I promised that this update would bring us up to date on both Australia and New Zealand, but I figured that 64 updates' worth of total neglect warrants a heftier dose of exposition than can be covered in a single update. So, here's part one of how Australia's been doing:
The Sydney Morning Herald, March 24, 1930
KNOX TO BE APPOINTED GOVERNOR OF N.S.W.
New South Wales Premier
Thomas Bavin has announced that he will advise the King to appoint
Adrian Knox, Chief Justice of the High Court, as Governor of New South Wales. Knox, 66, announced just days ago that he was retiring from the Court after over a decade of distinguished service, and most observers expected he would retire from public life. However, when asked whether or not he intends to serve as Governor, he responded in the affirmative. Knox will be the first Governor in a long time not to come from the ranks of the British military; sources within the state government indicate that Bavin's initial preference for the post of Governor was
Sir Philip Game of the Royal Navy, but personal differences caused the Premier to pick another distinguished statesman for the job. [1]
October 26, 1930
LANG GAINS FIFTEEN SEATS, FORMS GOVERNMENT
In yesterday's elections to the state Assembly, Mr.
J. T. Lang, Leader of the Labor Party's New South Wales branch, led his Party to a profit of 15 seats, winning a majority of 9 and setting himself up to become the next Premier of New South Wales. [2]
From Jack Lang: The Pied Piper of Canberra by Ordney Brigstocke, 1953
The Great Depression hit Australia hard, just as it hit every other wealthy country in the world. The highly profitable export market, which had sustained so much prosperity in the preceding decade, practically disappeared, rendering millions of Australians unemployed and removing billions of pounds from the market. As a result, prices plummeted, deflation reached crippling levels and most forms of commercial activity ground almost to halt. Faced with unemployment rates of nearly 30% and a stagnating economy, the newly-elected Labor government of Prime Minister James Scullin had to find a way out of the crisis.
The solution they came up with was harsh on the millions of Australians who had been rendered destitute by the financial collapse. Acting on the advice of British banker Otto Niemeyer, Scullin urged a plan to pay off the country's debts, balance the national budget, and further deflate the pound; this program would require massive reductions in government spending (including cuts to salaries and pensions for government workers), as well as a sharp tax increase. Needless to say, Scullin's plan was unpopular among the common people, which looked much more favourably upon the proposals of Premier Lang and his government in New South Wales.
Lang was fiercely opposed to austerity measures. He had won the premiership of New South Wales in 1930 on a promise to deal with the Depression, and his plans drew upon the ideas of the British economist John Maynard Keynes; whereas Scullin's plan called for zealous repayment of Australia's foreign debt, Lang urged that interest repayments on all government borrowings be sharply reduced, and that the resulting savings be channeled directly into the economy through the still-functioning banking system. The most inventive aspect of Lang's plan was the abandonment of the Gold Standard for what he called the “Goods Standard”, whereby the amount of money in circulation would be determined not by a fixed quantity of gold, but by the total value of all goods produced by the Australian economy.
Bowing to pressure from conservative elements of the Labor Party, Scullin resigned as Prime Minister on 14 June 1931. He was replaced by his Treasurer, Joseph Lyons, who promptly paid off the foreign debt and then demanded that Lang turn over New South Wales's share of the cost. As the new Prime Minister discovered, however, Lang was as bold as he was innovative. Rather than simply surrendering NSW's money to Canberra, Lang withdrew the state's entire budget and held it in cash at Trades Hall, where the federal government could not access it. A political showdown had begun between Lang and Lyons, and the stakes were high: Lyons was risking a large portion of his political capital within the Labor Party and outside of Canberra, and Lang was risking his entire political career.
Lyons at first seemed in the superior position, as he had a highly influential ally: New South Wales Governor Adrian Knox. Knox was a veteran of Australia's conservative tradition, and held Lang's bold defiance to be illegal (which, in Lyons' defence, they were). More importantly, as a former Chief Justice of the High Court, he knew that as His Majesty's anointed representative, he had the constitutional power to dismiss the Premier and call for a new state election. No viceregal official had ever exercised such a power before in the country's history, but it looked increasingly like he would set yet another constitutional precedent when, suddenly[...]
The Sydney Morning Herald, 12 August, 1931
GOVERNOR KNOX DEAD!
