Was the Great Depression successfully overcome in Australia by 1930?

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Australian Economic Development

First Major Essay

“Was the Great Depression successfully overcome in Australia by 1930?”

The Great Depression of the 1920’s and ‘30’s has been the greatest defining moment of international economics in the modern era. During this period, western nations such as Australia and Great Britain suffered the worst economic downturn in modern history. The result was a re-evaluation of economic policy and a series of structural change that would shape the nations economic system into the twenty-first century. The reasons for the Depression are long, varied and disputed, however what cannot be argued is the dramatic effect that the Depression had on the vast majority of industrialized nations, such as Australia. The purpose of this essay is to pose the question of ‘How successful was Australia’s economic recovery by 1939?”. In this essay, I will argue Australia had begun to recover from the despairs of the Great Depression by 1939, however that process was in fact far from complete. I will discuss this statement in a linear fashion. Firstly, I will investigate the state of the Australian economy before the onset of the Great Depression and discuss the economic structures in place during this period. Secondly, I will look into the effect that the Depression had in Australia. Thirdly, I will investigate the nature of the Australian recovery, by discussing the various practices that the Australian Government employed to pull the nation out of the slump and their apparent success. And finally, I will then look into the state of the Australian economy in 1939, by investigating and relating economic indicators to the pre-Depression era.

With the outbreak of war in 1914, and the coming of the industrialized era, Australia went through a state of cyclical change throughout the World War I period and after. The outbreak of war stimulated large-scale growth of industry in Australia in order to cope with the demands of the soldiers fighting abroad. Whilst the Agricultural industry remained the backbone of the Australian export market, there was a sudden growth in manufacturing industry in Australia, producing wartime goods such as clothing, boots & blankets. When war ended in 1918, there was a feeling of expectation amongst Australians who saw the post-war period as a future of “material progress” (Spenceley 1981, pp. 1). Returning serviceman would expect to return to their jobs in hope of prosperity in the post-war period. The women and others who stayed and looked after the ‘home-front’, and fulfilled labour shortages throughout war would expect to continue their employ in the workforce.

However whilst the 1920’s were prosperous times for Australian’s, by 1928, materialism on the part of the ‘prosperous’ citizen, and the nations increasing trade deficit would prove costly as the worldwide economic slump took shape. Australia proved to be one the hardest affected nations during the Depression, to which there are a number of key reasons. Australia’s reliance on exports of primary products, in particular wool and wheat meant that a slowing economy in Britain and the United States would eventually result in a reduction in exports to those countries, which would force economic contraction domestically. Further, Australia, which at the time was going through a large population growth thanks largely to the large-scale immigration of migrant workers from nations such as Britain and southern Europe after the First World War, also began a period of infrastructure development, in cities such as Sydney and Melbourne, and in rural communities. This infrastructural development was essential in accommodating the booming population in Australia, and to also provide new Australians with rural job opportunities that were unavailable in the larger urban centres. However, the funds needed to finance such infrastructural development were not readily available domestically. Taxes had already been increased and the population was obviously unwilling to accept any further increase (Snooks 1974, pp. 2). Therefore to finance development, the Australian Government was required to borrow funds domestically, and also internationally from nations such as Great Britain and the United States. This indebtedness to these nations placed an even larger reliance on overseas markets and would place Australia in a poor position come 1928.

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The prosperity of the late 1920’s had lead Australians to become materialistic in their nature, which caused further insecurity on the Australian economic position. Real wages had slowly increased to close to pre-war levels, migration into urban areas began to increase [both from rural Australia and abroad] and the development of infrastructure such as electricity lead to a general feeling of enthusiasm (Spenceley 1981, pp. 8). This rise in affluence was materialised through the purchase of houses, motorcars, and electrical goods. The problem, however, was that in order to purchase the material goods of the time, Australians continued to finance ...

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