Fiscal policy was not really though about until until John Maynard Keynes' great book, The General Theory of Employment, Interest and Money in 1936. Early responses to bad times was that of Governor Phillips, 'reduce rations'. Effectively this was the approach even after Keynes' book was published. Now standard practice is to 'increase rations', often by far too much and with poor timing.
'Fiscal policy' as we understand it now hardly existed in Australia until 1960, when it was used to slow an inflationary boom. I define such policy as the deliberate use of changes in government spending or taxes in an attempt to change outcomes for economic activity, employment or other economic targets deemed to be sensible. With such a definition we shall look at attempts by successive Australian governments to improve the lot of citizens. Special attention will be paid to policy in the Great Depression, where America's so-called New Deal might have been expected to create a precedent.
Keynes is the member of my favourite economists third from the left.
Especially in looking at Australia's Great Depression, we shall have to look well beyond 'fiscal policy'. In fact, fiscal policy proper was largely concerned at 'deflation' of government, or harking back to Governor Phillip, 'reduced rations' policy when the Second Fleet arrived late.
Wages were reduced by the Arbitration Commission and the currency was slashed by the Bank of New South Wales. The Commonwealth Bank eventually, and reluctantly, came to the party by cutting interest rates, and the economists laid a nice lacy table cloth over the whole package and took credit for their wise council. Yet as students at Melbourne University we were told the economists were heroes who had saved the nation's economy.
The best way to consider the changing nature of fiscal policy is to examine debate and actions by government at times of perceived crisis. We shall examine this subject by consideration of the following crises in this chapter: near starvation between the arrival of the first and second fleets in the late seventeenth century; Australia's first major speculative boom and bust in the 1840s; attempts to alleviate distress during the crash after the ending of the great real estate boom of the 1880s; the first world war; the great depression of the 1930s; the second world war.
The wool boom of 1950 was short-lived and government barely changed policy. The credit squeeze of 1960-61 saw excessive rations delivered late. The attempted reforms of the Whitlam government and the successive oil booms of the 1970s both had confused and badly explained effects. The economic crunch of 1980-81 was worsened by excessive increases in interest rates in overly activist monetary policy.; The Banana Republic crisis of 1986 saw fiscal tightening and interest rate increases later reversed.
The strong recession of the early 1990s must be blamed by inexperienced leaders at the Reserve Bank who (again) tightened interest rates too much, The global economic crisis of 2007-08 was responded to by poor government spending and other innovations to policy to be discussed later. The slow global recovery and very low inflation is regarded by many global economists as a great puzzle.
Near starvation between the arrival of the first and second fleets.
Imagine the study and planning that will attend the first attempt to establish mankind's first colony on the moon, or another planet, such as Mars, or on one of the moons of Saturn.
When the first fleet reached Australia it contained animals to eat and to breed and supplies of food to eat and seeds to plant. While the air was breathable, if in summer unusually hot, no-one understood that agriculture was upside down compared to that in the home country. Seeds were planted at precisely the wrong time of year in poor soil and crops failed. Wandering animals were killed by the First People and the settlers also had to kill to eat more animals than had been planned.
There was not much that the government, meaning Governor Phillip, could do except reduce people's rations. This was done in several stages, with the governor and other high officials sharing the pain, an approach not adopted by modern politicians. Ships were dispatched to find food but some were lost at sea, and the arrival of the second fleet was delayed.
Near starvation was the situation by the time the second fleet arrived in 1790. Many of its new settlers had died during the voyage and the rest were emaciated and many died after arrival. This was the result of overly greedy behaviour by the contractor employed by the British government. It was dramatic proof that not all economic activities should be privatised, or else only if there are harsh punishment for rorters. The new colony nearly failed completely, and there was nothing to be done except hunker down and wait for deliverance. Nevertheless, reductions of rations was the main pro-active response, and that remained the standard approach to a crisis until modern times.
Boom and bust in the 1830s and 1840s.
Trevor Sykes, author of a book called Two Centuries of Panic, begins his second chapter with the following wonderful summary: 'Australia's first speculative boom occurred in the 1830s. It was followed, with Biblical inevitability, by Australia's first major speculative bust in the 1840s'.
This defines immediately features of the boom-bust experience and management. It takes time for booms to get out of control and after the inevitable crash time for recovery to be achieved. There is inertia in both the boom and the effects of the bust. Many people are enjoying the good years and anyone who tries to issue warnings or head off the consequences is labelled a Jeremiah, or killjoy, or even 'deliberately pessimistic'. With strong 'Animal Spirits' among leading citizens a boomtime atmosphere is created and even people appointed to manage the economy can become caught by the general expectation of effortless wealth or overwhelmed at the size of the remediation task before them.