The Honourable Adrian Knox—Governor of New South Wales, Chief Justice of the High Court of Australia, and respected jurist and legal scholar—was found dead this morning in his residence at Governor House, having died peacefully in his sleep. [3]
From Jack Lang: The Pied Piper of Canberra by Ordney Brigstocke, 1953
[…] With no Governor to dismiss the rebellious Premier, Lyons' most convenient asset had disappeared. He was minimally concerned, however, because his second-best option—suing Lang's government in the High Court—remained open. The Court was still dominated by conservative justices, and was sure to take Canberra's side on this legally precarious issue; perhaps it would appear unsettling for the Commonwealth to be so heavy-handed in imposing its will on a single state, but, Lyons reasoned, these were extraordinary times, and extraordinary measures were required. Unfortunately for Lyons, he had underestimated his rival once again. He barely had time to publicise his intentions before the floor dropped out from under him: in a hastily-organized confidence motion, 11 of New South Wales's 20 Labor MPs (whose loyalties lay more with Lang than with the seemingly aloof Lyons) voted with the opposition to bring down the government. All of a sudden, Lyons' attentions were focused solely on the forthcoming election, and he had no time to spare for the rebellious Lang.
The Premier did not waste the time he'd bought himself. Rather than run a formal campaign, Lang chose to institute his policies, and turn the election in his state into a referendum on his leadership style. As such, the day after the election was announced, all £18 million were hastily withdrawn from the Trades Hall building and spirited to the Commonwealth Bank of Australia, whose cooperative leaders quickly converted it into credit and distributed it to smaller banks, businesses and individuals throughout the state. At first, Lang's approach was unpopular, with Lyons' newly-formed, fiscally conservative United Australia Party (a merger of the National Party, the Australian Party, and some dissident Labor MPs) polling highest in New South Wales during the first weeks of the 43-day campaign. However, midway through the campaign, the state economy started to pick up, and continued to rise as commerce revived under the torrent of government spending. As election day neared, unemployment levels began to slowly drop, as businesses started up again and hired back old employees, and a hint of recovery graced the shores of New South Wales.
When voters went to the polls on 15 October, 1931, they turned in an echoing endorsement of Lang and his policies: all but two of NSW's 28 federal constituencies returned Labor MPs, rejecting several former Laborites who had thrown in their lot with Lyons' UAP. The effect of Lang's governance rattled throughout the country, as several Labor candidates picked up seats in conservative areas. When the dust cleared away, no party had the 38 seats necessary for a majority: the new UAP held 33 seats, Labor (under the interim leadership of
Ted Theodore) had dropped to 29, and Earle Page's agrarian Country Party had 13. Lyons had to sort out the formation of a coalition with Page's caucus and pass a budget before turning his attentions back to Lang, by which point nearly three months had passed since Lang had injected much of New South Wales's treasury into the state economy. When Lyons' new government demanded the money, Lang bared his empty hands and pointed to the signs of renewed growth in the New South Wales economy. The battle was over, and Lang had won.
Not that Lyons would forego his revenge. Within a month of the election, the case was appealed in the High Court, which quickly ruled against Lang, ordering that he resign his post as Premier and that new elections be held. Considering his work finished, Lang gladly stepped down on 16 November, handing the reins over to his political ally Jack Beasley, who handily won the subsequent state election with an increased majority of two seats (and governed in large part on the advice of Lang). Lang would not, however, stay out of politics for long: as the most popular Labor Party member in the country, he was moving up to the federal service.
A by-election was found for Lang in East Sydney, whose electors sent him to the House of Representatives in an enormous landslide. As an MP, Lang was quickly elected leader of the Labor Party against token opposition (Theodore, the caretaker leader of the federal party, chose not to contest the leadership). He was massively popular in his own state and in loyal Labor constituencies for his defiance of Lyons, and as Leader of the Opposition he showed no mercy, using his oratorial skills to periodically harangue Lyons about the suffering that continued in the country despite Lyons' “sensible” policies of recovery. As Beasley continued using NSW's somewhat limited capacity for deficit spending and the state economy continued to grow slowly but steadily, Labor Premiers were elected in Tasmania and Western Australia, cementing the party's dominance on the state level. Lyons rode his mandate to its maximum date of expiry, until finally, on 2 December 1934, elections were held. Aside from two seats gained by the
Centre Party (which had been formed the previous year and had never yet contested a federal election), the result was predictable: a comfortable majority for Labor, and a mandate for the mustachioed Sydney firebrand. Jack Lang was the Prime Minister.
