Great Depression in Australia - 1932-1939: A Slow Recovery

1932-1939: A Slow Recovery

Unlike the United States, where Franklin Roosevelt's New Deal attempted to stimulate the American economy, New Zealand where Michael Savage's pioneering welfare state tried to reduced hardship, or the United Kingdom where rearmament (from 1936) increased deficit spending, there was no significant mechanism for Keneysian policy responses in Australia.

Federation in 1901 had granted only limited power to the federal government. For example, income taxes were collected by the State governments. High tariffs worked to hurt the economy, but powerful interest groups permitted no change in this aspect of policy. There was no significant banking reform or nationalisation of private businesses.

The devaluation of the Australian pound, abandonment of the Gold Standard, recovery of major trading partners like the United Kingdom and public works projects instituted by State and local governments led to a slow recovery. Unemployment, which peaked at 32% in 1932, was 11% at the start of the Second World War compared to 17.2% in the United States, where the federal government took a much more active role in promoting recovery.