Describe and explain the political, social and economic developments in interwar Australia, including post-war reconstruction, the 1920s political settlement, the Great Depression, the Premiers' Plan, the dismissal of Jack Lang and the rise of new political movements

What this dot point is asking

QCAA wants you to describe and explain the political, social and economic developments in Australia between the end of World War I and the outbreak of World War II. You should cover demobilisation and the war's social aftermath, the Bruce-Page government of the 1920s, the impact of the 1929 Great Depression, the policy response (the Premiers' Plan) and the political crisis around Jack Lang. Source-based questions usually present a Depression-era photograph, a political cartoon and an economic data table.

The answer

The interwar period in Australia divides into two phases. The 1920s were dominated by post-war reconstruction, conservative coalition government and an uneven prosperity built on commodity exports and immigration. The 1930s were dominated by the Great Depression, the worst sustained economic crisis in Australia's history, and the political conflict it produced. The shape of the post-war federation, and the political memory that drove Curtin's government in World War II, were forged in these two decades.

Demobilisation and the 1920s settlement

About 264,000 men returned to Australia between 1918 and 1920. The Commonwealth's repatriation program included pensions for the disabled, a soldier settlement scheme that placed about 37,000 ex-servicemen on rural blocks (many of which were marginal and failed within a decade), and preferential employment policies. The Returned Sailors' and Soldiers' Imperial League of Australia (RSSILA, later the RSL) became a significant political force.

The 1922 election produced a Nationalist-Country Party coalition under Stanley Bruce (Nationalist, Prime Minister) and Earle Page (Country, Treasurer). The Bruce-Page government held office for seven years, the longest unbroken interwar conservative ministry. Its program was:

• Men, money, markets. Encourage British immigration, attract British capital, secure British markets for Australian exports.
• Industrial settlement. A more interventionist Commonwealth role in industrial relations through the federal Arbitration Court.
• Federal-state cooperation. The 1927 Financial Agreement and the creation of the Loan Council to coordinate state borrowing.

The government fell in October 1929 when Bruce attempted to abolish federal industrial arbitration. The Labor Party under James Scullin won the resulting election in a landslide. Five days after Scullin took office, the Wall Street crash began.

The Great Depression in Australia

Australia was acutely exposed to the global Depression for three reasons.

• Export dependence. Wool and wheat were 60 percent of Australian exports. World prices collapsed; wool prices fell about 50 percent, wheat prices fell about 50 percent.
• Capital dependence. The states and the Commonwealth had borrowed heavily in London during the 1920s. The London capital market closed to Australian borrowers in 1929 and 1930.
• Industrial structure. Australian manufacturing was small and protected; it could not absorb labour displaced from primary industry.

National income fell by approximately 30 percent between 1929 and 1932. Unemployment among trade union members peaked at 32 percent in mid-1932; total unemployment was probably higher. Government revenue collapsed.

Social effects were severe.

• Sustenance ("the susso"). State governments paid ration coupons (not cash) to the unemployed. The amount and conditions varied by state.
• Evictions and shanty settlements. Inner-city evictions led to camps of unemployed people on urban fringes (Happy Valley near Sydney, La Perouse, the Domain).
• Internal migration. "Swaggies" (men walking the country roads in search of work) became a national image of the period.
• Demographic effects. Marriage rates fell; birth rates fell; emigration to Britain rose modestly.

The Depression's effects were uneven. Small farmers and unskilled urban workers suffered most. The middle classes were affected by salary cuts but most kept their jobs. The wealthy were largely insulated, though wealth dropped on paper. Indigenous Australians, already in the worst conditions, fell out of statistical view; rations were cut, missions were under pressure and some Indigenous workers were displaced by white labour.

The policy response: the Premiers' Plan

The Scullin Labor government was divided. Its Treasurer Edward Theodore proposed a moderately expansionary program (a degree of currency depreciation, controlled deficits) influenced by the British economist J.M. Keynes. The Commonwealth Bank Board, the Sir Otto Niemeyer mission from the Bank of England (1930) and most Australian Treasury officials urged deflation: cut wages, cut government spending, restore confidence with British creditors.

The June 1931 Premiers' Conference adopted a deflationary compromise known as the Premiers' Plan. Its main elements were:

• A 20 percent reduction in adjustable government spending including pensions.
• A 22.5 percent reduction in award wages.
• A conversion of internal government debt at lower interest rates.
• Tax increases.

