Chapter 15
A Not So Great Depression
In This Chapter
Crashing and burning in the worst economic depression of the century
Splitting the Labor Party (again)
Seeing the appeal of communism and vigilantism
Emerging from the trauma: Politicians versus ordinary people
The 1930s were a period where just about everything that could go wrong did go wrong. The collapse of international commodity prices, especially wheat and wool, meant that the huge amounts of debt run up by state and federal governments in the 1920s for all their development projects (refer to Chapter 14) were almost impossible to pay off. Experts from the Bank of England arrived with stern looks on their faces and the economy nose-dived. The result was massive job losses in many industries and a cutback in people’s consumption. Suffering and deprivation, while generally localised to ‘factory belts’ in inner cities or particular industries (such as construction), was intense. With the main breadwinner unemployed and very little being offered in the way of government assistance, many families could no longer pay their rent and were evicted and forced to live in unemployment camps.
Governments fell. Politicians shouted. Men began drilling in secret armies in order to step in if civil unrest turned to anarchy and violence.
And yet, strangely, ordinary Australians showed themselves to be less overwhelmed than their politicians. While the politicians, the bankers and angry organisers were proving ill-equipped to agree to a solution, Australians became extraordinarily good at devising their own solutions to the problems of economic crisis and mass unemployment.
In this chapter, I cover the mismanagement and splits of political life through the 1930s, as well as the resilience of the Australian people.
Crash and Depression
The 1920s were heady days indeed, with the idea of Australia having the potential to be the next US taking hold across the nation. Massive borrowing funded ambitious development and settlement schemes. However, the dream fractured with the market crash of 1929, and Australia woke up to a huge debt and creditors knocking.
Borrowing like there’s no tomorrow
Australia borrowed more than just about any other nation in the world during the 1920s, depending on high prices for their main exports — wool and wheat — to keep the money flowing in for their ambitious development projects. By the late 1920s, Australia’s interest payments had increased sevenfold since Federation, and were absorbing nearly two-thirds of the government’s taxation revenue.
Some brokers in London reported to concerned bankers in the late 1920s that ‘in the whole of the British Empire there is no more voracious borrower than the Australian Commonwealth’.
Unfortunately for Australia, the world economy was about to experience the biggest shakedown of the 20th century, in the form of the 1929 Wall Street crash and the subsequent Great Depression. Australia couldn’t dodge this bullet, and the country copped it right between the eyes.
At the time of the crash in 1929, protectionist taxes on imports resulted in 10 per cent inflation of all prices. Heavy tariffs made for a very rigid economic structure, meaning that costs couldn’t go down in Australia as world prices for Australian exports went down.
Here comes tomorrow
In 1929, the price of wool dropped 30 per cent, and the price of wheat fell 10 per cent. By the time Scullin’s Labor Party took government in October 1929, overseas debt had reached £53,000,000. Then the New York Stock Exchange collapsed, sparking global panic. How good is that for timing?
After the crash, international commodity prices collapsed, triggering a further fall in export earnings, and the overseas debt became impossible to service. Public expenditure was cut dramatically as the economy went into freefall and infrastructure projects were shelved.
In early 1930, bankruptcies rose 50 per cent on their 1920s average. After the 1920s expansion of suburbia (refer to Chapter 14 for more on the growth and outward march of Californian Bungalows), the construction industry collapsed. In Sydney and Melbourne the number of new houses being built collapsed tenfold, from the 20,000 average in the 1920s to a mere 2,000 — which spelt bad news for builders, carpenters, painters, plumbers and the like.
James Scullin, the Labor prime minister, raised tariffs to try to protect local industry, but it had no noticeable effect. In the factory belts of inner cities in Sydney (Redfern, Paddington and Newtown), Melbourne (Brunswick, Collingwood and Fitzroy) and Adelaide (Port Adelaide and Hindmarsh) manufacturers drastically cut back production or closed up completely. In these areas, unemployment levels reached more than 40 per cent.
