Facts
Early Stages
- The beginning and end of the Great Depression is debatable but most place it at 1929 (following the Wall Street stock market crash) and economic recovery going from 1935 to 1938 (economic growth, confidence and increase in wages).
- Between 1919-1929 overseas debt of the Federal and State government reached 250 million pounds and by the late twenties government borrowing reached 60 million a year at high interest rates (Bolton).
- In the 1920s unemployment increased from 31,000 to 47,000
- Worker unrest led to strikes: Waterside Workers Strike 1928 and the Transport Workers Strike 1929
- According to Bolton investment in manufacturing dropped considerably.
- 1929 Judge Lukin of the Arbitration Court handed down a judgement that reduced minimum wages and increased working hours (from 44 to 48 hours per week).
- More strikes emerged due to this judgement.
- Bitter strikes, especially by waterside workers, NSW coal-miners and timber workers.
- According to Bolton in 1929 four and half million days were lost due to strikes.
Unemployment Figures
- Unemployment figures are debatable. The most common figure used by historians is that unemployment reached 29 percent (1932) or one-third a statistic collected through trade union research.
- Of the states South Australia was the hardest hit with official unemployment figures reaching 35.4 percent while, according to Lowenstein, on the ground it was more like 45 percent. Queensland was least affected with a figures staying in the teens (14-18 percent).
- However historians like Potts disputes these figures. He argues it could be as low as 26% and that figures don’t take into account casual labour, women and children or even explore how some industries were hit much harder than others. His premise is that unemployment was not as harsh as what many people consider.
- Conversely Wendy Lowenstein refutes Potts claims yet also agrees that trade union figures are only rough estimates. Lowenstein identifies that “the Commonwealth statistician reported that unemployment was underestimated in the Census”. She argues that unemployment is too general a term and to understand the harsh economic circumstances of people living during the Depression an investigation into the regularity of work and the level of income also must be explored. From her research she argues that trade union figures would have to be “almost doubled” and that as more research is conducted that the “distress was far more widespread in Australia”. According to Lowenstein men were already paid below living wages in the 1920s, so when they cut again in the 1930s men who did work in minimum wage jobs (earning less than two pounds and one pound) could not provide for their families at all. Women were “grossly underpaid” and were not properly identified as unemployed in either the census or in trade union figures (as were young people). Lastly she notes that even when recovery did start to emerge in the mid-1930s it did not signify economic relief for many of the hardest hit as it took a long time for their conditions and wages to adequately return. As Lowenstein writes, “victims were still submerged in 1939.”
- Grimshaw et al also argue that the unemployment figures were "undoubtedly an underestimate" of the full extent of unemployment and more likely above 40 percent.
- In some industries unemployment was a relatively minor issue like teachers, nurses, car repairs, government workers. However people could still be insecure in their jobs. For instance in NSW 220 married women teachers were sacked with all other female teachers informed that they would be forced to resign when they married.
- Others were hit very hard most notably in unskilled labour and construction where unemployment figures were over 40 percent.
Depression
- 1929 Arbitration Commission reduced wages by ten percent.
- The export price index fell by half from 100 to 51, between 1928 and 1931 (Mandel).
- By the end of 1929 Australia began shipping gold to Britain to repay its debts to London banks (Mandel).
- Following the Premiers’ Plan government spending was reduced by 20 percent, taxes were increased, interest rates reduced, public service salaries and war pensions cut by 20 percent.
- Working class suburbs hit harder (Richmond, Footscray, Collingwood compared to Kew, Brighton, Toorak and Malvern).
- Richmond – around 4,000 people unemployed (McCalman). According to Lowenstein over half of Collingwood's parents were unemployed between 1931-1936.
- Eviction, starvation and health issues increased dramatically.
- According to the 1933 census 400,000 Australians were living in shantytowns.
- Petty crime, prostitution and abortion increased substantially. Mental trauma, suicide, alcohol abuse and domestic violence also increased in the most affected areas.
- 1931 a riot of a 1000 unemployed in Adelaide took place when meat was removed from rations while a riot in Perth emerged when the State government publicly declared that they could no longer afford sustenance payments (Lowenstein; Clark).
- 1931 protests became widespread across the country - Melbourne massive demonstrations where the unemployed demanded improved wages for relief work while in Darwin unemployed men occupied the verandah of government offices and raised a red flag (Lowenstein).
- Charities struggled to accommodate the mass influx of people asking for help. In 1931 the government introduced the Sustenance Scheme or the ‘susso’ where rations of meat, bread and groceries were distributed to families. Families had to qualify for the susso and could lose it if they attempted to use the goods in an appropriate manner (eg. bartering for alcohol).
- In Victoria there were 174 charity organisations and 154 were issuing relief.
