The year 1909 was a big one for Theodore, then aged twenty-five. It saw him marry Esther Maloney and also enter the Queensland Legislative Assembly as the member for Chillagoe. His early speeches did not go particularly well, but he threw himself even more into self-education, spending hours reading in the Parliamentary Library. His hard work won the respect of his colleagues and he was elected deputy leader of the state parliamentary Labor Party just three years later. In 1915, the Labor Party was elected to govern Queensland, and Theodore became deputy premier and treasurer. The TJ Ryan Labor government believed in robust involvement in the economy through government-owned enterprises extending from cattle stations to butcher shops. Its involvement in mining enterprises would play a big role in Theodore’s political downfall fifteen years later.
Theodore seemed a fairly conventional treasurer, bringing down a surplus in his first Budget. But in a sign that this orthodox treasurer was willing to try unorthodox measures to fix serious problems, he introduced the Unemployed Workers Bill in 1919 to establish an Unemployment Council to develop solutions to the state’s unemployment problem. Hawkins notes that the ‘central thrust was to time public works projects for periods of slack demand’.8
Also in 1919, Ryan transferred to the federal parliament and Theodore became Queensland premier at the age of thirty-four, initially retaining the Treasury portfolio as well. Three years later, Theodore became the first (and very likely the only) premier to successfully move for the abolition of his state’s Upper House. The removal of this conservative handbrake saw him successfully introduce his package of intervention for unemployed workers, which had hitherto been blocked in the Legislative Council. Given the Senate’s role in similarly blocking his plans many years later, he no doubt occasionally wished he could accomplish a similar feat at the federal level.
In 1924, as a precursor to the furious debate that would be waged six years later, premier Theodore successfully moved a motion at the Labor Party National Conference that there be an independent reserve bank for Australia. The following year saw Theodore attempt to follow in Ryan’s footsteps by resigning as premier to contest the federal seat of Herbert. Most unexpectedly, he lost so Theodore moved to Sydney, no doubt figuring his political prospects were better in Australia’s largest city. Sure enough, he won the safe Labor seat of Dalley in a by-election in 1927.9 Allegations were made that the sitting member, William Mahony, was offered an inducement to stand aside for Theodore, but Theodore was cleared of any wrongdoing.
Just as he’d done in the Queensland Parliament, Theodore quickly impressed with his ability to take strong economic arguments to the incumbent conservative government. He was the first opposition member to trouble federal treasurer Earle Page, effectively becoming shadow treasurer in the days before such a portfolio existed. Again following a similar trajectory to his Queensland career, Theodore was unanimously elected James Scullin’s deputy leader in February 1929. The Sydney Morning Herald’s political correspondent, Brian Penton, wrote that Theodore ‘is rapidly becoming the actual, if not the nominal leader of his Party … there is something colossally spacious about him, something enormously strong’.10
October 1929 saw the Scullin Labor government elected in somewhat of a landslide. Held just ten months after the previous federal election, it came in the wake of the defeat of the Bruce government on the floor of the House over the Maritime Industries Bill. The aim of the Bill, which had arisen after a series of bitter coal industry strikes in NSW’s Hunter Valley, was to abolish the Commonwealth Court of Conciliation and Arbitration, effectively handing power over industrial relations to the states. Objecting to the Bill’s proclamation, disaffected former prime minister Billy Hughes engineered what was in effect a vote of no confidence in the Bruce government, and the first Australian House-only election, one of only a few in history, was held. Labor won its biggest majority to that point in the nation’s history. But the lack of a Senate election meant that the new government, while it had a large House majority, faced a brooding opposition-controlled Senate.
The new administration was sworn in ten days after the election, and Theodore had a full two days to settle in as treasurer before the great Wall Street Crash.
The Big Shock
Both the Wall Street and London stock markets had shown fragility and vulnerability through September and early October 1929, following a decade of almost uninterrupted growth. The big shock came on 24 October, when the Wall Street market dropped 11 per cent at the opening bell. This was followed by a further 13 per cent slide on 28 October, which became known as Black Monday. Another decline, this time of 12 per cent, occurred the next day. The market then moved around for a fortnight but reached a new low on 13 November.
The Australian economy was not well placed to deal with this economic shock. There had been a serious build-up of national debt during the 1920s. Keynes referred to this when he later passed judgement on Australian economic management. As Hawkins explains: ‘The UK banks and investors had become concerned about the build-up of Australian debt during the 1920s, and the increase in tariffs and end of assisted migration from the UK made things worse. The London market had effectively closed to Australian borrowers in January 1929.’11 Australia was heavily dependent on wool and wheat prices,