With no money coming in after mass layoffs, many people were unable to pay their rent, and the subsequent evictions led at times to violent confrontations. In June 1931, pitched battles in Newton and Bankstown were waged between police and an angry crowd as unemployed families were evicted. Evictions led to overcrowding in the inner-city doss houses (cheap basic lodgings). Men and families began sleeping in parks, under railway bridges and in shanty unemployment camps. In the areas of concentrated deprivation, many lived as best they could — on the support of private and religious charities, on subsidised bread and soup from soup kitchens, and the ration slips they received from ‘susso’ (sustenance schemes set up to feed and pay the unemployed).
The man from the Bank (of England)
With a collapsing economy, Australia’s overseas debt, most of which was owed to the London money market, was becoming impossible to service. The federal government, faced with no money in the coffers, asked for some relaxation of the loan repayments due in 1930. The Bank of England sent out its troubleshooter, Sir Otto Niemeyer, to inquire into the Australian mess and see what measures would have to be implemented.
Niemeyer arrived in July 1930, and after a month’s inquiry gave his diagnosis: Australia was living beyond its means. The problem had been caused by long-term high rates of protection and heavy borrowing, which had artificially — and unsustainably — inflated Australian standards of living. And ‘only Australia could save herself. It was [Australia’s] business to do this and no-one else’s’.
Having been clear in his diagnosis, Niemeyer was rigorous in advising the cure. Two main things would have to happen:
Cutbacks. Prohibiting and restricting imports wouldn’t save the economy and nor would altering the exchange rate. Balancing the budget was the key — costs would have to be reduced and standards of living would have to go down. This would result in the retrenchment of workers but a general deflation of prices and costs would follow, and Australia would be economically viable again.
Abandonment of the fantasy of Australia’s unlimited potential. This abandonment involved getting rid of what Niemeyer called ‘the exploded doctrine of the enormous potentialities of Australia’ also known as the ‘Australia Unlimited’ theory (refer to Chapter 14). The sun, it turned out, didn’t shine out of the back of Australia. Time to strip away the fanciful dreams and illusions, and bring the standard of living back to parity with Australia’s real trading capacity.
Part of abandoning the Australia Unlimited development ambition involved scaling back a lot of the big development schemes that had been underway throughout the 1920s. ‘A country could be over-provided with public utilities’ was how Niemeyer delicately put it. Australia was that country. The provision of infrastructure and services had outstripped the needs of trade and industry. ‘A halt in utility work [is] necessary until the volume of trade caught up and required the services provided.’
The Melbourne Agreement
Niemeyer delivered his message of austerity to various assembled state premiers and Prime Minister Scullin in August 1930. Borrow and bust had got Australian leaders, and Australians, into this problem; now hard years were the only things that were going to get them out. As well as putting a halt on borrowing and scaling back public development projects, Niemeyer also advised cutting pensions and reducing wages. The various leaders agreed to Niemeyer’s plan, but very reluctantly.
Scullin and many of the premiers were Labor, whose preoccupation was protecting and improving the rights and conditions of working people. And here they were forced into a corner, agreeing to cut pensions, wages and public works programs! They weren’t happy, but didn’t see any way out of it. They signed what became known as the ‘Melbourne Agreement’, and had to put up with the approval of bankers, economists and newspaper editors, and the condemnation of many strong Labor supporters, trade unionist organisers and unemployed factory workers.
After signing the agreement, Scullin left the country — he had to get on a boat to go to England, to calm the bank bosses about worries over Australia’s credit-worthiness, to pressure the King into letting an Australian be appointed governor-general, and to attend an Imperial Conference. He left behind his treasurer, Joe Lyons, to try to keep a lid on things. Within a few months, however, the lid was well and truly off.
A(nother) Labor Split
The challenges of meeting and solving the problems of the Depression proved too much for the Labor Party. Neither those who wanted more radical actions nor those in favour of more moderate approaches were at all happy with Labor’s actual approach, and the party ended up splitting twice within 12 months, losing much of its left and right wings in the process.