- The Salvation Army was famous for feeding and helping all who came (Lowenstein).
- Farmers were hard hit with plunging values for their crops however they could live off the food that they produced. Furthermore most state governments (eg. NSW distributed 75 pounds a year) provided relief wages to accommodate their losses. Despite plunging prices for wheat the government attempted to introduce a guaranteed price above market yet the Commonwealth bank (under advice from Menzies) that such actions were unconstitutional.
- 1931-32 State governments introduced relief schemes to provide work for the unemployed. The Great Ocean Road, the Shrine of Remembrance and the Yarra Boulevard are examples of relief scheme work. Mostly for married men and the work was not regular. There were also relief schemes in gold prospecting. Women were largely excluded from excluded from receiving relief scheme work.
Plans
In March 1930, upon invitation, the Bank of England's Sir Otto Niemeyer arrived in Australia to give advice on how the country could respond to the devastation of the Depression. He was quite vocal in his criticism of Australia's high standard of living, over-spending in public works and in his recommendations of a "deflationary" approach. He argued that living standards needed to be drastically reduced through cuts in public spending, wages and welfare payments. He was also adamant that Australia continue to respect their loan repayments. According to historians like Mandle Niemeyer was a catalyst that either encouraged other orthodox/classical economists/politicians to advocate his position or those that opposed his recommendations to produce their own plan. Not long after three distinct plans for addressing the Depression emerged.
- Theodore Plan: Inject 36 million pounds into the economy, increase spending on relief work, increase social service payments and pay back loans by installments to lenders. Address inflation by printing a special bank note. He had the support of the Labor caucus and initially of Scullin but not of the leading members of the conservative faction of the Labor party like Joseph Lyons. Commonwealth bank and the Senate rejected this plan. This plan followed a Keynesian economic philosophy that during times of economic crisis the government props up declining demand through public works projects. However unlike the Lang Plan Theodore did not support repudiation (refusing to pay the interest on loans from British bond-holders). Theodore's plan was considered to be "proto-keynesian" as it pre-dated many of Keynes' future economic policy advise. Keynes himself was quite supportive of the orthodox Premiers' Plan, only being critical of wage cuts.
- Premiers’ Plan: Increase taxes, reduce government expenditure by 20 percent, pay back loans and rigidly balance the budget. Decrease interest rates to encourage private corporate borrowing. This was a plan of deflation and advocated by the visiting Bank of England representative Sir Otto Niemeyer who followed a classical or a conservative economic philosophy that was focused on maintaining the free market system of economic exchange. Following Niemeyer's visit leading Australians in positions of power like economists, employers, bankers and judges advocated and pressured the Federal cabinet to adopt Niemeyer's recommendations (Grimshaw et al; Mandel). This plan was adopted by both the Scullin and the Lyons' governments as well as all of the premiers (including Lang eventually) in 1931. The Premiers' Plan was largely considered to be a factor in prolonging the Depression (Lowenstein).
- The Lang Plan: Interest payments to British banks should be deferred and the funds re-invested into the local economy through public works to provide jobs for the unemployed. Interest rates on loans raised within Australia to be reduced to 3% forcing the incomes of Australian investors down so they were in line with general decreases in Australia. Australia should settle overseas debts in its own currency, based on goods produced rather than the gold standard. He also advocated for the extension of the welfare state such as the widow’s pension, worker’s compensation and child endowment payments to mothers. This too was a Keynesian economic plan. Scullin and the other Premiers rejected Lang's Plan as they argued that it would increase inflation but Lang pushed forward with his plan in the state of NSW. When the government attempted to block his refusal to pay interest to British creditors through federal legisaltion (Finance Enforcement Act, 1932) he simply appropriated the money and deposited it in the NSW treasury. As this broke federal law the Governor of NSW Sir Phillip Game dismissed him in May 1932.
Recovery
- By the mid-1930s Australia was on the way to economic recovery.
- Investors and banks began to have more confidence in the national economy and therefore were more willing to invest in business expansion.
- The farming sector recovered and returned to exporting wheat and wool again to their traditional markets.
- AGL Shaw has argued that Australia’s real recovery came from the emergence of a manufacturing sector that provided employment, goods and bolstered the wider local economy.
- Manufacturing recovery came in metals, chemicals and the textiles industries. Manufacturing did recovery greatly however it relied on many rural products.
- R.M. Crawford: “The Depression brought greater health into the Australian economy. Inefficient industries went under and others learnt an increased efficiency. The fall in overseas credits made it necessary to buy less from outside and make more at home and the long-term effect was to stimulate renewed industrial expansion, aided by lower costs.”
- M. Johnston points out that wages increased from 1935-40.
