'Why don't you give them something, Mum?'
'I'd like to, but I can't. Your own father is out of work.'
My mother's words have stayed with me ever since the Great Depression of the 1930s. They followed the departure of yet another sad-faced man who had knocked on our back door that day. He pretended to be selling bootlaces but it was obvious he was simply begging.
The Depression was bad in Australia. The statistical unemployment rate reached 30 per cent, although the reality was worse. Tenants couldn't pay the rent and many were evicted.
Australia had amassed huge war debts, borrowed mostly from English banks. Sir Otto Niemeyer of the Bank of England came to Australia in 1930 and demanded the government reduce spending and cut wage rates. Projects were cancelled, workers sacked. Those with savings clung to their money out of fear and uncertainty.
The 1930s were miserable and a waste of years when Australia should have been building for the future. What had gone wrong?
The collapse of share prices in New York in October 1929 was the trigger, but not the cause. It was lust for wealth by investors and financial manipulators who bought shares, often with borrowed money, in the belief that share prices would keep going up, allowing them to become effortlessly richer. Inevitably, the bubble burst.
The economic disaster caused widespread misery but had one good result. It spurred some economists to question the conventional wisdom of shutting down projects and lowering wages when recessions loomed.
One of them was J. M. Keynes of Cambridge University. He changed from his conventional belief in 'the free market' to the need for government action and financial stimulation in the face of serious economic downturn.
In the US, President Roosevelt took some limited action in accord with the policy Keynes was to advocate a little later. He called it 'The New Deal' and began massive government construction projects such as the Hoover Dam. Employment was boosted and the bad effects of depression were reduced.
After the Second World War, the economic principles adopted by Keynes and supported by others, such as the American economist and author John Kenneth Galbraith, were widely accepted for several decades. In Australia, both major parties adopted Keynesian economic principles. The original Liberal