Between 1830 and 1835 wool exports quadrupled. Good seasons were a natural cause, and often a run of good seasons are followed by poor seasons. Graziers from Tasmania occupied Victoria despite feeble official attempts to stop this from happening. New settlements were set up in South Australia based on a land bank for settlers innovation and in Western Australia after a massive misunderstanding about the amount of fertile land available close to the Swan River. During the decade of the 1830s half of the continent, including most of the good quality land, was opened up for settlers from Europe.
While squatters grabbed land previously used only by the First People, property developers devised new towns or suburbs and profits from selling wool to the home country fuelled a land boom. Additional British capital flooded into Australia. Banks and auction houses were set up to maximise returns from imports and sale of land. A company called the Australia Auction Company was set up, sadly with an incompetent manager and a derelict board of assumed worthies.
In Adelaide, while the private sector was booming the government till was raided until it was empty, Governor Gawler drew bills to pay salaries and other expenses and was replaced by Governor Grey. A severe drought arrived in 1838 and 1839, not something printing money could alleviate. Wheat was still something that needed to be imported and its price boomed. Then crops improved just as imports were flooding in and the price of wheat collapsed.
The Australian Auction Company was in deep trouble and its meagre paper profits were outweighed by bad debts. Within a year it was virtually bust and none of the new banks lined up to bail it out. Arcane (by modern standards) legal matters severely limited the company's ability to sue to recover bad debts. The incompetent manager blamed the spirit of the times and the derelict worthies of the board blamed the manager. British capital scuttled home. This was a prime cause of the depth of the bust.
The Australian Auction Company's shareholders (including directors of course) were called upon to pay its debt to the Bank of Australasia. And there was an illegal lottery of the company's (overvalued) real estate assets. A new board appointed a new manager, a highly competent young man named Edward Knox born in Denmark, who quite quickly rose to the commanding heights of Australian commerce.
With banks unwilling to bail out the company, and government unable as well as unwilling, at least taxpayers were not dunned for the cost. Perhaps this searing experience helped form Adelaide's sarcastic suspicion of 'wise men from the east'.
Boom and bust 1880 - 1900.
The great gold discoveries of gold in New South Wales and (especially) Victoria as well as influx of many immigrants created mostly buoyant times from 1851 until prosperity was ended by crash of real estate in 'Marvellous Melbourne'. (A name bestowed by George Augustus Sala, a visiting celebrity journalist, in 1885.)
The colony of Victory became self-governing just before local gold was discovered, and the new government invented a steep new mining tax. Relatively few squatters were making fortunes from the wool trade, but high taxes on men digging for gold on small plots was deeply unfair. In 1854 the size of the tax, and the unfairness in how it was administered, led to a miner's rebellion. While it was quickly quashed there were consequences. When rebels were taken to Melbourne to face trial, juries would not find them guilty, though one lonely journalist spent time in goal. The mining tax was reduced and made fairer and male-only democracy was introduced, leaving tasks for future suffragettes.
As already disclosed, the author's Swedish ancestor, Eric Jonsson arrived from London in 1855 in the good ship Amsterdam, apparently attracted by the gold fields. In those days before passports or excessive bureaucrats, Eric simply decided to leave the ship to find his fortune, an action that in modern times might well have landed him incarcerated on a tropical island. He simplified his name by dropping the second 's' and found no great fortune. His descendents turned bush into grassland, drove Cobb & Co coaches and milked cows in East Gippsland. They missed the great Melbourne land boom but the family farm lasted in the Jonson family until the end of world War II.
The Melbourne land boom was fuelled by gold, capital from the British homeland and a growing dose of positive, indeed unsustainable, Animal Spirits. Shares as well as land boomed, with BHP's silver and Mount Morgan's gold leading the pack. Trevor Sykes tells the story of a knighted politician, Sir Matthew Davies, a colourful villain among many similar economic and political entrepreneurs. The involvement of government in the boom rivalled similar behaviour in the twin booms in France and England in the 1720s. No one apparently in the new Victorian government had studied the history of those earlier booms.
In 1887, just before the peak of the boom, Sir Matthew chaired a Royal Commission into banking. Its most remarkable recommendation was that restrictions on the ability of banks to lend for purchase of land be removed. Sykes remarks that the justification for this was the 'ordinary prudence' of bankers. This was, he says 'the words of men inured to long prosperity', Sykes, (1988), p146.