The leader of the split on the conservative side of the Labor Party was Joe Lyons, an ex-Tasmanian premier, serving as treasurer and stand-in prime minister while Scullin was in England in 1930. The leader of the split on the radical side was Jack Lang, NSW premier, and many of the NSW-based MPs in federal parliament sided with him.
Even though Lang was, at the time, in politics at state level and Lyons was at federal level, the men represent the two political and philosophical ends of the spectrum of Labor’s response to the Great Depression. The main body of federal Labor dithered between the two approaches, and when each man left the party, taking his supporters with him, federal Labor was left decimated.
Two different solutions for the Great Depression problems
In the early 1930s, two very different views on how best to deal with the economic crisis contended for supremacy. The widely divergent actions of Joe Lyons and Jack Lang give some insight into these opposing views.
The moderate view — triumph of the ordinary Joe
Early in the economic crisis, Prime Minister Scullin declared that he regarded the national debt in the same way he would a personal debt — it had to be paid back. When in London in 1930, he told a journalist that rather than fail to pay what was owing ‘he would tax Australians to the last penny’. In a similar vein, if a little more graphic, future Liberal prime minister Robert Menzies said that rather than repudiate debt to bondholders, ‘it would be far better for Australia that every citizen within her boundaries should die of starvation during the next six months’.
The heavy words from Scullin and Menzies were partly bluster. Australia needed credit, and had to convince the world that it was still credit-worthy. However, the notion of ‘saving’ at this time had a great deal of meaning for people beyond the simply financial. In 1930s Australia, saving, self-sacrifice and thrift were now part of a way of seeing the world, and paying your way, balancing your books and living within your means became real indicators of character. This ethic was what it meant to be respectable. And as with individuals and households so with nations. The notion of Australia not being able to pay what it owed struck at the heart of what people thought Australia should be.
Joe Lyons seemed to exemplify these 1930s values perfectly. For starters, he put these principles above his political allegiance, refusing to go along with the rest of the Labor Party when they wanted to defer debt repayment, saying ‘I am out for Australia and the interests of its people’. In the middle of the Depression, when people were deeply disillusioned with all parties and politicians, this struck a chord. He was a negotiator and a compromiser, not a big capitalist, nor a radical or class war agitator.
But on top of this were Lyons’s other perceived values. ‘Honest Joe’ was lauded for being ordinary, practical, hard-working, honest, principled and incorruptible. He dealt with national problems in the way those caught up in the Depression would like to deal with their own. A newspaper approvingly described him as ‘a solid, clear minded man of the people whose simple conception of right and wrong had been bred in the normal atmosphere of family life’. Lyons was seen as the man with a small amount of savings and a home of his own — the quarter-acre-block man with his family. Men just like Lyons, and their families, were Lyons’s key supporters, and he spoke directly to them in countless whistle-stop tours, radio addresses and town hall meetings throughout the country.
Lyons was always very clear on the best way to fix the economy, saying ‘We have to go back to honest, straightforward methods . . . We must do what the ordinary citizen would do in similar circumstances’.
The radical view, as Jack saw it
On the radical side of the Labor Party was Jack Lang, and his view was that the Depression was the deliberate creation of employers and governments. In order to deal with the ‘deliberately engineered’ Depression, Lang said he’d borrow more money to wipe out any deficit, and fund a program of restored wages and big public works programs. Of Otto Niemeyer, the troubleshooter from England (see the section ‘The man from the Bank (of England)’ earlier in this chapter), Lang said he was no more than ‘a member of the Bank of England, to which we do not owe so much as a bent sixpence’.
Lang said, and plenty were found who agreed, that Australia only had financial problems because of war debts incurred while saving Britain in World War I, and the interest now being charged on these debts. Lang claimed, ‘The same people who conscripted our sons and laid them in Flanders fields . . . now demand more blood, the interest on your lives’. According to Lang, Australians were being unfairly burdened with loan repayment requirements.
Lang’s claim about the source of the debt, as it turns out, was rubbish. Australia’s spectacular borrowing excesses of the 1920s were the dominant cause of Australia’s debt problem — of the vast amount Australia owed, only 16 per cent was related to the war. But it was highly appealing rubbish.
