Great Depression in Australia - 1929: The Storm Erupts

1929: The Storm Erupts

In 1925 the British government decided to put the pound sterling back onto the Gold Standard at pre-1913 parity. This had the immediate effect of making British exports far less competitive in international markets. Because Australia pegged the Australian pound to the pound sterling, this also affected Australian terms of trade.

Falling export demand and commodity prices placed massive downward pressures on wages, particularly in industries such as coal mining. Due to falling prices, bosses were unable to pay the wages that workers wanted. The result was a series of crippling strikes in many sectors of the economy in the late 1920s. Coal miners' strikes in the winter of 1929 brought much of the economy to its knees. A riot at a picket line in the Hunter Valley mining town of Rothbury saw police shoot one teenage coal miner dead.

The conservative Prime Minister of Australia, Stanley Bruce, wished to dismantle the conciliation and arbitration system of judicially-supervised collective bargaining which had been the cornerstone of Australia's industrial relations system since the 1900s. This is because arbitration made it difficult for employers to adjust wages in response to market conditions.

The opposition Australian Labor Party, led by James Scullin, successfully depicted Stanley Bruce as wanting to destroy Australia's high wages and working conditions in the 1929 federal election. Scullin was elected Prime Minister in a landslide which saw Stanley Bruce voted out as the Member for Flinders, the only time prior to the 2007 federal election that a sitting Prime Minister lost his seat.