Events in Europe from 1919 to 1939 - Soldier Settlement and Assisted Migration - The 'boom years' of the 'twenties - The Great Depression - The 'Premiers' Plan - The 'Lang Plan' and the 'New Guard' - Ottawa Conference - Recovery from Depression - Dearth of Social Legislation - The Second World War.

The period between the end of the first World War 1914-18 to the outbreak of the Second World War in 1939 was one of chequered growth for Australia as for many countries in the world. It was a period that began with great hopes of building a new era of peace and prosperity, with the League of Nations to settle disputes between countries and to preserve the peace of the world. The countries of Europe in particular had suffered so much from the war, and then from the disorders which followed upon it and the Russian Revolution of 1917, that there was a widespread longing for peace. What was needed was some machinery that would settle international disputes without the disastrous resort to war. The establishment of the League of Nations by the Treaty of Versailles in 1919 was an attempt to fulfil these hopes, and it was mainly due to the work of President Wilson of the United States that this body was set up. But in 1920 Woodrow Wilson was defeated in the American presidential elections, and the new Harding Administration refused to have anything to do with the League of Nations or any 'foreign entanglements.' The new government in Soviet Russia also refused to have anything to do with the League, saying that it was an organization of 'imperialist and capitalist powers'; they accused it of wanting to destroy the new socialist government of Russia. Thus the League was weakened from the outset by the absence of some of the great powers, whilst Germany was not admitted till 1926. In spite of this, and in spite of economic difficulties and unrest, the countries of Europe were not long in restoring the devastation caused by war, and by 1926 they had got back to normal peace-time conditions. For a few years the chances of peace and prosperity looked bright, but at the end of 1929 a worldwide economic depression began to cause unemployment and poverty on a large scale, and conditions grew worse for the next three or four years. In this situation the various countries tried to solve their own problems of unemployment by tariff duties, by prohibitions and quotas on each other's goods. By doing so each of them added to the difficulties of the others. In 1933 a World Economic Conference was held to devise common action, but it was too late and it was a failure. Meanwhile Japan had invaded Manchuria in 1931, and brought it under her control, although China was a fellow-member of the League of Nations. The League of Nations disapproved of the Japanese action, but as the great powers were not willing to do anything to stop the Japanese there was nothing the League could do about it. The seizure of Manchuria was one of the ways in which Japan tried to find a way out of the depression, so the setback to prosperity meant a setback to peace also. In Europe, too, the depression provided an atmosphere favourable to those elements which were opposed to the League of Nations and the Treaty of Versailles. Quite soon after that treaty had been signed, parties had risen in Germany and Italy which aimed at upsetting the peace settlement. In Italy the Fascist party, as it was called, was able to profit by a period of disorder and a weak government to seize power in 1922, and Mussolini became dictator of Italy. The Fascists were absolutely opposed to socialists, communists, and parliamentary democracy, all of which were suppressed in Italy. Quite soon after the end of the war a similar party had arisen in Germany, which called itself the National Socialist (Nazi) party. It blamed Germany's defeat on socialists, communists, and (for good measure) the Jews. The Nazis claimed that Germany had not been defeated by the Allied armies in the field, but by 'a stab in the back.' They were also opposed to the League of Nations and parliamentary democracy, and wanted to tear up the Treaty of Versailles. In 1923 they tried to seize power at Munich, but the rising was a fiasco and Adolf Hitler, the Party leader, spent nine months in gaol. During the next five years the Nazis made no headway, but lost influence while Germany gained stability and prosperity as a parliamentary Republic. But the depression gave Hitler and the Nazis their opportunity. With over 6,000,000 unemployed, men became ripe for any desperate remedies; many began to believe that the Treaty of Versailles was the cause of all their troubles, and millions flocked to Hitler's banner. In January 1933 the old President, von Hindenburg, made Hitler Chancellor of Germany. The Nazis seized power, and suppressed all their opponents; the Republic gave way to the Nazi Empire. Germany left the League of Nations, and the Disarmament Conference ended soon after in failure. Russia, fearing attack from Germany, now joined the League of Nations, but again it was too late. In October 1935 Italy invaded Abyssinia, though both countries were members of the League of Nations, and Abyssinia was soon conquered. In 1936 both Germany and Italy assisted the revolt against the Spanish Republican Government which was led by General Franco. After more than three years of terrible fighting the Republicans were defeated, and Franco set up a government somewhat similar to that in Italy and Germany. By this time Germany, Italy and Japan had all signed a pact which declared that communism was the great menace to world order and peace, and that it must be destroyed. For some years it had been plain that these Axis Powers (as they called themselves) were out to re-draw the map of the world in their own interest, and were preparing for war in order to do so. But there, were many people in Britain, America, France and Australia who were unable or unwilling to see this fact. Others hated the communists so much that they hoped Germany would attack Russia. But most ordinary people had come to think of war as a brutal and wasteful business, they found it hard to believe that anyone would deliberately embark upon it. The leaders of the Axis countries mistook this distaste for war for fear, and Hitler forcibly annexed Austria (1938) and Czecho-Slovakia (1939). The British and French saw they must call a halt to this method of altering the political boundaries of Europe. They warned Hitler that any further aggression would be resisted by force, and when the Germans invaded Poland both Britain and France declared war on Germany on 3rd September, 1939. The Australian Prime Minister, Mr. R. G. Menzies, announced the same day that Australia was at war with Germany alongside Britain. For the second time in twenty-five years Australia was involved in a world war that had its origins in Europe. Such has been the background of Australian history in the period since the Treaty of Versailles in 1919. Let us now look at what had been happening in Australia itself.

The first ten years after the victory of the Allied Powers in 1918 were marked on the whole by prosperity and economic progress in Australia. There was during this period a good deal of political strife mainly over industrial matters arising out of a number of big strikes. But on the whole people were busy making money and enjoying themselves and, if some suffered distress from unemployment, for example in the slump of 1920-21, the great majority were not much affected and conditions soon improved. The world outside was prepared to buy our wool, wheat, butter, fruit and metals, and to pay good prices for them, so Australian production expanded in response to demand. The Commonwealth and the State governments were busy promoting closer settlement, and particularly in providing farms for returned soldiers who wished to go on the land. They bought over 5,000,000 acres of private land (for 29,000,000 pounds), and also set apart 23,500,000 acres of Crown Land for farms for soldier settlers. In the long run Australia lost nearly 24,000,000 pounds on these ventures. But meanwhile many ex-soldiers settled in the irrigation areas of the Murray valley in Victoria, New South Wales and South Australia, and the effect of this settlement can be seen in the great growth of production of citrus fruits, dried fruits, table grapes and wine which took place between 1919 and 1939. Other ex-soldiers took up wheat farming (particularly in Western Australia), dairy-farming, or sheep-raising. There were many others besides ex-soldiers who were also going into farming, and in addition there were many being employed in factories or other businesses in towns. During the war the number of factories in Australia had grown considerably, partly because we could no longer get the goods we had previously imported. In 1921 many of these war-time industries succeeded in getting tariff duties to protect them from overseas competition, and so not only farm production, but also factory production entered upon a period of rapid expansion.