Lang was doing what the Labor Party had always said it was about doing — sticking up for the battler, the worker, the men and women losing jobs and getting evicted. Lang saw the Depression as a vast conspiracy of the terrible capitalist machine. Lang, his supporters said, was even ‘greater than Lenin’, the communist revolutionary who had seized power and become dictator in Soviet Russia. Furthermore, said his supporters, Lang wasn’t the problem — the problem was the Labor turncoats and weak-willed politicians in Canberra who worried too much about pleasing bankers and Britain.
Lang’s view on unemployment was also a traditional Labor one. In 1910, Billy Hughes had written ‘the unemployed man is a deliberate creation of the capitalist . . . Every industry trains many more men than it normally requires . . . In order that for one year, month or week out of every two or three, employers may have an abundant supply of labour, millions of hapless men are daily sacrificed’.
A party shoots itself in both feet
In October 1930, Jack Lang won the NSW state election by a large majority, on a platform of promising to reverse the stringent cost-cutting imposed on the government by the Melbourne Agreement (discussed earlier in this chapter in the section ‘The Melbourne Agreement’). As premier, Lang immediately restored all wage cuts, established better handouts for the poor and unemployed with a new ‘unemployment tax’, and introduced a moratorium to delay evictions. On the downside, he pretty quickly started running out of money. He then declared that he’d reduce interest payments to English bondholders and would use the NSW Savings Bank to finance housing loans and to assist primary producers. With people fearing their deposits were at risk, a run on the NSW Savings Bank ensued, which eventually caused the bank to close its doors seven months later.
Federally, some Labor parliamentarians took note of Lang’s reforms and started to think these radical policies might be a good idea. Many in the caucus began to support ideas of stimulating the economy by expanding credit and coercing the Commonwealth Bank to provide more funds. A vote was held on the issue and the majority supported this new policy direction. Acting Prime Minister Lyons was furious, saying ‘I will not do it! You have done this thing but I will not be a party to it’.
Labor’s new direction didn’t go down well with Australia’s creditors in London. When Lyons telegrammed Prime Minister Scullin in London to tell him the news, Scullin cabled back that the Labor Party’s resolution ‘has demoralised Australia’s stocks here, and unless rescinded will render renewal of bills here, as well as conversions in Australia, impossible’.
In a countermove to his own caucus, Lyons launched a public appeal for a ‘conversion loan’ to raise the £28,000,000 needed to meet Australia’s debt repayment deadline. While Treasury bureaucrats said it couldn’t be done — it was way too much money to raise over too short a time — Lyons organised public rallies, promotions, advertising campaigns on radio, in papers and cinema, and an ‘All for Australia Day’, urging everyday Australians to loan money at low interest to the government. Incredibly, it all worked. In the end, the loan was oversubscribed by £2,000,000, with much of the funds coming from small contributions of £100 or less.
While Lyons’s loan-raising scheme had been very successful with the public, it was not so with Labor caucus. When Scullin returned from London in January 1931, he removed Lyons from the role of treasurer, replacing him with the previous treasurer, Edward Theodore. This didn’t go down too well with Lyons, and he quit cabinet.
Theodore had become critical of the Melbourne Agreement, and suggested instead the expansion of credit to restore economic life. The governor of the Commonwealth Bank was called in to cabinet and asked by Scullin if he could give the government an extension of credit to cover the deficit and loans that were due to be repaid. The bank’s governor replied, ‘Mr Prime Minister and members of the cabinet, I bloody well won’t’.
Back in NSW, Jack Lang topped Theodore with his own plan, one where no more interest would be paid to British bondholders and a new currency would be introduced, one based no longer on gold but on a ‘goods standard’ based on ‘the wealth of Australia’. While Theodore’s plan would be considered fairly mild by today’s standards, it was hotly criticised at the time — while Lang’s solution was seen as either a funny money scheme, or the greatest masterstroke since the French Revolution (depending on who you asked).