Sir Matthew at the end of 1888 calculated his wealth at 600,000 pounds, with no debts. But as Sykes reports, this wealth was represented mostly by the value of shares in various companies. He estimates that the contingent liabilities of the shares, represented by the uncalled capital on the same shares, probably amounted to one million pounds. 'All booms must bust'. Sykes, (1988), Pp 146-147.
The Premier Building Society failed in late 1889 when the land boom ended. People were not totally surprised but 'were shocked by the incompetence and dishonesty of its management'. (Sykes (1988) p 146.) The liquidator exposed grossly imprudent, indeed illegal, behaviour by management and the manager was eventually sentenced to one year's goal. A generous law that allowed a man to be bankrupt without disclosure of the amount owed allowed the manager to settle with creditors for 2 pennies in the pound. There was concern about other building societies and eventually the banks.
Inertia ruled. In 1890 there was a serious maritime strike and in Argentina the Baring crisis broke. In London a large discount house failed and dumped large stocks of colonial bonds. The Imperial Banking Company had been founded in 1886 to lend on freehold properties and did well in a rising property market. The directors broadened its charter in 1888 to lend on city and suburban property, just as the land boom was ending. The Imperial owed money to the Bank of South Australia, few assets being recoverable as cash. Imperial closed its doors in July 1891
Now things got serious. The oldest bank in Tasmania suspended payment in August. so did the British Bank of Australasia, followed by the Australian Mercantile Loan and Guarantee and the Anglo-Australian Bank. The failure of building societies continued, including one chaired by former prime minister and a 'father of federation', Alfred Deakin. The Victorian government then intervened to make it far harder for creditors to liquidate a failing company against the wishes of the directors. Mostly failed companies then remained under the control of its directors, making disclosure of past sins and mistakes unlikely and financial recovery virtually impossible.
The next day the Federal Building Society suspended payment. This society was owned by the Federal Bank, which was managed by Premier Munro! Failures continued, in what reads as one of the slowest but most inevitable train wrecks in commercial history. Examples of incompetent and downright illegal activity emerged over and over, often involving senior political identities. But the best was yet to come. 1892 was another tough year, but the banking crisis of 1893 took the palm. In this year thirteen banks, including the biggest in Australia, closed their doors within six weeks.
Trevor Sykes is a master storyteller. With a broad definition of 'bank', in mid-1891 there were 64 'banks' in Australia. By mid-1893 54 had closed, 34 forever. With a narrower definition equivalent to modern trading banks there were 28 banks and only 9 stayed open throughout the crisis. With one exception the major banks had realised trouble was coming and had avoided the worst of the late boom madness. 'Tighten up' had been the instruction to managers, and mostly this was done beginning in 1887 for those bankers who could imagine a coming train wreck.
Naturally, Australia's reputation in London was badly damaged, and capital was withdrawn. People in Melbourne lost deposits, especially in building societies that had failed. Deposits in banks closed for reconstruction were not available. The government's revenues had dried up and spending had to be reduced, an action reminiscent of Governor Phillips' reduction of rations.
Many men lost jobs and during the crisis Melbourne's population actually declined. Men left to go 'on the wallaby' looking for work and some headed for the goldfields of Western Australia. Families had to abandon homes and had to live with friends and relatives, as there was very limited government help though the churches did what they could. Sykes (1988), Chapter 9 has lots of juicy detail about the banking crisis. Jonson (2011) details the consequences.
A severe drought, called the 'Federation drought' prolonged the misery.
In this case, government action was still 'reduction of rations'. It was a great shock to a hitherto successful collection of colonies, and almost certainly encouraged those colonies to join the Federation.
World War I.
This global war was another severe shock to the new nation of Australia. Our then government was quick to join Britain in its declaration of war and to send troops to Europe. The attempt to invade via Turkey failed at great cost at Gallipoli. The horrible trench warfare in France cost many lives until General Monash worked out how to use tanks to protect his troops, and is said by many to have won victories that materially helped end the war. The epic 'Cavalry Charge' by Australian and New Zealand troops at Beersheeba was another great victory that also shortened the war.
The war was a great test for a new nation, a test it faced with steadfast valour. But the horrific cost in lost and traumatized lives is reflected in memorials around the nation and in diaries and other mementos. Those with loved ones who survived the war quickly realised they would hear little of their exploits.