It is, perhaps, not surprising that in these circumstances governments and many people were confident and optimistic about our future progress. At the census of 1921 the Australian population numbered 5,436,000 and statesmen in this country and overseas thought this number could be rapidly increased. They thought, moreover, that we should have a bigger population in the interest of our security and prosperity, as well as in the interest of the Empire as a whole. It was simply a matter of 'men, money, and markets,' in the opinion of Mr. S. M. Bruce, who was Prime Minister of Australia from 1922-1929. During his term of office there was a considerable amount of unemployment in Great Britain, and British leaders as well as Mr. Bruce thought it would be a good idea to encourage emigration from Britain to Australia. Britain was also willing to lend Australia money to enable her to establish these settlers on the land, or in other employment. So in 1922 the British government passed the Empire Settlement Act so that it could lend money on easy terms to the dominions, and help to pay the passages of British emigrants. Three years later the Commonwealth entered into an agreement with the British government whereby Britain was to lend Australia 34,000,000 pounds on easy terms; in return Australia was to take 450,000 British emigrants within ten years. This was known as the '34,000,000 pounds Agreement.' The money was to be used in building roads and railways, schools and hospitals and to provide all the other public needs of a growing community. As a matter of fact not 34,000,000 pounds, but more than ten times this amount (410,000,000 pounds) was spent by Australian governments and public bodies between 1919 and 1929 to promote settlement in Australia. Much of this money (about 20,000,000 pounds each year) was borrowed in London, and it played a big part in the prosperity of that period. For a few years British immigrants came to Australia in large numbers, but our population grew even more by natural increase. By the end of 1929 our population had grown by a million more than at the census of 1921. We had certainly succeeded to a large extent in getting the men, and even more in getting the money for settlement. But what about the markets?

British and Australian statesmen had both thought that most of the British immigrants would settle on the land, and produce farm products that would be sold mainly in Britain. Great plans were made for closer settlement in addition to the soldier settlements that already had been started. The gigantic Hume Weir was planned to provide more water for irrigation settlements. It was thought that the British market would take all that could be produced, but the problem of markets was not so simple. Within a few years there was such an increase of dried fruits that prices fell, and growers were threatened with ruin. The Commonwealth urged the British government to give a preference to Australian wine and dried fruit, by putting a higher duty on foreign than on Australian products. The British government was not keen to do this, because Britain has to sell most of her exports to foreign countries and they might retaliate by putting higher duties on her goods. However, it was urged that Australia could not take so many British immigrants unless this were done, so in 1925 the British government gave way. But what was to happen when the British people had all the raisins, currants, and wine they wanted? Other nations would not be prepared to take them on better terms than were given to growers in Greece or California. However, for the present the British market served our needs. But meanwhile the dairy-farmers were also complaining that their prices were not profitable enough; they complained that the cost of the manufactured goods they had to buy was raised by the duties on imports. They could not get these duties reduced, and Britain would not put duties on foreign butter, so they could not get a British preference. However, the Paterson Butter Plan gave them what they wanted in 1926. Australian consumers were charged a higher price for butter than it fetched on overseas markets, while New Zealand butter was kept out by a duty. Similar arrangements were already being used for dried fruits and sugar, and so the production of all these went on increasing; so did the production of wheat, wool and metals. By 1929 there was a relative overproduction of primary products on the world's markets; their prices dropped heavily and a world depression began that was to have widespread and disastrous results. The causes were many and complicated, and cannot be detailed here. We are more concerned with its results for ourselves, but before looking at those we must notice some other things that were happening in the expansive nineteen-twenties.

In addition to the great growth in farm production there was a great growth in the number of Australian factories and of the people employed in them. Actually the value of factory goods grew faster than that of farm products, and the number of factory workers certainly grew much faster than those on farms. It was a period of great prosperity for Australian manufacturers, and it was marked by the growth of the iron and steel industry, textile manufactures, rubber goods and many other things. We were making more and more things that had previously been imported, and our people were becoming skilled in more and more occupations, which of course is very desirable. But there were also some disturbing features about this growth of manufactures, because much of it was only possible because of high duties on imported goods. We have already noticed how this had led Australian farmers to ask for tariff duties and for financial assistance. But high duties also enabled manufacturers to make good profits, and this encouraged wage earners to ask for higher wages. This was only to be expected, and their demands were hard to refuse because they were continually getting stronger through their organization in trade unions. Accordingly there were quite a lot of industrial disputes in these years, and some of them were very bitter. In 1925 there was a great shipping strike throughout Australia, and the Commonwealth government tried to deport two of the seamen's leaders, Walsh and Johnson, on the ground that they were 'undesirable immigrants.' The High Court held, however, that the Commonwealth did not legally have power to do this. Trade unions continued to press for higher wages and better conditions for their members, and there was a good deal of industrial unrest. But when prices and profits began to fall it was no longer possible to get these demands granted. In 1928 and 1929 there were two big but unsuccessful strikes by the timber workers and the waterside workers; in both cases the men refused to accept an award of the Commonwealth Arbitration Court. This Court, set up in 1904, had done a great deal to improve wages and conditions, especially under the presidency of Henry Bourne Higgins from 1907 to 1921. But the Prime Minister, Mr. Bruce, in 1929 decided that the system was not working satisfactorily, and proposed to abolish the Commonwealth court, and to leave industrial arbitration to the States. He was overwhelmingly defeated in the elections at the end of 1929, and Labour returned to power under the leadership of Mr. J. H. Scullin, after a period of 13 years 'in the wilderness.'