Although federal Labor did seek more credit, they still believed the original debts should be paid back. Lang continued to ignite tensions when, in March 1931, he refused to pay bondholders any interest, saying it was more important to pay the dole in full. This was in direct conflict with federal Labor policy, under Prime Minister Scullin, and for Scullin, this was the last straw. As Lang’s supporters were NSW-based, Scullin still had enough support within the Labor Party at a federal level to act decisively. Lang’s supporters in federal parliament were formally expelled from the Labor Party.
In the same month, Lyons, completely disenchanted with the approach Labor was taking, resigned from the Labor Party, and took a lot of the popular goodwill that he’d built up in December 1930 along with him. Soon he formed a new party, with support coming from large citizens’ organisations (the ‘All for Australia’ leagues) and the old opposition party (the Nationalists, begun by the last Labor renegade — Billy Hughes — during World War I).
Even though Lyons and Lang offered very different solutions, they (and their supporters) both opposed the solution proposed by the Scullin Government. For Lyons (and other moderates and also the Liberals), the solution was too extreme. For Lang and his supporters, the solution wasn’t nearly extreme enough. In November 1931, Lyons and the ‘Langites’ combined their votes in federal parliament to force an election, and in December, Lyons’s new political organisation, the United Australia Party, won, taking over the federal government.
Lang sacked and Labor in tatters
After coming to government, Lyons took action to pay the unpaid interest owed by Lang to bondholders, and Lang reacted with further extreme measures.
Lyons billed Lang for the unpaid interest, and Lang refused to pay up. In order to stop the Commonwealth confiscating state funds, Lang ordered all the state revenue being collected to be shifted into the State Treasury rather than going to the banks (where the Commonwealth could have confiscated it). Lang barricaded the Treasury and surrounded it with a security force of unemployed members of the Timber Workers Union. At the same time, Lang issued a notice to the public service seeking volunteers to enlist in a state citizens’ army. This step went too far; the governor decided that this activity was getting just a little too illegal — trying to start an army, for example, wasn’t what premiers were meant to do. On 13 May 1932, Lang was dismissed from office, and in the subsequent election was demolished.
As for the Labor Party — when Lyons left in 1931, it lost some moderates from the party and just about all of the moderate support in the electorate. Labor also managed to lose the majority of its NSW members when Lang left because most organisers, supporters and trade unionists in this state backed Lang rather than federal Labor. There would not be another Labor prime minister until 1941. The party that had been so central to shaping political life in the nation’s first decades could barely muster two years of time in government (1929 to 1931) in the whole 21 years of the inter-war period.
Threats to Democracy from Best Friends and Enemies
As the Depression bit harder in the 1930s and politicians seemed unable to come up with a decent solution to the problem, many people began to wonder whether the parliamentary system could cope with the crises of 20th-century life. ‘Democracy is a Great Error’, declared The Adelaide Advertiser. A conservative politician wrote a series of newspaper articles, describing ‘Why I have become a Fascist’. Many people felt a desire for a strong leader — someone decisive and compelling, similar to Italy’s Mussolini or the Soviet Union’s Joseph Stalin. When ultra-ordinary Joe Lyons became prime minister in 1932 (see preceding section), it was a kind of repudiation of the dream of a strong dynamic leader that some people were pining for.
In this atmosphere, both communism and vigilantism began to have an appeal.
Seeing the virtues of communism
In 1917, the Bolshevik Revolution in Russia was the first communist revolution anywhere in the world, and many idealistic people thought that now, at last, a government that abolished all inequalities and injustices could finally come into existence.
In Sydney in 1920, encouraged by the Bolshevik Council in Russia, a small group set up the Communist Party of Australia, which claimed it was committed to overthrowing parliamentary democracy and establishing a ‘dictatorship of the working class’. In 1922, Jock Garden, secretary of the Trades and Labor Council, went as a Communist Party delegate to an international communist conference in Moscow. He boasted to the conference that the Australian Communist Party would take over leadership in Australia by controlling Labor Councils in the main cities, as he did in Sydney.
