Suicide is one marker of a severe economic downturn and while the current health and economic crisis is concerning, there are some big differences between the 1930s and the 2020s. In particular, there are now more safety nets for those losing their jobs and a much greater focus on providing mental health support.
Unemployment and adjustment
When Wall Street crashed in 1929, Australia’s jobless rate skyrocketed as export industries suffered, incomes declined and the economy went into freefall. By the early 1930s, the unemployment rate among men (who were the primary earners at the time) was a record 30 per cent.
With men at that time seen as the traditional breadwinner, the shock of losing work had a dramatic impact on the national psyche, explains University of Melbourne professor Janet McCalman, who interviewed many people who lived through the 1930s for her book Struggletown: Public and Private Life in Richmond 1900–1965.
“Some men would get up, put their suit on, get on the train and then walk around the city all day and come back again, pretending for a long time they were going to work until they were forced to admit they didn’t have a job.”
The IMF is forecasting national unemployment, which stood at 5.1 per cent in February, to average 7.6 per cent this year before increasing to 8.9 per cent through 2021.
Modelling for the federal Treasury has found it is likely to peak at 10 per cent, or 1.4 million people, in the June quarter. Without the federal government’s $130 billion wage subsidy package, Treasury predicts it would have surged to 15 per cent.
The rules varied from state to state in the 1930s but to access meagre benefits – typically food rations rather than money – for a family of four in NSW you were unable to have any assets apart from your home and had to earn less than $130 a week (in today’s dollars).
In The Hard Times Handbook by Keith and Irene Smith, Lilian Gadd of North Sydney recounts her life during the Depression, when she lived in a slab cottage on the NSW Central Coast.
“We lived for the first year or so on the dole … Pride is the first casualty in hard times and our men had to front up to the nearest police station and prove their destitution, accepting the humiliations handed out with the 7s 6d worth of food coupons. This was a very lean period,” she says.
Sustenance work was available to some of the unemployed, with payment below award wages, and there were food coupons for those not involved in relief work programs, a Reserve Bank of Australia discussion paper explains.
From the time of the Great Depression to the 1980s, government benefits were made about 90 times more generous. Now, the government has temporarily doubled benefits for the unemployed to help them through this crisis.
The JobSeeker unemployment allowance provides $1100 a fortnight while the separate JobKeeper wage subsidy will give 6 million workers $1500 a fortnight in support through their employers.
At the peak of unemployment in the 1930s, one in 10 people usually in the workforce were both jobless and not receiving any assistance. There was no government-funded healthcare in NSW for the unemployed until 1937, the RBA research shows. Some states provided only food rations, leaving many without money for housing.
“Some people who had mortgages had a moratorium on their payments but a lot of people lost their houses as they couldn’t pay rates. Councils re-possessed their homes and sold them off cheaply,” McCalman says.
Prime Minister Scott Morrison has declared a six-month moratorium on evictions, although it is being handled differently state by state, and banks are giving homeowners in hardship a six-month mortgage pause.
In the 1930s, even those lucky enough to keep their jobs or find other work took significant reductions in pay and faced a dramatically different lifestyle, Federation University Australia professor Erik Eklund says.
Those who had to leave their homes to find work set up tent cities in places like Wollongong, Sydney and other regional and metropolitan centres across the country. Councils designated areas for camps, others were informal, and the conditions in each varied.
“Workers just hoped there might be something coming around public works, railway construction or a new harbour … A lot of that work is casual, you have to make an effort to be there at the right time,” Eklund says.
The combination of tight budgets and single men leaving town to find work contributed to a dip in the birth rate to a historic low of 2.3 per woman in the 1930s ahead of World War II, before peaking in the 1960s at 3.5 babies per woman. The birth rate has since declined to 1.74 in 2018.
Sport, socialising and surviving
Entertaining the family was a difficult task during the Great Depression. Few could afford to go out and this caused many institutions to close, such as Her Majesty’s Theatre in Sydney. The theatre, which was located where Centrepoint is today, opened in the 1880s and was forced to shut in 1933.
Many households relied on sport to help them through and this was the era when cricket great Don Bradman became famous and racehorse Phar Lap captured the public imagination.
The current social distancing measures mean some of the techniques relied on for comfort and finding work back then are not feasible today. Cinemas, pubs, theatres, many shops and sports games have shut down and people have been told to stay home and avoid all but essential outings to help stop the spread of coronavirus.
“People played sport and watched sport and would sneak into the footy at half-time and go for free,” McCalman says of the 1930s.