For Australia, the First World War remains the costliest conflict in terms of deaths and casualties. From a population of fewer than five million, 416,809 men enlisted, of whom more than 60,000 were killed and 156,000 wounded, gassed, or taken prisoner.
The global influenza plague toward the end of the war created as many deaths as the war, and provided another shock for governments everywhere to consider. The global wartime dead in measured at 20 million, with a greater number left permanently disabled. The flu epidemic is said to kill another 20 to 50 million people (check).
The Australian government learned how to run a war and strengthened our ties with the motherland, although Aussie troops had little respect for most British officers. There was the Great Depression to come, another testing time for government, and for the first time economists were in the middle of the action.
As Ian McLean* says the first world war was the first of a series of negative shocks that destroyed the international trading system and halted the economic progress of many nations. Germany suffered horrendous hyperinflation and mass unemployment but dragged itself out of depression by preparing for the next global war. Australia grappled with severe loss of income and jobs, like many other developed nations.
* Insert reference
The Great Depression
Recovery from the war was slow in Europe and in Britain made worse by return to the gold standard in 1925, one of Chancellor Churchill's worst decisions. In Europe German recovery was greatly hampered by the onerous terms of the treaty signed by the coalition's leaders at Versailles in 1919. A relatively young economist, John Maynard Keynes represented the British Treasury at Versailles and eventually left in disgust to write one of the famous books by an economist, called The Economic Consequences of the Peace. 'Keynes predicted that the stiff war reparations and other harsh terms imposed on Germany by the treaty would lead to the financial collapse of the country, which in turn would have serious economic and political repercussions on Europe and the world.' *
Sadly Keynes was right. Britain struggled to pay for war materiel purchased from the United States but in the end Germany did not meet its financial obligations under the Treaty. Inflation turned into hyperinflation, a powerful example of economic policy very wrong. Continued misery among unemployed people in Germany helped explain the rise of Hitler and Germany's second attempt at global domination.
While Europe was struggling with consequences of the war, the United states entered an apparent golden age. Growth was strong, inflation subdued and share prices rocketed up. As with Melbourne's great land value inflation, America's share value inflation had to come to an end, and there were massive falls from September 1929 to mid 1933. The combination of subdued goods and services inflation and rocketing asset (share price) inflation occurs only occasionally. In the American case of the 1920s, as well as near insane Animal Spirits, the New York banks were lending to speculators at high rates of interest and the US Fed was loaning them money at low rates. The New York banks had been specifically told not to do this, but great fortunes are rarely made by people who too zealously obey the rules.
A major lesson is that monetary policy has to consider the state of asset inflation, with a policy to keep them from boiling over, as well as goods and service inflation. More on this issue, only recently and insincerely accepted by central bankers, later in the book.
The great American stockmarket crash was replicated quickly elsewhere. Lesson number 2, the world economy was now powerfully interlinked and the economy and policies of major countries had to be understood in small open economies like Australia. I feel pretty sure that in Australia in late 1929, it was like a distant clap of thunder, whose true consequences were poorly understood at the time. The great explainer of Australia's Great Depression is Boris Schedvin in his book called Australia and the Great Depression.
'The impact of the international collapse on Australia was immediate and savage.' (Schedvin, P47). Export prices collapsed. Overseas borrowing dried up at a point when Australia had borrowed more than was prudent. Domestic costs were too high and the nation was already experiencing recession. Industrial strife was widespread.
Unemployment in Australia had averaged 8 per cent is the 1920s and rose to a peak of 28 per cent in 1932. While measurements differ between nations, only Germany, with peak unemployment of almost 44 per cent achieved, if that is the correct word. Measures of national incomes and outputs fell dramatically.
As already noted, Australian economists were described as heroes, with one of them supposedly inventing the so-called 'multiplier' before Mr Keynes, who unfortunately forgot to publish the idea. In Australia when Wall Street crashed, Australia had borrowed too much from London's capital market and used the proceeds to build up its industrial strength behind tariff walls. This was the strategy supported by economists, we were told at Melbourne University, as our great trade theorists had figured out that Australia needed more people. While industrialisation would make us poorer than we'd otherwise be there would be more of us. This rationale was published in 1929, and was known as the Brigden report.