Early Stages
- The beginning and end of the Great Depression is debatable but most place it at 1929 (following the Wall Street stock market crash) and economic recovery going from 1935 to 1938 (economic growth, confidence and increase in wages).
- Between 1919-1929 overseas debt of the Federal and State government reached 250 million pounds and by the late twenties government borrowing reached 60 million a year at high interest rates (Bolton).
- In the 1920s unemployment increased from 31,000 to 47,000
- Worker unrest led to strikes: Waterside Workers Strike 1928 and the Transport Workers Strike 1929
- According to Bolton investment in manufacturing dropped considerably.
- 1929 Judge Lukin of the Arbitration Court handed down a judgement that reduced minimum wages and increased working hours (from 44 to 48 hours per week).
- More strikes emerged due to this judgement.
- Bitter strikes, especially by waterside workers, NSW coal-miners and timber workers.
- According to Bolton in 1929 four and half million days were lost due to strikes.
Unemployment Figures
- Unemployment figures are debatable. The most common figure used by historians is that unemployment reached 29 percent (1932) or one-third a statistic collected through trade union research.
- Of the states South Australia was the hardest hit with official unemployment figures reaching 35.4 percent while, according to Lowenstein, on the ground it was more like 45 percent. Queensland was least affected with a figures staying in the teens (14-18 percent).
- However historians like Potts disputes these figures. He argues it could be as low as 26% and that figures don’t take into account casual labour, women and children or even explore how some industries were hit much harder than others. His premise is that unemployment was not as harsh as what many people consider.
- Conversely Wendy Lowenstein refutes Potts claims yet also agrees that trade union figures are only rough estimates. Lowenstein identifies that “the Commonwealth statistician reported that unemployment was underestimated in the Census”. She argues that unemployment is too general a term and to understand the harsh economic circumstances of people living during the Depression an investigation into the regularity of work and the level of income also must be explored. From her research she argues that trade union figures would have to be “almost doubled” and that as more research is conducted that the “distress was far more widespread in Australia”. According to Lowenstein men were already paid below living wages in the 1920s, so when they cut again in the 1930s men who did work in minimum wage jobs (earning less than two pounds and one pound) could not provide for their families at all. Women were “grossly underpaid” and were not properly identified as unemployed in either the census or in trade union figures (as were young people). Lastly she notes that even when recovery did start to emerge in the mid-1930s it did not signify economic relief for many of the hardest hit as it took a long time for their conditions and wages to adequately return. As Lowenstein writes, “victims were still submerged in 1939.”
- Grimshaw et al also argue that the unemployment figures were "undoubtedly an underestimate" of the full extent of unemployment and more likely above 40 percent.
- In some industries unemployment was a relatively minor issue like teachers, nurses, car repairs, government workers. However people could still be insecure in their jobs. For instance in NSW 220 married women teachers were sacked with all other female teachers informed that they would be forced to resign when they married.
- Others were hit very hard most notably in unskilled labour and construction where unemployment figures were over 40 percent.
Depression
- 1929 Arbitration Commission reduced wages by ten percent.
- The export price index fell by half from 100 to 51, between 1928 and 1931 (Mandel).
- By the end of 1929 Australia began shipping gold to Britain to repay its debts to London banks (Mandel).
- Following the Premiers’ Plan government spending was reduced by 20 percent, taxes were increased, interest rates reduced, public service salaries and war pensions cut by 20 percent.
- Working class suburbs hit harder (Richmond, Footscray, Collingwood compared to Kew, Brighton, Toorak and Malvern).
- Richmond – around 4,000 people unemployed (McCalman). According to Lowenstein over half of Collingwood's parents were unemployed between 1931-1936.
- Eviction, starvation and health issues increased dramatically.
- According to the 1933 census 400,000 Australians were living in shantytowns.
- Petty crime, prostitution and abortion increased substantially. Mental trauma, suicide, alcohol abuse and domestic violence also increased in the most affected areas.
- 1931 a riot of a 1000 unemployed in Adelaide took place when meat was removed from rations while a riot in Perth emerged when the State government publicly declared that they could no longer afford sustenance payments (Lowenstein; Clark).
- 1931 protests became widespread across the country - Melbourne massive demonstrations where the unemployed demanded improved wages for relief work while in Darwin unemployed men occupied the verandah of government offices and raised a red flag (Lowenstein).
- Charities struggled to accommodate the mass influx of people asking for help. In 1931 the government introduced the Sustenance Scheme or the ‘susso’ where rations of meat, bread and groceries were distributed to families. Families had to qualify for the susso and could lose it if they attempted to use the goods in an appropriate manner (eg. bartering for alcohol).
- In Victoria there were 174 charity organisations and 154 were issuing relief.