The Plan was conservative in intent but Labor governments (federal and most state) administered it. It contributed to the Scullin government's defeat at the December 1931 election, in which Joseph Lyons (a former Labor minister who had defected to lead the new United Australia Party) won government with a large majority. Lyons remained Prime Minister until his death in 1939.

Jack Lang and the 1932 NSW dismissal

The NSW Premier Jack Lang refused the Premiers' Plan. His government suspended interest payments on debts owed to British bondholders, imposed emergency taxes on Commonwealth bondholders and disputed the legitimacy of London creditors. The federal government (initially Scullin, then Lyons) sued in the High Court and won. Lang refused to pay.

The constitutional crisis escalated. On 13 May 1932 the Governor of NSW Sir Philip Game dismissed Lang and commissioned the Opposition Leader Bertram Stevens to form a government. Stevens called an election (June 1932) and won decisively.

The dismissal was politically explosive. The right wing (organisations such as the All for Australia League and Eric Campbell's New Guard, a paramilitary group of returned soldiers and conservatives, which had earlier disrupted Lang's opening of the Sydney Harbour Bridge in March 1932 when Captain Francis de Groot slashed the ribbon ahead of the Premier) saw the dismissal as a restoration of constitutional order. The left wing of Labor (the "Lang Labor" faction) saw it as a vice-regal coup. The episode shaped NSW Labor politics into the 1940s.

New political movements

The Depression and the Lang crisis brought new political movements into the open.

• The New Guard. A right-wing paramilitary force in NSW (1931 to 1935), peaking at around 50,000 members. It saw itself as a bulwark against the communist threat it associated with Lang.
• The Communist Party of Australia (CPA). Founded in 1920, the CPA grew during the Depression among unemployed organisations and the Militant Minority Movement in the unions. Membership remained small (a few thousand) but the party influenced industrial action and unemployed organising.
• Country-based fascist sympathies. Small fascist movements (the Centre Party, parts of the New State League) attracted some interest but did not approach the size or influence of European fascist parties.
• Catholic Action. Catholic social movements developed under the influence of Pius XI's Quadragesimo Anno (1931), prefiguring the Catholic Social Studies Movement of the 1940s.

The Australian political system absorbed these movements without serious systemic threat. Democratic institutions held; elections went ahead; the dismissal of Lang was the closest the country came to a constitutional rupture in this period.

The late 1930s: partial recovery and rearmament

By 1935 Australia was recovering, though unemployment remained around 10 percent through the late 1930s. Recovery was driven by:

• Currency depreciation (the Australian pound fell about 25 percent against sterling in 1931).
• Tariff protection of manufacturing, which grew during the 1930s.
• A modest recovery in commodity prices.

Rearmament from 1937 (under the Lyons government and its successor under Robert Menzies, who became Prime Minister in April 1939) brought defence spending and industrial activity. By September 1939 Australia was better placed economically than at any point since 1929, although not at 1929 levels of national income per head.

Common traps

Treating the 1920s as uniformly prosperous. Rural Australia was already in trouble in the late 1920s. Wool and wheat prices had been falling before 1929. Soldier settlement schemes were failing across the decade.

Confusing the Premiers' Plan with Lang's plan. Lang rejected the Premiers' Plan; he did not implement it. The Plan was a compromise drafted by the conservative governments and accepted reluctantly by Scullin federally and several Labor premiers.

Calling the New Guard "fascist" without evidence. The New Guard had paramilitary, anti-communist and authoritarian features but did not have an integrated fascist ideology or aim to overthrow the constitution. Some historians use "para-fascist" carefully.

Ignoring Indigenous Australians. The interwar period saw the consolidation of state policies of removal, mission control and rations. The 1937 federal-state conference on Aboriginal affairs began to articulate a national assimilation policy. Reference where relevant.

Stopping the story in 1932. The Lyons period (1932 to 1939) is examinable. Recovery, rearmament and the political settlement that produced the wartime Menzies and Curtin governments belong in this dot point.

In one sentence

Interwar Australia moved from the conservative Bruce-Page coalition of the 1920s, built on British men, money and markets, through the catastrophic collapse of export prices and capital inflows after 1929 that produced unemployment of around 32 percent at its 1932 peak, into the bitter politics of the Premiers' Plan, the dismissal of Jack Lang in May 1932 and the slow partial recovery under the Lyons government, leaving a federal political system that had absorbed the New Guard and Communist Party challenges but carried deep class and sectarian memory into World War II.