It was the misfortune of Mr. Scullin's government that it had to grapple with the problems of the greatest depression in history. To add to his difficulties the Labour party had been so long out of office that all the old tried and tested leaders of Fisher's day were dead, or retired from active politics. All except Mr. W. M. Hughes, who had left the Labour party in 1916, and was now one of its chief political opponents, although he frequently proved disconcerting to his own party as well. Australia was feeling the effects of the world depression through the fall in prices of primary products. Farmers in particular were suffering a serious loss of income, and since they could not buy so many manufactured goods, unemployment was growing in town and country. To make matters worse, in these circumstances we could not borrow overseas, so loans from Britain stopped and public works had to be curtailed - result, more unemployment and poverty. There even began to be a danger that our exports would not be able to pay for our necessary imports together with the interest on the loans raised overseas, mainly in London. The Commonwealth tried to avoid this danger by reducing imports through higher duties; they even prohibited the import of many luxury goods altogether. But although this helped us to pay our interest bill, the situation continued to get worse. The British government also gave some relief by cancelling the payments due on our war debt to them; but this relief was also inadequate. So great was the fall in prices of our exports that by 1931 importers were willing to pay up to 130 pounds (Australian) in order to obtain 100 pounds sterling in London, so that they could carry on their business. This fall in the value of the Australian currency in relation to sterling, dollars, and francs gave some relief to those producing for export, for it meant that for every 100 pounds sterling they received in London they could get 130 pounds in Australia. At the end of 1931 the Commonwealth Bank took over this regulation of 'the rate of exchange,' and fixed the rate at 125 pounds (Australian) for 100 pounds sterling, and this rate has since been maintained. This certainly did something to help our farmers and exporters, but meanwhile many other difficulties plagued the harassed governments.

The fall in people's incomes meant that there was also a fall in the revenue of the Commonwealth and State governments; they were unable to meet their normal expenditure and 'balance their budgets.' It is not difficult to understand why, when it is realized that the national income (that is the total of people's incomes), fell by about 30 per cent. during the worst of the depression. At first governments were not inclined to reduce expenditure very much, and the Federal government looked to the Commonwealth Bank to lend it money to tide it over its difficulties. But in April 1931 the Commonwealth Bank Board told the Federal government that the Bank could not lend them any more. The Commonwealth government then proposed to alter the Commonwealth Bank Act so as to make the Bank do what it wanted; but it did not have a majority in the Senate, and the Senate refused to pass the bill. The result was that the Commonwealth and State governments were now compelled to reduce expenditure, and at a Premiers' Conference in June 1931 a plan was agreed on to reduce public expenditure by 20 to 25 per cent. This 'Premiers' Plan' within a few years had the desired effect of balancing budgets, and it did provide a policy for meeting the depression. But it entailed severe sacrifices for many people. Salaries of public servants were reduced, and there was much bitter opposition from trade unions and wage-earners at this 'attack on the standard of living.' However, this was the price that had to be paid in order to get assistance from the banks, and it was made somewhat more acceptable by the fact that all holders of government bonds had to accept a similar reduction in interest. Without this it would have been impossible to balance budgets. In addition the Commonwealth Arbitration Court in January 1931 had ordered a 10 per cent. cut in the real basic wage, so that there was a general reduction of wages, salaries, and rates of interest. All incomes had suffered, and the reductions made under the Premiers' Plan were advocated in the interests of 'equality of sacrifice' as well as of balancing the budget. But many people believed that these reductions, or much of them, could have been avoided if the banks had acted differently. Labour's supporters began to say it was a question of 'the people versus the banks,' and to blame the Scullin government for accepting the 'Premiers' Plan.' This was particularly so in New South Wales among the followers of Mr. J. T. Lang, the Labour premier. He had also put forward his plan. The main points of the 'Lang Plan' were that interest on government bonds should be reduced to 3 per cent., and that Australia should pay no more interest to British bondholders until they agreed to a similar arrangement. He had a number of supporters in the Federal parliament, where the position of the Scullin government was seriously weakened by these divisions in the Labour ranks. Mr. Lang was really bent on wrecking the 'Premiers' Plan,' and in November 1931 his supporters voted with the opposition to defeat the Scullin government. J. A. Lyons then left the Labour party to form a national (United Australia) government, and became Prime Minister. The elections in the following month, which were fought largely on the question of the nationalization of banking, were an overwhelming defeat for Labour. For ten years Labour was to remain out of office, and Joseph Lyons remained Prime Minister until his death in April, 1939.

With the Lyons government in office the argument about a policy for the depression was virtually settled, but Mr. Lang continued to resist for a little longer in New South Wales. He had already in April 1931 failed to pay interest on overseas debt, but the Commonwealth Government shouldered the responsibility. He introduced bills to reduce interest in New South Wales, though these were blocked by the Legislative Council. There was a run on the Savings Bank of New South Wales, and it had to close in April 1931. Mr. Lang's policy caused such strong feeling in New South Wales that his opponents organized a semi-military body, the New Guard, to call a halt by force if need be. Mr. Lang's supporters began to talk about 'the rise of fascism,' and the situation was certainly disturbing. But in 1932 Mr. Lang by acting unconstitutionally brought about his dismissal by the governor, Sir Philip Game, and Mr. B. S. B. Stevens became premier. Again at the ensuing elections in June 1932 Labour suffered heavy defeat, and remained out of office for the next nine years. Mr. Lang himself subsequently lost the leadership of the Labour party in New South Wales, but Labour throughout Australia was for many years handicapped by the dissensions which he caused in the movement.

Though the political issues were settled by June 1932 the economic situation was still extremely bleak. Unemployment amongst trade unionists had just reached the record figure of 30 per cent. of their membership, and prices for exports were still extremely low. In July 1932 Australia sent representatives to an Imperial Economic Conference at Ottawa, in an attempt, along with Britain and the other dominions, to increase inter-Empire trade. The Ottawa Agreements provided that the dominions should reduce the duty on British goods, and so increase the tariff preference which they already had over foreign goods. Britain, on the other hand, undertook to put tariffs on foreign goods, and to admit Empire products at lower rates of duty. At last Britain had succumbed to dominion and colonial pressure for Imperial Preference, which had been shrewdly and steadily applied for some 25 years. The result was that trade within the Empire certainly increased after 1932, but it was very largely at the expense of foreign countries. It is very doubtful whether the increased inter-Empire trade was worth the worsening of international relations that followed. Moreover, although the Ottawa Agreements gave some relief to Empire producers, they did not solve all the problems of export production. It was impossible, for example, for Britain and the Empire to buy even half the Australian wool clip. For this, and for many other products, Empire producers had to depend largely on sales to foreign countries. In 1938 Britain and the dominions recognized that Ottawa had not really solved the problem; to parody the words of Nurse Cavell, 'Ottawa was not enough,' what was required was a recovery of world trade. Fortunately this did begin to recover in 1933, and Australia benefited from it.