- The Salvation Army was famous for feeding and helping all who came (Lowenstein).
- Farmers were hard hit with plunging values for their crops however they could live off the food that they produced. Furthermore most state governments (eg. NSW distributed 75 pounds a year) provided relief wages to accommodate their losses. Despite plunging prices for wheat the government attempted to introduce a guaranteed price above market yet the Commonwealth bank (under advice from Menzies) that such actions were unconstitutional.
- 1931-32 State governments introduced relief schemes to provide work for the unemployed. The Great Ocean Road, the Shrine of Remembrance and the Yarra Boulevard are examples of relief scheme work. Mostly for married men and the work was not regular. There were also relief schemes in gold prospecting. Women were largely excluded from excluded from receiving relief scheme work.
Plans
In March 1930, upon invitation, the Bank of England's Sir Otto Niemeyer arrived in Australia to give advice on how the country could respond to the devastation of the Depression. He was quite vocal in his criticism of Australia's high standard of living, over-spending in public works and in his recommendations of a "deflationary" approach. He argued that living standards needed to be drastically reduced through cuts in public spending, wages and welfare payments. He was also adamant that Australia continue to respect their loan repayments. According to historians like Mandle Niemeyer was a catalyst that either encouraged other orthodox/classical economists/politicians to advocate his position or those that opposed his recommendations to produce their own plan. Not long after three distinct plans for addressing the Depression emerged.
- Theodore Plan: Inject 36 million pounds into the economy, increase spending on relief work, increase social service payments and pay back loans by installments to lenders. Address inflation by printing a special bank note. He had the support of the Labor caucus and initially of Scullin but not of the leading members of the conservative faction of the Labor party like Joseph Lyons. Commonwealth bank and the Senate rejected this plan. This plan followed a Keynesian economic philosophy that during times of economic crisis the government props up declining demand through public works projects. However unlike the Lang Plan Theodore did not support repudiation (refusing to pay the interest on loans from British bond-holders). Theodore's plan was considered to be "proto-keynesian" as it pre-dated many of Keynes' future economic policy advise. Keynes himself was quite supportive of the orthodox Premiers' Plan, only being critical of wage cuts.
- Premiers’ Plan: Increase taxes, reduce government expenditure by 20 percent, pay back loans and rigidly balance the budget. Decrease interest rates to encourage private corporate borrowing. This was a plan of deflation and advocated by the visiting Bank of England representative Sir Otto Niemeyer who followed a classical or a conservative economic philosophy that was focused on maintaining the free market system of economic exchange. Following Niemeyer's visit leading Australians in positions of power like economists, employers, bankers and judges advocated and pressured the Federal cabinet to adopt Niemeyer's recommendations (Grimshaw et al; Mandel). This plan was adopted by both the Scullin and the Lyons' governments as well as all of the premiers (including Lang eventually) in 1931. The Premiers' Plan was largely considered to be a factor in prolonging the Depression (Lowenstein).
- The Lang Plan: Interest payments to British banks should be deferred and the funds re-invested into the local economy through public works to provide jobs for the unemployed. Interest rates on loans raised within Australia to be reduced to 3% forcing the incomes of Australian investors down so they were in line with general decreases in Australia. Australia should settle overseas debts in its own currency, based on goods produced rather than the gold standard. He also advocated for the extension of the welfare state such as the widow’s pension, worker’s compensation and child endowment payments to mothers. This too was a Keynesian economic plan. Scullin and the other Premiers rejected Lang's Plan as they argued that it would increase inflation but Lang pushed forward with his plan in the state of NSW. When the government attempted to block his refusal to pay interest to British creditors through federal legisaltion (Finance Enforcement Act, 1932) he simply appropriated the money and deposited it in the NSW treasury. As this broke federal law the Governor of NSW Sir Phillip Game dismissed him in May 1932.
Recovery
- By the mid-1930s Australia was on the way to economic recovery.
- Investors and banks began to have more confidence in the national economy and therefore were more willing to invest in business expansion.
- The farming sector recovered and returned to exporting wheat and wool again to their traditional markets.
- AGL Shaw has argued that Australia’s real recovery came from the emergence of a manufacturing sector that provided employment, goods and bolstered the wider local economy.
- Manufacturing recovery came in metals, chemicals and the textiles industries. Manufacturing did recovery greatly however it relied on many rural products.
- R.M. Crawford: “The Depression brought greater health into the Australian economy. Inefficient industries went under and others learnt an increased efficiency. The fall in overseas credits made it necessary to buy less from outside and make more at home and the long-term effect was to stimulate renewed industrial expansion, aided by lower costs.”
- M. Johnston points out that wages increased from 1935-40.
|