The Depression in Australia

THE DEPRESSION IN AUSTRALIA LLOYD Ross I. BEFORE THE DEPRESSION: THE STATE AND EcoNOMIC LIFE J UDGED by the extent and direction of state intervention , Australia before the depression was the most socialistic country in the world. Strong militant trade unionism in 1927 embraced 911,652 out of 1,566,841 employees of twenty years and over-the highest proportion in the world. Every State had had a Labour government, and Labour had been in power in the Commonwealth sufficiently long, in 1910-2., to set up a State Commonwealth Bank and to extend all the social reforms of the earlier Liberal governments. Around the individual had been built an armour of legislation, from maternity: allowances, through childhood endowment and free education, to workers' compensation , old-age pensions, and widows' allowances.1 Around the country had been huilt tariff and migration barriers to preserve the Australian standard against an influx of cheap goods and cheap foreign labour. Undertakings like railways and tramways, the post office, telephones, and hydro-electric development, were nationalized ; in others such as canneries, banking, and insurance, the state interfered by its own competition to protect the consumer; in all · trades humanitarian considerations limited profiteering by granting a minimum wage and legally-enforceable conditions. Australians, fresh from the horrors and the cramped opportunities of 11n the four years 1925-6 to '1928-9, there were 374 pensioners pet 1000 of the population over the required age; for 1929-30, there were 412, and for 1930-1, 453. THE DEPRESSION IN AUSTRALIA the Old World, were determined to keep open the road to improvement.· Australia had her frontier period when land was cheap and accessible and gold was plentiful and alluvial. But, despite its size, Australia was not suited for openwaggon expansion. Very early the opportunity of obtaining cheap land was closed, partly by the large holdings of first arrivals, but chiefly because capital was required to exploit the open spaces, which were very difficult of access and very liable to droughts and floods. Political democracy was won early: English Chartists obtained the essence of their six points. The Australian people interfered with industrial development, not merely because the democracy followed the easy route of compelling the state to help by giving pensions and subsidies and by cutting up large estates, but also because the difficulty of raising capital by private individuals made it inevitable that the very necessary developmental work of building railways, roads, and hydroelectric systems should be done by the state. While the Labour party was influenced by the socialism of Bellamy, by the Fabians, by popular Marxians, and by European immigrants, its doctrines of state intervention were applied because the spirit and movement of the whole Australian people were controlled by the general practice of calling on the state to solve all problems that faced any group large enough to have deCISive votes. The best approach for the student of Australian socialistic development is by contrast with American development; it is sufficient here to emphasize that despite the subdued warnings of many economists and the limited criticisms of those .not being assisted at the moment,- Australia entered the depression with THE UNIVERSITY OF TORONTO QUARTERLY an intense faith in the efficacy of the state to control economic and social conditions. Until the depression, expansion of production and plentiful borrowing made the Australian accustomed to an improving standard of living, which he was determined to defend at all costs. So interwoven with Australian thought had become the belief in the power of state action to secure rising standards that Australians began to think that state action was independent of econo1nic conditions. According· to the comparison made for the International Labour Office by Mr. J. H. Richardson , the Australian standard was the next in the world after that of the United States and Canada. Judged by ease of work, state social services, and absence of great and obvious inequality, the standard was probably the highest-at least the Australian said it was. To-day economists are claiming that Australia will be the first country to take advantage of world recovery. One of them writes:2 My theme is that the wrangling style we affect has not...