The years from 1933 to 1939 saw a marked economic recovery in Australia, as in most other countries of the world, though there was another temporary setback in 1938, owing to a fall in export prices. By 1937 the loss in national income had been completely restored, unemployment had fallen to pre-depression levels, and wages were restored to their previous levels and even above them. This recovery was, of course, largely due to the rise in prices of our exports, but it was also largely due to the policy followed in Australia. After 1931 the Federal government and the Commonwealth Bank worked harmoniously together. The various governments carried out the 'Premiers' Plan,' and the Commonwealth Bank helped them by providing money to meet deficits until they could balance budgets. The Commonwealth and the States through the Loan Council (established in 1928) also planned public works for which the Bank helped to provide the funds. These works not only helped to increase production and income, but also increased employment. Private business also recovered, and in particular there was a great expansion of manufacturing industry which surpassed all previous levels of output and employment. In some ways the depression had helped in this expansion. The fall in wages had reduced manufacturers' costs and helped them against overseas competitors, whilst keen competition forced them to be more efficient. In particular there was a great expansion of iron and steel production; by 1934 it passed all previous records, and then doubled in the next three years. This was to be very useful to Australia when she found herself again at war in 1939, for steel is essential for tanks and guns, battleships and munitions. The companies which had exploited the mineral wealth of Broken Hill began to make steel in 1915, and the Broken Hill Proprietary Ltd. by 1937 was able to make steel as cheaply and efficiently as anywhere in the world. It draws its iron ore from Iron Knob in South Australia through the port of Whyalla, which has itself become a steel producing and shipbuilding centre. But the main B.H.P. works are at Newcastle, and they draw their coal from the company's own mines in that district. Other industries like textiles, chemicals, engineering and motor body works also expanded greatly, and proved immensely valuable when war came. The production of aircraft was also begun, and though this is an industry which takes time to establish soundly, we have been able to produce hundreds of planes for service duty. In the war of 1914-18 Australian armies were mainly equipped with British guns, shells, and tanks, but in the Second World War we have provided for practically all their needs except tanks, some aeroplanes, and some other very specialized equipment. There was also a considerable expansion of primary production, particularly in dairying, and meat production By 1929 the number of sheep had just recovered, after a period of droughts and low prices from 1890 to 1910, to the figure reached in 1891 (106,000,000), but they went on increasing to the record numbers of 116,000,000 in 1939. Production of butter, cheese, meat, sugar and dried fruits also went on increasing, but the wheat farmers still suffered adversity. Prices on the whole remained low and unprofitable for many, and the area under wheat declined though the production on the average showed no fall. A number of farmers gave up wheat-growing for other occupations. Reviewing the period of the depression and recovery, there were some exciting events when feelings ran high and at times some people feared disorder and even revolutionary risings. The communists were a bogey to the respectable classes and much was made of the 'red menace,' particularly at elections. But in actual fact their numbers were small and the danger was exaggerated, although their ideas did gain more sympathy and support in the dark days of depression. But as prosperity returned and men got jobs and better wages, the influence of communist ideas declined. The experience of the depression left its mark on peoples' minds, however, and public opinion grew in favour of governments doing more to control booms and slumps, and taking measures to protect people from the disastrous effects of unemployment. Governments and the Commonwealth Bank were both doing something in this direction, and in 1938 the Lyons government passed a National Insurance Act to insure wage-earners against unemployment, sickness, old-age, and invalidity. But many sections were dissatisfied with the actual measure, and it did not come into operation.

The whole period from 1919 to 1939 appears, in fact, to have been almost barren of great social reforms. It is in no way comparable to the period before 1914, when old age pensions and industrial arbitration were introduced, and the Commonwealth Bank established. We do find some States passing social legislation; in particular Queensland introduced Unemployment Insurance (1923), and New South Wales introduced Child Endowment (1927). The Commonwealth had introduced a limited scheme of child endowment for its own public servants in 1920, but there was no system for Australia as a whole until it was introduced by the Menzies government under the pressure for higher wages in 1941. Australians seem to have been too complacent about their 'high standard of living,' and to be unaware of the improvements that were going on in other parts of the world. It is true that they sent representatives to the annual conferences of the International Labour Office, set up at Geneva in 1919 for the improvement of social and labour conditions throughout the world. Sometimes we even adopted the labour conventions framed at these conferences in Geneva. But in general our representatives went in a condescending manner, thinking they had nothing to gain by this international co-operation. They were mistaken, for a number of countries were outstripping us in the field of social legislation. We have begun to realize this, and it is possible that after the war we shall take steps to carry out considerable social reforms.

But though there was little that was new in the field of social legislation, there was a considerable expansion of existing 'social services,' and of expenditure on health, education, and social welfare. Between 1914 and 1939 the expenditure on health, old-age and invalid pensions, and maternity allowances, increased from 5,000,000 pounds to 34,000,000 pounds. Allowing for growth of population and changes in the value of money, this represented a threefold increase in real expenditure per head. Because of rising incomes per head people were also able to make increased provision on their own account against old age and infirmity, through savings banks, friendly societies, and life assurance. In education, also, we find increased expenditure by governments, but the increase is not nearly so marked as in the field of health and social welfare. Australia, in fact, has been lagging behind in the provision of educational facilities, and the time is ripe for considerable improvement and extension of education. Both Commonwealth and State governments were obliged to make large grants of money during the depression for the relief of unemployment, but the assistance given was not very adequate. Also since the amount of assistance for each person was a matter for the States, it tended to vary from one State to another. In the future we may hope to have a high level of employment, and the Commonwealth has introduced a Social Security Act (1944), so that those who may become unemployed will be better cared for. It is worth noting that the death-rate in Australia, and in particular the infant death-rate, are among the lowest in the world. That is partly due to our relatively high income per head and our healthy climate, but it is also due in large part to our public health services and the increased expenditure on them. But there is still room for improvement, and no grounds for complacency.