“Football was very important in Melbourne and a number of working-class teams were going very well. This gave people an anchor and their whole week would revolve around football, for women as well as for men, even if they couldn’t afford to go to the match they would hang outside for the score so they could talk about it.
“It gave the days and weeks and months a structure. It gives you something to think about and people would talk of their teams like your own sons, as our boys.”
Conversation and socialising also filled the time, with a focus on politics and gossip. “The most important and constant form of entertainment was conversation. We don’t talk to each other to the extent that people do then,” McCalman says.
Communities would come together for free events, including singing held in the picture theatres to “get people into the shopping centres in the hopes they’d buy something”.
With public gatherings banned due to coronavirus, people are finding new ways to entertain themselves in 2020, including using technology to video call friends, family and colleagues. Online gym classes, schooling and courses are increasingly popular.
University of Sydney professor Lisa Adkins, who has spent hours listening to recordings of those who lived through the Great Depression through the National Library’s Lowenstein Collection, says the experiences of people at the time were “very gendered”.
As women were paid much less in the 1930s than men, some women managed to keep their jobs throughout the Depression, while others spent time at home making ends meet. Almost everything was made from scratch and households kept chickens and grew vegetables.
“The women’s [stories] were much more about day-to-day survival and community oriented,” she says, while men’s were “more heroic”.
“They were going on the track, doing the travelling to find work in groups of men. It was heroic accounts of survival, catching chickens and killing and cooking them, [how they] managed to dodge paying fares,” she says.
Households looking to make and save money would grow flowers to sell, rent out spare rooms to boarders and grow their own food. Potatoes were a staple and many caught rabbits for meat.
“There are so many stories about people supplementing their income, if they had any, through fishing, vegie gardens and you could go prawning on coastal NSW. Communities used natural resources from the environment to get by.”
So far in 2020, women are bearing the brunt of economy-wide efforts to protect Australia from the spread of coronavirus, with female-dominated industries like retail, accommodation and food services most likely to stand down staff or cut pay. Male-dominated industries including mining and manufacturing have been relatively untouched by the anti-virus measures.
Four ways to climb out of an economic crisis
SGS Economics & Planning partner Terry Rawnsley:
- The Australian government could take equity in, or even nationalise, critical parts of the national economy. The airlines would be an obvious example. The Australian economy will be hindered without a functioning domestic or international air travel market. This approach could involve governments owning (but not operating) airlines, with current management teams in place, long enough for normal economic conditions to return.
- Emergency equity may need to be provided to selected listed companies whose revenues have reduced by more than 50 per cent (the 50 per cent figure can be debated as being too high or low). These companies could be selected based on their ability to prosper at the end of the crisis and the negative impact their failure would have on the broader supply chains.
- Significant funds could be handed to state and local governments to support an infrastructure building program to offset any collapse in private sector investment. This initiative could fund a major construction program in social and affordable housing to help offset the fall in private dwelling construction. Alternatively, if a fall in house prices leads to mortgage defaults, state and local governments could purchase distressed new home sales for use as social housing.
- Local governments across the country have long lists of small-scale infrastructure projects that can provide a pipeline of work. Local government is in a good position to identify additional projects such as tree planting, waterway remediation and open space enhancements, which can be undertaken by workers with a basic skill set. This approach would reduce the pressure on the more skilled construction workforce so they can focus on housing and infrastructure building.
Keeping spirits up
One of the biggest challenges faced by people in the Great Depression was not just keeping food on the table but staying optimistic.
It was the middle class who struggled most to adjust, McCalman says.
“For many people it just blew away a lot of their hopes,” she says. Many who wanted to go to university found this was no longer an option and those who had never faced unemployment before were in shock.”
The Great Depression marks the lowest point on record for the livelihoods of Australians and the unemployment rate has not come close since, SGS Economics & Planning partner Terry Rawnsley says.
“To combat the Great Depression, governments around the world employed classical economic approaches … which involved reducing wages and trying to balance their budgets,” Rawnsley says. This made a bad situation worse.
With governments racking up unprecedented levels of debt to support workers and businesses, Morrison and Treasurer Josh Frydenberg are banking on the economy “hibernating” for a period then “snapping” back once the virus is under control.
“I believe that more jobs will be created on the other side of this crisis. I think there will be the recovery phase, Australia will be well positioned for that,” Frydenberg says.
IMF chief economist Gita Gopinath sees many reasons for optimism, despite the dire circumstances.
“The swift and substantial economic policy actions taken in many countries will help shield people and firms, preventing even more severe economic pain and [creating] the conditions for the recovery,” she says.
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Jennifer Duke is an economics correspondent for The Sydney Morning Herald and The Age, based at Parliament House in Canberra.