Back in Australia, Garden said that ‘the shadow of communism is over the Labour movement. All efforts to banish communism and the communists are bound to fail. The good old times of playing at politics are gone. Revolution has stepped upon the stage’.
Given that in the Labor Party the policy of socialising industry — bringing in public or government ownership of banks, factories, large shops and businesses — had already been adopted in 1921, communism wasn’t seen as too great an enemy within the Australian labour movement (refer to Chapter 13). By controlling the highest councils of the trade unions, a small but committed group of revolutionaries could look to create industrial and political turmoil, seize power and abolish democracy.
In the Depression of the 1930s, Communist Party membership numbers surged. The Communist Party’s explanation for the problems — that they were inevitable by-products of capitalist society and wouldn’t be resolved until a communist revolution took place — gained traction in the midst of evictions, soup kitchens and mass unemployment in the heavily industrial inner-city suburbs. Communists were prominent in rallies of unemployed people, carrying red flags and singing revolutionary songs. During the annual May Day procession in Melbourne, marchers gave ‘three cheers for the revolution and the Soviet Union’.
At a NSW Labor Conference in 1931, one speaker moved motions for the immediate socialisation of industry, another said that ‘unemployment can’t be solved under capitalism . . . [The unemployed] are going to smash the system down. The time is ripe’.
While the communists didn’t succeed in overthrowing government or socialising industry, they did succeed in making a lot of people very uneasy.
Communist influence in key trade unions grew in the 1930s, giving them the capacity to cause strikes that could paralyse industry, transport and communications, and challenge the established democratic order more generally. Simultaneously, a strongly idealistic streak was evident in communist agitation. Much of the evidence in the 1930s seemed to point to modern capitalist society being plenty sick, and needing replacement. Thinkers, artists and activists were drawn to the dream of a new communist social order regenerating a sick society. Even though they planned and hoped for the overthrow of democratic government, the ambition of their hearts is harder to fault.
Forming secret armies
Fears of a communist revolution increased with the arrival of the Depression and, for most people, the most threatening part of the Communist Party was the secrecy with which it conducted its plans.
In the Labor Party, Doc Evatt saw communists gradually taking many key positions in the party and was worried. Evatt complained that whenever communists campaigned openly for election, they were always beaten solidly, but instead, according to Evatt, they were following Lenin’s advice, which was: ‘A small minority, if sufficiently unscrupulous and persistent, can capture most political parties’.
Outside of the Labor Party, other people were just as worried. Taking a fight-fire-with-fire approach, these people began organising secret groups of their own, and were ready, if society began to fall apart, to maintain law and order before revolutionaries could take advantage of any chaos. ‘King and Country’ would have to be defended, and these fellows decided they were just the men to be defending it — deciding, in effect, democracy and open society would be defended by secret organisations.
NSW’s Old Guard
The NSW Old Guard was formed by ex-army officers and businessmen who had influence in the army and police. Returned Services League clubrooms were used to recruit ex-digger soldiers, following a district-by-district form of organisation and using a military hierarchy. They performed military drills and stockpiled weapons and, at their peak between 1930 and 1932, they numbered some 25,000 members in rural NSW, with nuclei in each region and town. In Sydney they had 5,000 members.
Members of the Old Guard saw themselves as loyal citizens defending Australia’s democratic institutions — only in crisis, if Australia was threatened with a dictatorship, would they move into action. They planned to take control of government and daily administration and protect property in the event of any outbreaks of anarchy or civil insurrection.
Victoria’s White Army
Similar in organisation to the Old Guard, Victoria’s White Army was led by chief commissioner of police, and World War I officer, Thomas Blamey. The White Army’s main plan was to protect bridges and essential services in the event of insurrection, and for them the fear peaked on 6 March 1931, when rumours spread throughout rural Victoria that an army of unemployed revolutionaries was on a rampage and marching up the road. No such violent mob was on the loose and, after spending a night out manning roadblocks, the next day White Army members returned, a little embarrassed, to their homes, farms and work sheds.
