page_title: History of Australia (1901–1945)
section_title: Great Depression: the 1930s
hierarchical_section_title: History of Australia (1901–1945) / The Inter-war years / Great Depression: the 1930s
caption_attribution_description: English: Image of the ribbon ceremony to open the Sydney Harbour Bridge on 20 March 1932. Premier Jack Lang cuts the ribbon while Governor Sir Philip Game (left) with his ADC, Lord Gifford (far left), and Sydney Lord Mayor, Samuel Walder (right), look on.
context_page_description: The history of Australia from 1901–1945 begins with the federation of the six colonies to create the Commonwealth of Australia. The young nation joined Britain in the First World War, suffered through the Great Depression in Australia as part of the global Great Depression and again joined Britain in the Second World War against Nazi Germany in 1939. Imperial Japan launched air raids and submarine raids against Australian cities during the Pacific War.
context_section_description: Australia's dependence on primary exports such as wheat and wool was cruelly exposed by the Great Depression of the 1930s, which produced unemployment and destitution even greater than those seen during the 1890s. The Labor Party under James Scullin won the 1929 election in a landslide, but was quite unable to cope with the Depression. Labor split into three factions and then lost power in 1932 to a new conservative party, the United Australia Party (UAP) led by Joseph Lyons, and did not return to office until 1941. Australia made a very slow recovery from the Depression during the late 1930s. Lyons died in 1939 and was succeeded by Robert Menzies.
  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 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 to power in a landslide, the former Prime Minister Stanley Bruce losing 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, other 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% 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 the 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 ne
caption: Ribbon ceremony to open the Sydney Harbour Bridge on 20 March 1932. Breaking protocol, the soon to be dismissed Premier Jack Lang cuts the ribbon while Governor Philip Game looks on.
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