ABSTRACT
The First World War had contributed to the consolidation of Australia's nascent heavy industrial sector and by 1939 Australia had recovered from the Great Depression in the sense that it had regained previous levels of output and employment, though substantial spare capacity remained. The Second World War marks a transition in the development of the Australian economy, from a phase in which primary industry was the 'engine of growth', to an era in which capital-intensive manufacturing industries played a greater role. The process of conversion to war began before the formal start of hostilities. As the overseas strategic situation became bleaker, planning for war production began by creating capacity or making arrangements for it, in a way that allowed rapid expansion once war began. Few could foresee the growth in scale of demand which followed the outbreak of war, but, at least, Australia was not starting from scratch in September 1939.
