The world-wide economic downturn of the early 1930s resulted in severe unemployment and hardship throughout Western Australia. The loss of confidence in business, the drop in consumption and the huge fall in production resulted in record unemployment throughout Australia, with levels topping 30% in Western Australia.
Like most governments in Australia at the time, the State Government led by Premier James Mitchell struggled to cope with the severe social, economic and political problems caused by the Depression. Despite a bumper crop in 1931, wheat prices collapsed, leading to the militant Wheatgrowers' Union attempting to strike in 1932 by withholding the delivery of crops and preventing the forced sale of bankrupt properties through disrupting auctions.
In Perth unemployed men demonstrated in the streets, while those in work saw their wages and conditions reduced. Hamstrung by the Premiers' Plan, which sought to restore prosperity by reducing government spending and repaying government debt, and unable to borrow money from London to pay for job creation schemes, Mitchell's only remedy was to provide sustenance work for the unemployed on public works schemes. While the Commonwealth Government did look to increased gold production as one way of boosting the economy, governments throughout Australia followed orthodox economic policy and reduced their spending.