It is also worth noting that population grew between 1929 and 1939 by only 560,000 compared with more than 1,000,000 in the previous ten years. The depression largely accounted for this, since it discouraged immigration and for five years out of the ten we actually lost people by emigration. Taking the ten years as a whole we only gained about 10,000 people by immigration, whereas in the previous ten years we gained nearly 330,000. The rest of the difference was accounted for by a lower birth rate, which during these years began to cause grave concern. Our population was just reaching 7,000,000 at the end of 1939, but it was growing very slowly.

In the field of international relations we might also have done more to shoulder our obligations and responsibilities. Certainly our governments co-operated readily in the work of the League of Nations, and we still pay our contribution to its work. But on the whole we have not taken as much interest in foreign affairs and international relations as we should. We have not made a special study of the needs of other countries, especially our Pacific neighbours, nor of the ways in which we might co-operate with them to our mutual benefit. We have been ready enough to give assistance in times of disaster, for example at the time of the great Japanese earthquake which destroyed most of Tokyo in 1923. On the other hand we have been rather unaware of the effects, for example, of our trade and tariff policies; these add to the difficulties of Asiatic countries, which have a much lower standard of living than ours. During the depression and the recovery our trade with Japan increased greatly, in spite of the Ottawa Agreements, and Japan became our second best customer. But in 1936 we suddenly made a change in our trade policy, which discriminated sharply against both Japan and the United States. This 'Trade Diversion' policy, as it was called, was intended to give Britain a larger share of our market, but it at once brought retaliation from both Japan and the United States and loss to ourselves in trade and good relations with our Pacific neighbours. We had to abandon the policy within a couple of years, but much harm had been done. Again although Australia carried out all her formal obligations to the League of Nations in this period, it may be doubted whether our governments did all they possibly could to make a success of the League. It is true that when the League 'imposed sanctions' on Italy for attacking Abyssinia, Australia broke off trading relations with Italy in accordance with the decision. But it can hardly be said that our governments fully realized the importance of making a success of the League in the interest of our own security and well-being. It is probable that they still thought that in case of war Britain and the rest of the British Commonwealth would be able to guarantee our safety. This idea proved to be quite wrong in 1942, but the possibility should have been seen at an earlier date. Even when it became clear that the League, because of the vacillation of its leading members, could not prevent aggression, our governments still seemed blind to our danger. In 1936, when Italy had conquered Abyssinia, both Germany and Italy were helping to overthrow the Spanish Republic in order to forward their own designs in Europe. But our government was reducing taxation, and our defence expenditure was insignificant. Compulsory military training had been suspended by the Scullin government in 1929 as an economy measure, and it was not re-introduced till 1940. In 1937 the defence expenditure was increased to 11,500,000 pounds, which was much less than we were paying for old-age and invalid pensions. Our military forces, however, were much less numerous than old-age pensioners, and were totally inadequate for a war footing. Even in 1938 after the 'Munich Crisis,' when war almost broke out in Europe, our defence budget was only 16,800,000 pounds, although this was revised at the end of the year when it was decided to spend 63,000,000 pounds on defence over the next three years. But this was quite insufficient, and before another budget was presented Australia was at war.

But if the expenditure on defence in the years immediately before the war was inadequate, at least the Commonwealth government had made some preparations in other directions. Steps had been taken for the production of military aircraft in Australia, and in June 1939 the Government compiled a National Register of manpower, industry and private wealth, in order to organize our resources for war purposes. A survey was also made of our resources of raw materials in order to build up stocks of those which were essential, especially those which had to be imported. These, and many other measures were taken, so that when the long-threatened war occurred we would not be entirely unprepared.

The Second World War was finally precipitated by the German invasion of Poland on 1st. September, 1939. Great Britain and France declared war on Germany on 3rd September. Russia remained neutral, having made a non-aggression pact with Germany in August, 1939. As a result of this agreement the Germans felt quite safe in attacking Poland, for they knew quite well that Britain and France on their own could do nothing to prevent its conquest. Within a month the Germans had defeated the Poles, and Russia and Germany divided Polish territory between them. The war then entered a stage of comparative inactivity. The British and French were maintaining a naval blockade of Germany, and there was some activity by sea. German submarines sank Allied vessels, and they in turn were hunted by Allied warships. But little else happened, and it is not surprising that in America someone coined the phrase that it was a 'phoney war.' The United States was neutral; so were Italy and Japan at this stage. Only France and Britain, together with the members of the British Commonwealth, were at war with Germany. And even of the British dominions Eire remained neutral. The Germans said that France and Britain might as well accept the conquest of Poland, and make peace; the Russians agreed with them. But the British and French leaders knew by now that hat there would be no peace, but only an uneasy truce until Hitler was ready to pounce again. The Russians really knew this too, and occupied the Baltic states of Latvia, Esthonia, and Lithuania. The Finns, however, refused the Russian demands, and Russia went to war against Finland in November, 1940. The Finns fought bravely and skilfully through a winter campaign, but within four months they were defeated by overwhelming weight of men and material. By the spring of 1940 the Germans were ready to move again. In April they quickly occupied Denmark and Norway by surprise tactics. In May they over-ran Holland and Belgium, and burst through the Ardennes and the Meuse valley into France. They drove a wedge between the British expeditionary force in Belgium and the main body of the French armies. By skill and good fortune the bulk of the British forces were evacuated through Dunkirk, but all the heavy equipment and material was lost. Within a month the French armies were rolled back over the Seine, defeated and bewildered by the speed of the German mechanised columns; by the middle of June a French government, headed by Marshal Petain, capitulated to the Germans. Just before the fall of France Mussolini declared war on Britain and France, being convinced that Germany would be victorious and wishing to obtain some share of the victors' spoils. Britain was now left alone, in a very vulnerable situation, with only the help of the Empire to withstand the German and Italian attack. But though she was greatly inferior in military strength, Britain's naval superiority made a German invasion of England difficult and dangerous. The Germans therefore tried to pave the way for invasion by destroying British aerodromes. Hundreds of bombers were sent over in daylight bombing attacks, but they were decisively beaten in the great air battles of August to October, 1940. The skill of British pilots and the quality of the Spitfire fighter planes saved Britain from invasion. The Germans then tried to knock Britain out of the war by the concentrated bombing of British cities by night. This phase lasted for about eight months, to May, 1941, but it was no more successful in its purpose. Meanwhile the Italians had attacked the Greeks in order to obtain control of the eastern Mediterranean, and the first rounds of the North African campaign had been fought in Egypt and Libya. But the Greeks put up such good resistance that the Germans also joined in the attack on Greece, overrunning Yugo-slavia on the way. British troops again had to be evacuated; Greece fell in April and Crete in June, 1941.