Sydney’s New Guard
Founded in February 1931 by fascist Eric Campbell, the New Guard quickly became popular among the middle class and ex-diggers who were most worried about Jack Lang’s radical measures as premier. Lang had proposed to replace the currency and was refusing to pay interest on overseas debt, and Campbell was certain Lang was a communist (he wasn’t, but at times he could certainly sound like one).
Unlike the Old Guard and White Army, very little was secret about the New Guard. They also seemed more likely to add to the turmoil the two secret armies wanted to prevent. They attacked meetings of communists, unionists and the unemployed, and Campbell threatened publicly to overthrow Lang. At their peak, Sydney’s New Guard numbered 36,000 members.
The New Guard’s biggest publicity ‘coup’ was at the opening ceremony of the Sydney Harbour Bridge in 1932. Here a New Guard member, Francis De Groot, beat Premier Lang to the ribbon cutting when he unexpectedly rode forward on a horse and declared the bridge open ‘in the name of the respectable citizens of NSW’.
The New Guard didn’t last much longer than Lang himself (who was sacked shortly after the Bridge opening — refer to the section ‘Lang sacked and Labor in tatters’ earlier in this chapter), and improved no-one’s mood while its members engaged in public violence and grandstanding.
Mistakes and Resilience Through the Crisis
Politicians spent a lot of the 1930s arguing heatedly over what might be the best thing to do in the midst of this great crisis. One solution they came up with — which had strong approval from the public — was to ‘tune in with Britain’, establishing even closer economic ties and allowing some British manufacturers to compete against unprotected Australian industries so Australian exports would have access to British markets. This idea offered plenty to like, but Australian politicians in the 1930s pursued it at the expense of other possible markets and ties.
Meanwhile, everyday folk got on with surviving — and managed to do so remarkably well. Although the main images we have in our collective memory about the Great Depression are the dramatic bigger catastrophes — the eviction of newly unemployed renters from their inner-city slum properties, the stories of starving men having to walk hundreds of miles in search of work in outback Australia — the vast majority of Australians in the Great Depression proved themselves remarkably resilient and highly resourceful in working out ways to get by, survive and (even) enjoy themselves.
The politicians fail
The 1930s decade can ultimately be seen as a time when the politicians let down the people they’d been elected to represent. The Labor Party showed itself again unable to hold the party, let alone the nation, together in a time of crisis. And the non-Labor side, while utilising Joe Lyons’s capacity to unify national opinion and galvanise active community spirit in the worst of the Depression, showed itself unable to adjust to rapidly changing times.
As the 1930s progressed, politicians of all stripes failed the new task of working out exactly where Australia fitted into a far more perilous world. Australia was cocky about its international standing, and about how far it could keep using its World War I record with Britain. Australian politicians were also slow to acknowledge that the old assurances and certainties of a world largely dominated by the British Empire as sole superpower had gone. The world was now unstable and dangerous; Britannia no longer ruled supreme and, particularly in terms of trade, Australia needed to be looking for new alliances.
Doing (too) well at Ottawa
Australia had played hardball with Britain in the years after World War I, extracting maximum advantage from the kudos won and sacrifices made by Australian soldiers who had fought for Britain. Immigration schemes and easy money loans were both forthcoming (refer to Chapter 14). At Ottawa in 1932, Australia continued to play hardball and struck a trade agreement, winning just about all the trade concessions they wanted from Britain, while giving very little away.
The Ottawa trade agreement gave Australia free entry for most of its goods in to Britain (with the exception of meat). Britain in return got practically nothing. Some preference was to be given to British goods coming into Australia but at a level decided by the Australian Tariff Board (which was sort of like making the poacher head gamekeeper). Australian officials and politicians couldn’t help but crow about their success.
The Australian High Commissioner in London, ex-prime minister Stanley Bruce, joked that it wasn’t his job to teach the British officials how to negotiate. The British, after all Australia’s talk about ‘imperial family’ and unity, were burned — and Australia started thinking that if this was what being a Commonwealth dominion was all about, then international life wasn’t too bad after all. However, this victory damaged Australia’s interests in the long run — because Australia became lazy and assumed that its trading future was entirely bound up with staying tuned in to Britain.