Australia was regarded as a 'voracious' borrower, and Mr Keynes had warned about its appetites as early as 1924. There was a period following that in which Australian debt was not so warmly received until in 1927-28 when in thirteen months Australia borrowed a record 63.7 million pounds (check) in London and another $US 50 m in New York. The global money began to flow to speculate in New York and Australian borrowing was far harder. As Schedvin says: 'Australia found herself in a much more embarrassing position on the eve of the world depression than other large debtor countries'. *
Policies were devised on the run by various people. While the conservative Prime minister, Stanley Bruce was aware that the nation was in trouble his conservative focus was on costs - 'reducing rations' - and the attempt to rationalize the heavy regulatory burden of both national and State based Arbitration organisations. The newly appointed Manager of the Bank of New South Wales A. C. Davidson, played an important role. Schedvin describes him thus: 'A man of exceptional ability, enormous capacity for work and sound grasp of prevailing economic theory.' (Schedvin, P 126)
In late 1929, the new Labor government of Prime minister J.A. Scullen and Treasurer E. G. ('Red Ted') Theodore introduced a bill to allow the Commonwealth Bank to do two new things, in each case after securing the Treasurer's approval. The first required the trading banks to disclose their gold holdings. The second allowed the Bank to require gold to be exchanged by bank notes. A third change enabled the Treasurer to prohibit the export gold, after issue of a proclamation by the Governor-General in Council, changed in parliament to give this power to the Commonwealth Bank. This bill produced 'Confusion and uncertainty' as the third change produced 'muddle-headed sermons on the value of maintaining the gold standard'. It was eventually passed and gold flowed out of the country almost immediately. At this stage there was no official intention to quit the gold standard. (Schedvin, Pp 124-126).
Schedvin says that 'There is little doubt that that the gold standard was, in fact, abandoned on 14 January 1930, the day that Theodore approved the Commonwealth Bank's request to implement the provision requiring gold to be exchanged for notes'. This interpretation was denied by the Bank's Chairman, Sir Robert Gibson at the time, who may not have fully understood the consequences of the Bank's action. Market forces produced consistent pressure on the currency and Davidson lead the way. Finally, even Davidson declared enough was enough at an exchange rate 30 % below the gold standard value of parity.
The movement in the value of the Australian pound was 'haphazard and circumstantial' says Schedvin, and should really have been lead by the Commonwealth Bank. Its effect was 'an important influence in moderating the effect of international collapse on Australia and in assisting domestic recovery'. (Schedvin, P 167). As we shall see, under the Whitlam government and then at times under the floating rate adopted in 1983, the Australian dollar was uncomfortably strong, an issue that needs careful thought that has not yet been undertaken.
Back in the Great Depression, cost overhang issues were already in action. Since 1928, the Commonwealth basic wage had fallen by 20 per cent, half due to Court order and half due to cost of living adjustment. This ratio was adopted by the Commonwealth for all adjustable government spending as part of the attempt to achieve 'equality of sacrifice'. Later judgment was that the wage cut was a great help to recovery. However, the issue was whether wages had fallen relative to levels in competitor nations. Schedvin (P 348) shows indexes of money wages of six nations, starting with wages equalised at 100 in 1928. By 1933, Australia's wage index was 81, while Germany's at 79 and the USA at 61 were the only nations to record lower levels. By 1937, Germany's index was still 79, while the USA had recovered to 94 and Australia to 88.
In short, every nation was attempting the same strategy, although Australia was slightly ahead of the pack on average. Another fact about which not much is known is the issue of hours worked. These were sizeable in Australia and perhaps elsewhere.
Davidson early on argued for interest rate increases in response to drying up of overseas borrowing. Eventually under the banner of 'equality of sacrifice' rates of interest as well as pensions were cut. Economists were summoned to produce a plan called the Premiers Plan which we were told at Melbourne University in the 1960s saved the nation. It involved a three year term to balance the budgets of States and the Commonwealth - 'reducing rations' again - with much agonised tooing and froing about how to fund the deficit spending.
Expansion of government was never contemplated except by Premier Lang of New South Wales. His idea was to fund it by repudiation of his state's debts, an idea quickly repudiated by other Australian governments. Paul Keating sat at Mr Lang's feet as a young Labor man but suprisingly ended up fairly conservative as Treasurer in the 1980s.
Mr Scullin's treasurer, Mr Theodore, had the boldest plan, to print banknotes to fund expansive spending. This was squished despite its similarity to the Rudd government's actions at the time of the global crisis as Australian economic policy was still conservative. Indeed, government outlays were cut back in yet another version of Governor Phillip's 'reduction of rations'.