Confident in the power of Germany and Italy to conquer and control the Mediterranean, Hitler now hurled his armies against Russia on 22nd June, 1941, intending to smash Russian military strength and to obtain control of Russian wheat, oil, and minerals. Doubtless he imagined that when this was done the final defeat of Britain would be easy. But he miscalculated. Though his armies bit deep into Russian territory and millions of Russians were killed, the Russians were not defeated and Britain and the United States sent them as much help as possible. Ever since the fall of France, Franklin Roosevelt, as President of the United States, had shown that he would do everything possible 'short of war' to help Britain, and to prevent an Axis victory. When Russia was attacked the same aid was readily given to her. It became clear that it was probably only a matter of time before the United States was actually in the war herself, but the matter was put beyond all doubt at the end of 1941. On 7th December, 1941, the Japanese simultaneously attacked the Americans at Pearl Harbour and in the Philippines, and also the British in Malaya. The line-up of the rival powers was now almost complete. On the one side were the Axis Powers, with most of Europe under their control, and the active assistance of Hungary, Rumania, and Finland. On the other side were the United Nations of Britain, Russia and the United States, with the British Dominions (except Eire), the 'free' forces of France, and of the refugee governments of Poland, Czechoslovakia, Norway, Holland, Belgium, Yugo-slavia and Greece. Also with the United Nations were the great people of China, who had been fighting the Japanese without respite ever since 1937. Most of the Central and South American countries also joined the United Nations, though Argentina was a notable exception and remained neutral.

The Japanese by their surprise attack at Pearl Harbour dealt the American navy a heavy blow, and 1942 was a black year for the United Nations. Within a few months the Japanese had conquered Malaya; Singapore, the great British naval base, fell on 15th February. The Philippines fell soon after and then Burma, while the American bases at Guam and Wake Island had already gone. In Russia the Germans reached the northern Caucasus, and the River Volga at Stalingrad. In North Africa the Germans and Italians were only stopped at El Alamein, 90 miles west of Alexandria and Cairo. Australia came under the menace of invasion with the fall of Malaya and of the Dutch East Indies, when the Japanese advanced into New Guinea and the Solomons. On 19th February, 1942, for the first time in our history, Australia came under enemy attack, when Japanese bombers practically wiped out Port Darwin. Broome and Wyndham had their turn a couple of weeks later. Already in January, 1942, the Japanese had taken Rabaul, and early in March they landed in strength on the mainland of New Guinea at Salamaua; they began to advance towards Port Moresby by the Markham Valley. But by this time American aid, particularly air and naval forces, had arrived to help defend Australia. Australian ground forces repelled the advance by the Markham Valley, while American air forces stopped the Japanese invasion fleet at Salamaua. General MacArthur landed in Australia on 17th March, 1942, from the Philippines, and took charge of the Allied forces in the South-West Pacific. Another southward drive by a Japanese invasion fleet was checked by American air and naval forces in the Battle of the Coral Sea in May, 1942. But on the New Guinea mainland the Japanese still strove to take Port Moresby by land and sea advances. Both these attempts were defeated, but not until the Japanese had reached within 30 miles of Port Moresby. The tide at last turned when Australian troops pursued the Japanese back across the Owen Stanley Ranges in October and November, but the chief factor in checking the Japanese drive was the American success in the Solomons. In August, 1942, American forces seized the Japanese airfield and base at Guadalcanal, and after several months' desperate fighting threw the Japanese out of the island with heavy losses.

From that time the fortunes of war began to swing in favour of the United Nations; the Axis countries had reached the summit of their success about August, 1942. At that time the Japanese were entrenched as far to the south-east as New Guinea and the Solomons, and to the south-west upon the eastern borders of India; the German armies were at Stalingrad and in the Caucasus, and the Germans and Italians at El Alamein. By the end of the year the Germans were reeling back from Stalingrad and the Caucasus; in Egypt Rommel had suffered a decisive defeat from Montgomery at El Alamein, and the Japanese had been completely stopped by the Americans in the Solomons. In fact, by their attack on the United States in December, 1941, the Axis Powers had made their ultimate defeat certain. Although they gained some initial advantages from the Japanese surprise attacks, and their early successes, they also brought into the war the most powerful country in the world. Once the United States had the time to mobilize her millions of men, and to turn her tremendous wealth and productive forces to war purposes, there could be little, doubt about the outcome. Once her strength was effectively added to the already great resources of Russia and the British Commonwealth the tide began to turn in their favour. In November, 1942, American and British forces landed in Morocco and Algeria, and by June, 1943, the Axis forces were defeated and thrown out of Africa. The invasion of Sicily followed soon afterwards, and then of the Italian mainland. This brought about the fall of Mussolini, and Italy was defeated; but the Germans were in Italy in strength and the complete freeing of Italian soil was to be a slow and painful business. In Russia the Germans were driven back beyond the Don in 1943, and in New Guinea by hard fighting the Japanese were driven from Salamaua, Lae, and Finschhafen. The year 1944 saw further great Russian advances, the Germans being driven from Russian soil; in June the Americans and British invaded France, and by a decisive victory in the Battle of Normandy brought about the liberation of French territory. Against the Japanese, General MacArthur carried out a series of brilliant actions which gave him a chain of bases along the north coast of New Guinea, and enabled him to carry out a successful invasion of the Philippines. The beginning of 1945 (when this narrative is being written) saw the liberation of Northern Burma by the Allied forces, and the reopening of the Burma Road to Chungking; for 2 1/2 years it had been closed by the Japanese conquest of Burma. In Europe, East Prussia was being overrun by the Russians, who swept across Poland and invaded Prussia and Silesia from the East. The Americans, British, French and Canadians were hammering at the western frontier of Germany, and the defeat of the second Axis partner in 1945 seemed certain. Then the combined might of the United Nations could be turned against Japan; her defeat also seemed inevitable. The nations would then be given an opportunity to enter into a new set of relationships; if the terms of peace settlement are wisely drawn up this great struggle may prove to have been the starting point of an era of human happiness, peace and prosperity. If not, there will probably be another period of uneasy peace in a prelude to further disastrous conflicts between the nations of the earth.

