In 1929 the conservative government of
Stanley Bruce fell when its industrial relations bill was defeated in the House of Representatives. In the subsequent elections Scullin campaigned as the defender of the industrial arbitration system and won a landslide victory, becoming Australia's first Roman Catholic Prime Minister. The conservatives, however, retained control of the Senate. Two days after Scullin took office on
22 October 1929, the New York stock market crashed and Australia became caught up in the worldwide
Great Depression, with the
Great Depression in Australia biting hard.
The Depression hit Australia hard in 1930, with the collapse in export markets for Australia's agricultural products causing mass unemployment. The Scullin government, guided by orthodox economic advice, was unable to cope, and the Labor Party was rent by internal conflict over how to respond. The Treasurer (finance minister),
Ted Theodore, was an early advocate of
Keynesian economic ideas, and advocated deficit financing as a means of reflating the economy, but his Cabinet colleagues
Joseph Lyons and
James Fenton strongly supported traditional deflationary economic policies.
In June 1930 the government suffered a heavy loss when Theodore was forced to resign after he was criticised by a Queensland Royal Commission inquiring into a scandal (the
Mungana affair) dating back to Theodore's time as Premier of
Queensland. Scullin took over the Treasury portfolio. Matters were made worse by Scullin's decision to travel to
London to seek an emergency loan and to attend the
Imperial Conference. While in London, Scullin succeeded in gaining loans for Australia at reduced interest. He also succeeded in having
King George V appoint
Sir Isaac Isaacs as the first Australian-born
Governor-General, despite the King's reluctance and the furious response of the conservative opposition in Australia, who attacked the appointment as tantamount to republicanism.
With Scullin out of the country for the whole second half of 1930, Fenton (as acting Prime Minister) and Lyons (as acting Treasurer) were left in charge and insisted on pursuing deflationary policies, arousing great opposition in the Labor caucus. In regular contact with Fenton and Lyons in London through the awkward means of cables, Scullin felt he had no choice but to agree to the recommendations of advisers from the
Bank of England, supported by Lyons and Fenton, that government spending be heavily cut, despite the suffering this caused. These decisions led to furious infighting in the government and destroyed any semblance of party unity.
During 1931 the Scullin government disintegrated. In January, Scullin returned to Australia and decided to reinstate Theodore as Treasurer. Lyons, Fenton and their supporters resigned from the ministry in protest and soon joined up with the
Nationalist Opposition to form the
United Australia Party, led by Lyons. Meanwhile the Labor Premier of
New South Wales, Jack Lang was campaigning for economic policies much more left-wing than Theodore's, calling for Australia to repudiate its foreign debt and take other radical measures. In March, Lang's supporters in the federal Parliament had split from the Labor Party, forming a "Lang Labor" group, which, combined with the defections of Lyons and his supporters, had deprived the Scullin Government of its majority in the House of Representatives. However, the Government limped on until November, due to the reluctance of the Langite MPs to vote it down. Finally, however, on
25 November 1931, the Langite MPs, attacking the government with accusations of impropriety, voted with the Opposition to pass a
motion of no confidence, forcing an early election.
Labor was defeated in a massive landslide 1931. The official Labor Party, which had won 46 seats out of 75 in the House of Representatives in 1929, was reduced to a mere 14 (Lang Labor won another 4), and Lyons became Prime Minister. Scullin felt traumatised by the experience of presiding over such a disastrous period, but stayed on as Labor leader. After losing another election in 1934, he resigned the leadership. He remained in Parliament and became a trusted adviser to later Labor Prime Ministers
John Curtin and
Ben Chifley. He retired in 1949 and died in Melbourne in 1953 at the age of 76. Historians have judged him as a conscientious, well-meaning politician who was simply overwhelmed by events.
As Leader of the Opposition, Scullin had been a vocal opponent of the cost of
The Lodge, the official residence of the Prime Minister. True to his word, he and his wife lived at the
Hotel Canberra during parliamentary sessions, and at their home in Melbourne at other times.