The Canberra Times, 12 February 1935
McKELL ANNOUNCES “NATIONAL RECOVERY PROGRAMME” TO CURB POVERTY, UNEMPLOYMENT
Treasurer
William McKell announced yesterday the incumbent government's plan to address the country's pervasive problem of unemployment with an injection of over £210 million into the economy through Commonwealth Bank credit, and transition from a monetary policy based around the Gold Standard to one determined by the gross economic output of the country, as delineated by Prime Minister Lang during the recent electoral campaign. Addressing criticism by the Opposition that this "National Recovery Programme", as the Treasurer called it, will compel the federal government to spend more money than it controls and may destabilise the nation's fiscal system, McKell stated that now is “a time of crisis in Australia”, pointed out that unemployment rates remain high at 16%, and called the plan “moderate and restrained” relative to the country's needs.
From Economic Policies of the Australian Labor Party, 1901—1941, Melbourne University Press
After some modifications mandated by dissatisfied Senators, the National Recovery Programme was eventually passed by Labor majorities in the House and Senate. The nation as a whole experienced what New South Wales had experienced four years prior: a clear, if erratic, decline in unemployment accompanied by a steady rise in economic productivity. The distribution of credit to needy firms and individuals added momentum to businesses that were just starting to grow anew after the contractions of 1929, and the flexible flow of currency afforded by the abandonment of the Gold Standard allowed that credit to be repaid at reasonable rates. The government was rewarded for its charity by generous purchases of bonds by the large financial institutions which benefited from the rises in commerce and investment. In addition, the inflated Pound facilitated the raising of both prices and wages; and although these increases were measured in their nominal rather than real values (meaning that many of the associated benefits were cancelled out by inflation), the raises imbued families with a sense of security that led them to increase their spending, further fueling the recovery. [4]
A flyer distributed in Brisbane in February of 1937
Australians:
Do you oppose the SOCIALISATION of your home country?
Do you fear the creeping influence of COMMUNISM upon your God-granted liberties?
Will you DEFEND your homeland against INVASION by uncivilised hordes of Orientals?
Do you believe that three more years of Labor tyranny could mean DISASTER for the
continued welfare of our national heritage?
Join the
CENTRE PARTY—
[5]
A free association of PATRIOTIC, CONSERVATIVE, WHITE Australians prepared to FIGHT
against the BOLSHEVISATION of Australia AT ANY COST.
Open meeting with address by Centre Party leader and respected solicitor Eric Campbell
22 February, Yeronga Memorial Park
ALL PATRIOTS WELCOME!
[1] IOTL, Game was appointed. ITTL, due to butterflies, he and Bavin had a falling out and a different man was picked on the spot.
[2] As OTL.
[3] IOTL, Knox died in 1932. Up to this point, everything described is OTL (except for some events happening a year earlier, Knox rather than Game being Governor of NSW, and Joseph Lyons becoming Prime Minister without an election).
[4] The author of this passage is somewhat biased, and doesn't paint a complete picture. While the economy does start to grow anew as Lang's Programme is administered, the lopsided doling out of credit benefits some firms more than others and prevents unemployment from dropping in a stable or reliable way. And while inflation makes it easier for debtors to pay off their debt, it eventually diminishes the effect of Lang's monetary injections as every million pounds is worth less than the last million pounds.
[5]
These jackasses. Despite their name, they were anything but centrist: they were a far-right group organized to oppose Lang's Premiership of New South Wales, associated with the arch-conservative
New Guard. Most of the members were right-wing businessmen and middle-class conservatives, but the leadership (Eric Campbell included) were died-in-the-wool fascists. They were never taken seriously in the mainstream political scene, were never active outside of New South Wales, never had a candidate win an election, and once Lang was dismissed in OTL they quickly faded into nothingness. Here, however, with Lang as Prime Minister and the Australian right frustrated and fractured, they're enjoying a speedy rise in popularity.