In the Second World War which began in 1939 Australians took part in operations in many parts of the globe. The first squadrons of the Royal Australian Air Force reached England in December, 1939. Their exploits, for example, in the Sunderland flying-boats of Coastal Command, have made them famous. Australian pilots in the Royal Air Force took part in the Battle of Britain in August-October, 1940, and in subsequent years thousands of Australian airmen trained under the Empire Air Training Scheme fought in Europe, the Middle East, the Pacific and elsewhere. The first divisions of the second Australian Imperial Force raised for overseas service were despatched in 1940. The 6th Division was sent to the Middle East; the 7th Division was also en route to Egypt, when the fall of France caused it to be diverted to England, where it went to action stations against the expected German invasion. Australian troops in the Middle East proved a very useful addition to the Imperial forces in that area, particularly after the fall of France. They took part in the first Libyan campaign of December, 1940, to February, 1941, in which General Wavell, the British commander, inflicted a crushing defeat on the Italians; Bardia, Tobruk, Derna and Benghazi were captured, and over 130,000 Italians were taken prisoners. Unfortunately many of the troops were then sent to Greece (March, 1941), amongst them some of the Australian 6th Division. This enabled Rommel, the German commander in Africa, to carry out a counter-offensive which forced the Imperial troops back into Egypt; but an Allied force, including the Australian 9th Division, successfully held the port of Tobruk from March until November when it was relieved by another British offensive. Meanwhile the British and Imperial troops in Greece, after fighting a delaying action against overwhelming odds, were forced to withdraw; the evacuation took place at the end of April, 1941. Most of their heavy equipment was lost, and many of them landed in Crete with practically nothing. In May the Germans carried out an air-borne invasion of Crete, and Australian and New Zealand troops took part in the bitter fighting that followed, without any support from fighter planes; another defeat and evacuation followed. Meanwhile reinforcements had built up the strength of the A.I.F. to several times the strength of the original 6th Division. The British decided to occupy Syria in order to prevent the Germans and the Italians from establishing themselves in Asia Minor, in order to drive upon the Suez Canal from both sides. The Vichy French Government seemed to be following a policy of collaboration with Germany and Italy, and the occupation of Syria was the merest common sense. Vichy troops resisted the occupation, but a five weeks' campaign in June-July, 1941, brought Syria under Allied control. Australian troops took part in this and in all the subsequent fighting backwards and forwards across North Africa during 1941-42, until they were withdrawn to meet the threatened Japanese invasion of Australia. The last Australian division to leave the Middle East was the 9th, and it did not leave until after the victorious offensive at El Alamein, in which it did its full share in contributing to the eventual defeat of the Axis forces in North Africa. The 8th Division of the A.I.F. had been sent to Singapore in February, 1941, to form part of the British force in Malaya. They took part in the Malayan campaign against the Japanese from December, 1941, to February, 1942. Although they fought gallantly they had little or no air support against Japanese bombers. With the fall of Singapore some 17,000 troops of the 8th Division became prisoners of war in the hands of the Japanese.

Since early in 1943 the sphere of operations of the Australian Army has been confined to New Guinea and the adjacent islands. During 1942 they scored their first decisive success against the Japanese at Milne Bay in August, when they severely defeated a Japanese landing assault. This stemmed the coastal advance to Port Moresby. When the Japanese were driven back over the Owen Stanley Ranges in October and November, Australian troops linked up with Americans to capture Gona and Buna. In February, 1943, they inflicted a sharp defeat on the Japanese at Wau, which the Japanese tried to capture. The crushing defeat of the Japanese in the Battle of the Bismark Sea in March, when a whole Japanese convoy was wiped out by the American Air Force, paved the way for further successes on land by the Australian troops. Woodlark and the Trobriand Islands were occupied by the Allies in June, and in September Salamaua, and Lae were taken. By October Finschhafen was captured, and Satelberg followed in November. Along the Ramu Valley and across the rugged Finisterre Ranges, Australian soldiers fought through some of the worst jungle and mountain country in the world to link up with American forces, and to drive the Japanese from the Huon Peninsula in February, 1944. The American forces then went on to make successful landings in the Admiraltys in March, and at Hollandia (Dutch New Guinea) in April. In both these and subsequent landing operations during 1944 at Wakde, Biak, Noemfors, Morotai, and the Philippines, Australian air and naval units took part, while Australian troops remained in New Guinea to deal with the Japanese garrisons that had been by-passed during this series of operations.

The Royal Australian Navy has played an equally meritorious part in operations during this great struggle. At the outbreak of war our naval units had important duties in convoy and patrol work, while some were posted to serve with the British Mediterranean squadron. It was here that the cruiser H.M.A.S. SYDNEY, under Captain Collins, sank the Italian cruiser BARTOLOMEO COLLEONI in July, 1940. Thousands of Australian naval men went to serve in British corvettes and submarine chasers, especially in the dark days from June, 1940, to the end of 1942, when the submarine menace was particularly grave. The destroyers and sloops of the R.A.N. played their part in supplying and reinforcing the garrison of Tobruk, during their world-famous defence of the port from March to November in 1942. The Royal Australian Navy suffered heavy losses, particularly after the Japanese entered the war; in fact, in proportion to its numbers it has suffered much more heavily than any of the other services. The cruiser H.M.A.S. SYDNEY was sunk in the Indian Ocean in November, 1941, with the loss of all on board, in circumstances which are not yet generally known. Presumably she was sunk by a German raider, which itself went down before the SYDNEY disappeared burning fiercely. In February, 1942, the cruiser H.M.A.S. PERTH and the sloop YARRA were lost in the Battle of the Java Sea, when an Allied force under the Dutch Admiral Helfrich engaged a Japanese fleet. The R.A.N. suffered another heavy blow when the cruiser H.M.A.S. CANBERRA was sunk in action in the Solomons in August, 1942. Three of our five cruisers had now been lost in action, and in September the British Government presented the cruiser SHROPSHIRE to the Australian Government to replace the CANBERRA. But despite the losses the R.A.N. continued to expand its numbers, and destroyers and smaller ships of war were built to replace the lost vessels. The number of ships and men rose to higher levels than ever before, and the Australian squadron continued to take an active part in the war against the Japanese. It took part in all the major landing operations in the campaign from New Guinea to the Philippines. In these engagements two cruisers, the HOBART and the flagship AUSTRALIA, suffered considerable damage, but their crews had the satisfaction of sharing in victories instead of suffering reverses.