Politics was very difficult. The Conservative government of Stanley Bruce had ruled from February 1923 to October 1929. Mr Scullin was Prime Minister from late 1929 to January 1932 until there was a split in the Labor government. A former minister in Scullin's government, Joseph Lyons, won the general election and formed a curious coalition with former Prime minister Bruce and some of his conservative ministers. His policy was to balance budgets ('reduce rations') and reduce costs with no unorthodox ideas of expanding the way out of depression. Wages and the exchange rate had already been substantially reduced, and the powers recognised that there would be no sustained recovery until commodity prices recovered. Schedvin (P xiii) says in the preface to his book: 'The overriding problem was of external balance, and this had left the authorities with little room to manoeuvre'.
McLean's much later book reaches a similar conclusion: '... history has delivered further evidence of the difficulty of combating major economic and economic downturns in advanced economies - such as experienced by Japan in the 1990s and by many countries after 2007'. (McLean, P 163).
The Great Depression however changed many features of the global economy and economic analysis. Many countries, including Australia, pulled back from international trade. Following the second global war, there was far more focus on the aim of 'full employment' and following the writing of Keynes his disciples assumed policies could achieve such an outcome. The great post-war boom seemed to support the 'Keynesian' approach to economic management but as McLean says this seems far less certain after less happy experience in recent times.
As noted earlier, my father was sent to Melbourne from the family farm in East Gippsland with 5 pound in his pocket. He found work as a storeman and packer.
In Australia the role of the Federal Treasury became far more important and for many years it dominated official thinking and much of economic analysis. The Commonwealth Bank became (reluctantly) technically responsible for the elements of monetary policy though in this endeavour it was subordinate to Treasury even after the creation of the Reserve Bank. This was the status quo until the floating dollar gave the Bank the ability to run an independent monetary policy and the courage to seek independence from political and Treasury control, eventually being granted this formally by Treasurer Costello in 1996. (Chapter 7 tells the story of the floating of the dollar.)
The Depression also enlarged the group of economic policy institutions, including the Tariff board, now the Productivity Commission, Nowadays there is greater attempt to coordinate the various 'arms' of economic policy, though the comments reported above by Messrs McLean and Schedvin raise the question of how much economic policies can change economic outcomes.
World War II
This war was again horrific, though generally regarded as less awful that WW I. Germany invaded the non-German part of Europe, then Russia, and fighting on two fronts eventually ended its appetite for war. Japan bombed Pearl Harbour to bring America into the war and also paid a massive price in deaths of its soldiers, airmen and sailors as well as the people of Hiroshima and Nagasaki.
My father signed up when war broke out but luckily survived the bombing of Darwin, with a bad head wound that made no noticable effect on his mind. Norm learned to repair and maintain refrigerators and ended the war as a sergeant. After the war he set up a small business in Nunawading and I learned to help renovate fridges that were traded in. We renovated fridges traded in by Myer at Chadstone, and received $100 per fridge. My special expertise was cleaning the interior, often a horrible job, and replacing the rubber around the door. [Remove repetition}
During WW II, Essington Lewis, the Managing Director of BHP also became Director of Australia's munitions, appointed by Menzies and retained when the political wheel turned to Chifley. Australia's promotion of manufacturing in the interwar years paid off as we were in virtual isolation, at least until the navel battle of Coral Sea and heroic army action on the Kokoda Track ended Japan's southward thrust.
By war's end Essington Lewis's strong leadership produced massive amounts of military equipment and munitions, including quite decent fighter planes. It is a sobering thought that no such effort could be mounted now due to the wreckage of Australia's manufacturing industries on the altar of 'Free trade'. *
The war again took several years and cost many lives and damaged lives. World War II fatality statistics vary, with estimates of total deaths ranging from 50 million to more than 80 million. The higher figure of over 80 million includes deaths from war-related disease and famine. Civilians killed totalled 50 to 55 million, including 19 to 28 million from war-related disease and famine.
Over 993,000 Australians served in the armed forces during World War II. Of those on active service, 27 thousand were killed in action or died, more than 23 thousand were wounded, and 30,560 were taken prisoner of war. Of those taken prisoner, almost 9 thousand died in captivity.
Both sets of statistics come from the World Wide Web.
After this second war to end war there was widespread fear of another depressed era. Instead it was a time of widespread boom, demonstrating the fallibility of prediction in human affairs. Also the 1950s and 1960s were time of widespread changes in social issues and culture. The children of those who had suffered war and depression, including this writer, experienced growth and general optimism and in Australia economic and social freedom never before experienced by such high numbers of people.