Britain began searching beyond its empire for other trade opportunities. ‘Times have changed’, said one British official. ‘Australia cannot afford to continue to be as self-centred and acquisitive as she has been in the past.’ But Australia was pretty slow in absorbing this fairly blunt message.
When it comes back to bite you — the 1936 trade diversion fiasco
The lessons that Australia should have been learning about the need to try to find new markets beyond Britain finally overtook them in 1936. In this year the federal government announced a trade diversion scheme, knocking back trade opportunities with the US and Japan in order to give preferential treatment to Britain. The blithe assumption was that Britain would automatically return the preferential treatment. Britain didn’t.
By 1936, Japan was Australia’s second biggest customer for wool, and rising. But Australia lost the entire Japanese wool market after their pro-British trade rebuff, and were shut out from the Japanese wheat and flour markets as well. In the same trade diversion scheme, Australia also increased its protective duty on motor car chassis coming into the country from America. American manufacturers were far from happy and the US withdrew Australia’s ‘Most Favoured Nation’ trading status.
Australia complained to Britain, pointing out that Australian tariffs had been cut for British goods, and not enough preferential treatment was being given in return. The British Board of Trade, no doubt enjoying itself immensely, pointed out that Australia’s tariff wall ‘was so absurdly high’ that plenty of tariff reduction was possible without running the slightest risk of damaging Australian manufacturers.
All in all, the 1930s didn’t include the best moments for Australian politicians trying to improve the prospects of ‘Australia Inc’.
The people endure
The Great Depression of the 1930s was extremely hard for many Australians, as businesses closed and mass unemployment hit some areas (refer to the section ‘Here comes tomorrow’ earlier in this chapter).
However, the Depression also threw Australians of all classes and walks of life back upon their own resources, and forced them to discover capacities for self-sufficiency. Most were lucky, in that the majority of Australians now lived on large quarter-acre suburban blocks. A flourishing ‘black market’ economy emerged, with people producing goods at home for their own consumption and trade, as well as exchanging services.
Here are some examples of what was taking place across the country:
Chooks and veggies replaced lawn.
Household items were repaired rather than replaced.
Bottling and preserving came into its own.
Clothes were made and mended.
Buildings were extended, and verandahs converted into bedrooms for extended family.
And the climate was good — most Australians didn’t have to weather harsh winters in hardship and without heating like so many in America and Europe.
One of the most striking things about the Depression era was that the general flow of people into cities and urban life, which had been a dominant feature of Australian life for more than 60 years, was reversed. As jobs gave out in the factories and building industries in the cities, many working-class men, teenage boys just out of school and various professionals connected with a prominent Australian social myth — the myth of ‘the bush’ as the heartland for authentic Australians. In the country, you could find more jobs (working for small and large farmers), more free food (fishing, rabbits and occasionally free ‘tucker’ from homesteads) and plenty of places to camp for free. Swaggies (itinerant workers) became a prominent feature of the country landscape as the government provided coupons for rations of food and dole at country police stations.
The Depression brought no shortage of painful and difficult experiences — including the dramatic increase in bankruptcies and the loss of many jobs. But overall people actually got healthier. They had less money but they ate better, in terms of nutrition. Cracked-wheat porridge, jam sandwiches, rabbit stew, lots of home-grown vegetables, mashed potato, milk, butter and eggs all made for cheap and plentiful foods.
The death rate during the 1930s actually declined. The suicide rate, after a sharp rise during the first initial shock of early 1930, fell far below what it had been in the ‘roaring twenties’. People crowded into cheap entertainments, such as horse races, football matches, cinemas, agricultural and flower shows, in record numbers. The worst hardships were hard, there’s no doubting that, but many found that there were far worse things than being poor. Weirdly, counterintuitively, if you could get by in the 1930s, you may well have been happier than in the more affluent decades both before and since.