Thus in every branch of the services by air, land, and sea, Australian forces played their part worthily in the struggle against the Axis Powers. In 1942 when the nation was fully mobilised for war, it was estimated that there were about 800,000 men in the Australian forces, and some tens of thousands of women in the auxiliary organizations. But a nation does not successfully organize for war merely by putting people in uniform. It is necessary to provide all the supplies and equipment that will enable them to fight at least on equal terms with the enemy. In this field Australia was able to do far more than she had done in 1914-18. Not only has she provided all the guns, rifles and ammunition for her armies, but in 1940 when Britain was faced with invasion she sent these in considerable quantities to England. She has built aeroplanes, and practically all her materials of war except tanks and some other very specialized and expensive equipment. She has supplied some millions of tons of food, raw materials and supplies to Britain, U.S.A., and her other Allies. These things were not done easily or very quickly, and they called for considerable changes in the way of life of the Australian people. They were also accompanied by important political changes. In the first year of the war the Commonwealth Government, led by Mr. R. G. Menzies, started to organize Australian production for war, and to raise an Australian army for service overseas. But it was not very clear whether Australian troops would be wanted, or where they could be best used. The chief step taken was to take part in the Empire Air Training Scheme, to train airmen for service wherever they might be wanted; this was begun in December, 1939. But at the outbreak of war there were considerable numbers of men in Australia who were unemployed, and so for the first year or so men could be recruited for the services, and production could be expanded, without any shortage of labour or lengthening of hours of work. In the first half of 1940 there was even a widespread strike in the coal-mining industry, which lasted for many weeks. But when the Germans invaded the Low Countries and burst into France in May, 1940, the strike soon came to an end. With the fall of France there was a rush of men to the colours, and factories began to work overtime to turn out supplies. Compulsory military service for the defence of Australia was re-introduced, although voluntary enlistment for overseas service was retained. The general election in 1940 returned Mr. Menzies as Prime Minister, but his supporters in the House only had an unstable majority of one, after a Speaker had been chosen!

In 1941 Mr. Menzies visited Britain, going by air via Singapore and the Middle East. His conferences with Mr. Churchill, the British Prime Minister, and his own experiences during a period of terrific German bombing raids on British cities, convinced him that Australia should quicken the pace of her war preparation and increase the scale of taxation. The situation called for efforts similar to those being made in Britain; the cutting down of all unnecessary expenditure and a sterner war effort. But his party, which was really a coalition of the United Australia and Country parties, was not prepared to accept the programme he proposed; doubtless they feared that their parties would lose political popularity. Moves were made to replace Mr. Menzies by another leader, and in August, 1941, Mr. A. W. Fadden, leader of the Australian Country Party, succeeded Mr. Menzies as Prime Minister. But his tenure of office was short-lived, for in October Mr. Fadden was defeated on his budget, and Mr. John Curtin, the leader of the Labour Party, became Prime Minister. At last, after ten years in opposition, Labour again had charge of the government of the Commonwealth, although it hardly had power. Its majority depended upon two independent members of parliament, but the Curtin Government took up its task with such vigour, determination, and sincerity that it maintained its position until a general election was due in 1943. When this took place in August, 1943, the Curtin Government was returned with an overwhelming majority. The people of Australia had appreciated the way in which Mr. Curtin and his government had successfully organized the nation for war, particularly when Australia was under the threat of a Japanese invasion. His measures called for self-sacrifice and hard work; men and women worked longer, and submitted to rates of taxation never previously contemplated. They contributed hundreds of millions of pounds to war loans, and they submitted to rationing of tea, sugar, butter, meat and clothing. Australians felt the pinch of war in a way they had never felt it in the war of 1914-18, yet most of them put up with all these shortages and inconveniences willingly in the national interest. The presence of hundreds of thousands of American service men in Australia also put a great strain upon Australian supplies and services, but American help was indispensable in defeating the attempted Japanese invasion.

With Labour in power as well as in office after August, 1943, it was natural that the Curtin Government should try to introduce some of Labour's social programme, and to realize some of the objectives proclaimed in the Atlantic Charter by Winston Churchill and Franklin Roosevelt in August, 1941. The Menzies Government, faced by a strong demand for an increase in the basic wage in 1940 and 1941, had introduced a system of Child Endowment in June, 1941, paying 5/-per week for each child in a family after the first. In February, 1944, the Curtin Government passed a Social Security Act to provide a national health and unemployment scheme, and thus give security from poverty and want. It also began to lay its plans for the return to Peace-time conditions after the war, and passed a bill to alter the constitution, so as to give the Commonwealth power to control employment and production. These powers were possessed by the States, and to transfer them to the Commonwealth it was necessary that the people should approve the alteration of the constitution at a referendum. However, by the time the referendum was held in August, 1944, the danger of a Japanese invasion was past. The people were beginning to become weary of the prolonged strain, and of the close control over their activities that had been necessary in a time of danger. Only two States out of the six voted in favour of the measure, and it was defeated by a considerable majority. The figures were as follows:


New South Wales 911,680 759,211 23,228 +152,469 Victoria 614,487 597,848 15,236 + 16,639 Queensland 375,862 216,262 7,444 +159,600 South Australia 191,317 196,294 4,832 - 4,977 Western Australia 128,303 140,399 3,637 - 12,096 Tasmania 83,769 53,386 2,256 + 30,383 
                   - - - - - - - - - - - - - - - - - - - - - - -Totals 2,305,418 1,963,400 56,633 +342,018 
                   - - - - - - - - - - - - - - - - - - - - - - -

It is possible that the people of Australia may suffer considerable inconvenience as a result of their decision at this referendum, for at the end of the war the return to peace-time conditions will present governments with many difficult problems. These problems will be nation-wide in scope and the national government, the Commonwealth, would be able to deal with them much more effectively if it had wider powers and was more clearly paramount over the States. In addition to the internal problems to be faced, the Commonwealth Government will also have to take its part in laying down the terms of a peace settlement after the war. Our responsibility and our share in this will not be nearly as great as in the case of great nations like the United States, Russia, and Britain. But our voice will depend to a large extent on the contribution we make to final victory, and it should be heard. It is very desirable that our voice should be used to advocate a wise and long-sighted settlement in order to obtain an era of lasting peace among the nations of the earth. This would be the best reward for the sacrifices endured by this generation in this country and many others throughout the world.