The Great Depression was a period of economic contraction and rising unemployment between 1929 and 1933 in Australia and throughout the rest of the world. The Great Depression followed a period of global prosperity and it was triggered by the Wall Street stock market crash on the 24 October 1929 in New York City. A depression is a period of time when the national income falls substantially and results in depleted money reserves causing economic contraction. The Federal Government contributed to the severity of the Great Depression in Australia, as it did not deal with the problem effectively because it delayed the response to the economic disaster and forced the country into tough times. During the Great Depression Australia was burdened
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Sir Otto Niemeyer advised Australian politicians and economists that a deflationary policy was the way to regain stability in the economy. However this was not the case, and it is apparent that policies based on the deflationary system only forced Australia deeper into depression. Sir Otto Niemeyer proposed his ideas so that Australia would assist in stimulating the British economy, rather than to stimulate their own economy (“Commonwealth Government Response to Depression”, 2009). The Federal Labor Government led by Prime Minister James Scullin was very inexperienced at the start of the Great Depression, as they only began there term in office, one week before the Wall Street crash. This meant that enormous pressure was placed on the Federal Government to devise a cohesive plan to rebuild the economy, but this was not possible, as the government did not have a clear understanding of what to do. Not only was the government inexperienced but also, they did not have a deep understanding of the severity of the Great Depression, believing that it would be over within a year (Brasch, 2009).
Disunity within Australian Government had a profound impact on the severity of the Great Depression. Following federation in 1901 there was division within the Australian government, and when the Great Depression began in 1929 there was divided and desperate leadership. The Australian government was federated on