around 2,500 years ago, and settled in the islands of the Torres Strait and the Cape York Peninsula forming the northern tip of the Australian landmass.
  The first known landing in Australia by Europeans was in 1606 by Dutch navigator Willem Janszoon. Later that year, Spanish explorer Luís Vaz de Torres sailed through, and navigated, what is now called Torres Strait and associated islands. Twenty-nine other Dutch navigators explored the western and southern coasts in the 17th century and named the continent New Holland.
context_section_description: Australia was deeply affected by the Great Depression of the 1930s, particularly due to its heavy dependence on exports, especially primary products such as wool and wheat. Exposed by continuous borrowing to fund capital works in the 1920s, the Australian and state governments were "already far from secure in 1927, when most economic indicators took a turn for the worse. Australia's dependence of exports left her extraordinarily vulnerable to world market fluctuations", according to economic historian Geoff Spenceley. Debt by the state of New South Wales accounted for almost half of Australia's accumulated debt by December 1927. The situation caused alarm amongst a few politicians and economists, notably Edward Shann of the University of Western Australia, but most political, union and business leaders were reluctant to admit to serious problems. In 1926, Australian Finance magazine described loans as occurring with a "disconcerting frequency" unrivalled in the British Empire: "It may be a loan to pay off maturing loans or a loan to pay the interest on existing loans, or a loan to repay temporary loans from the bankers..." Thus, well before the Wall Street Crash of 1929, the Australian economy was already facing significant difficulties. As the economy slowed in 1927, so did manufacturing and the country slipped into recession as profits slumped and unemployment rose.
  At elections held in October 1929, the Labor Party was swept into power in a landslide victory; Stanley Bruce, the former Prime Minister, lost his own seat. The new Prime Minister, James Scullin, and his largely inexperienced government were almost immediately faced with a series of crises. Hamstrung by their lack of control of the Senate, a lack of control over the banking system and divisions within their party over how best to deal with the situation, the government was forced to accept solutions that eventually split the party, as it had in 1917. Some gravitated to New South Wales Premier Lang, others to Prime Minister Scullin.
  Various "plans" to resolve the crisis were suggested; Sir Otto Niemeyer, a representative of the English banks who visited in mid-1930, proposed a deflationary plan, involving cuts to government spending and wages. Treasurer Ted Theodore proposed a mildly inflationary plan, while the Labor Premier of New South Wales, Jack Lang, proposed a radical plan which repudiated overseas debt. The "Premier's Plan" finally accepted by federal and state governments in June 1931, followed the deflationary model advocated by Niemeyer and included a reduction of 20 per cent in government spending, a reduction in bank interest rates and an increase in taxation. In March 1931, Lang announced that interest due in London would not be paid and the Federal government stepped in to meet the debt. In May, the Government Savings Bank of New South Wales was forced to close. The Melbourne Premiers' Conference agreed to cut wages and pensions as part of a severe deflationary policy but Lang renounced the plan. The grand opening of the Sydney Harbour Bridge in 1932 provided little respite to the growing crisis straining the young federation. With multimillion-pound debts mounting, public demonstrations and move and counter-move by Lang and then Scullin, then Lyons federal governments, the Governor of New South Wales, Philip Game, had been examining Lang's instruction not to pay money into the Federal Treasury. Game judged it was illegal. Lang refused to withdraw his order and, on 13 May, he was dismissed by Governor Game. At June elections, Lang Labor's seats collapsed.
  May 1931 had seen the creation of a new conservative political force, the United Australia Party formed by breakaway members of the Labor Party combining with the Nationalist Party. At Federal elections in December 1931, the United Australia Party, led by former Labor member Joseph Lyons, easily won office. They remained in power until September 1940. The Lyons government has often been credited with steering recovery from the depression, although just how much of this was owed to their polic
caption: In 1931, over 1,000 unemployed men marched from the Esplanade to the Treasury Building in Perth, Western Australia, to see Premier Sir James Mitchell.
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