As the antifederationists feared, Western Australian manufacturing languished, especially after the last protective tariffs were removed in 1906. Gold mining too, after attaining peak production in 1903, slowly declined. These trends were overshadowed by a great expansion of wheat growing. Building on Forrest’s policies, Liberal premier Newton Moore (1906–10) and his lieutenant James Mitchell pushed the farming frontier 200 miles (320 km) from the Avon valley (to the east of Perth) eastward to the 10-inch (250-mm) rainfall line. They were aided by recent advances in agricultural science as well as by the urging of former miners. “Gold brought these men to Western Australia,” said Mitchell “and superphosphate will keep them here.” The acreage under wheat trebled between 1905 and 1911. But a drought in 1911 dealt a severe blow to the new farmers, and at the elections in October a Labor government under Jack Scaddan was returned with a landslide majority.

Labor was innovative rather than radical. To curb the alleged profiteering of private firms, a number of state-owned businesses were established, including a shipping line, sawmills, butcheries, and other industries. Perth Modern School, a unique secondary school with an updated and broadly balanced curriculum, opened in 1911, offering free education to scholarship winners. The University of Western Australia, founded the same year, offered higher education without charging tuition. Despite such innovations, however, Labor followed the same policies of economic development as its predecessors, pushing the Wheatbelt farther into marginal country and building new railways, despite mounting disillusion among many farmers. In 1914—another drought year—the Farmers and Settlers Association secured the return of eight members of the Legislative Assembly who formed Australia’s first Country Party. They held the balance of power and in July 1916 ousted Labor in favour of a Liberal ministry.

Political instability followed, reflecting the pressures of World War I. With a high ratio of men to women and many recent British migrants, Western Australia sent a large number of volunteers to the war. At the federal referenda of 1916 and 1917, it supported conscription for overseas service more strongly than any other state. A non-Labor coalition formed in 1917 floundered under a number of crises, including disruption caused by the influenza pandemic of 1918–19. During a maritime strike in April–May 1919, a waterside worker was killed in a fracas with police, and the state premier narrowly escaped serious injury. The turmoil subsided after Mitchell became premier in May 1919.

No zealot for private enterprise, Mitchell, like most non-Labor leaders, believed that in the absence of strong local capitalists the government must take entrepreneurial initiatives. He pinned his faith on rural development. Eager to stimulate British immigration to fulfill his dream of a settled yeomanry, his government in the early 1920s promoted the group settlement scheme, under which parties of migrants banded in cooperatives would clear forestlands in the southwest to establish themselves as dairy farmers. Many of the inexperienced settlers failed, but the scheme continued even after Mitchell was replaced by Phillip Collier, the first of a series of moderate Labor premiers (1924–30; 1933–47).

Western Australia’s isolation was diminishing. The transcontinental railway connecting Perth and Kalgoorlie with Adelaide was completed in 1917. Commercial aviation came early; Australia’s second airline was operating in the state’s northwestern region from 1921, and an airmail service to Adelaide began in 1929. Motor transport came to the fore, and many farmers invested in tractors, often on credit. Agriculture seemed to thrive; the 1930 wheat harvest was unsurpassed for more than 30 years. But Western Australia was still overdependent on its exports of wheat and wool. Although the Great Depression came later to the west than to the rest of Australia, its impact was devastating.

Caught by the slump in export prices, many farmers were obliged to abandon their land. Others remained, living with their families in harsh poverty while they paid off their debts. Urban unemployment rose to a peak of 30 percent in mid-1932, provoking several demonstrations in the streets of Perth. Many of the unemployed found sustenance by labouring on government projects in remote rural areas. Mitchell, again premier from 1930 to 1933, tended to support the populist Dominion League, which urged secession from the Australian Commonwealth. A referendum in April 1933 produced a two-to-one margin in favour of secession, but at the same time Mitchell was swept out of office. Labor under Collier was less keen on this action; they procrastinated until 1935, when the British government declared it had no power to grant secession.

By that time the movement had folded. Economic recovery was heralded by the revival of the goldfields. In 1931 the state’s biggest nugget of gold, the Golden Eagle (1,135 troy ounces [35.3 kg]), was found at Larkinville in the south-central part of the state. Competition for jobs aroused ethnic antagonism, and in January 1934 Kalgoorlie was the site of a disgraceful three-day riot against southern-European immigrants—but it was the last of its kind. Cooperative bulk handling, introduced in 1932, enabled many wheat farmers to remain solvent. Although wool prices recovered from 1934, many graziers owed their survival to Aboriginal labour.

Prior to World War II the activities of Aboriginal peoples were strictly regulated under the Aborigines Act of 1905. The war, however, raised Aboriginal political consciousness. Many were employed by the armed forces, receiving adequate cash wages for the first time. Legislation of 1944 empowered indigenous people to apply for citizenship, but under such limited terms that few benefited. In 1946 Aborigines employed in the pastoral industry in the Port Hedland district went on strike for better wages. During the 1950s and ’60s, government policy toward indigenous peoples shifted to one of assimilation and then integration, and the remaining legal restrictions on Aborigines were gradually removed.

After two years of comparative isolation from the war, Western Australia seemed endangered in 1942 when Japanese aircraft bombed Broome and Wyndham. Credence was given to an alleged official plan to abandon the north and west of Australia in the event of an invasion. Such a plan—whether spurious or actual—carried the potential to reinvigorate the secession movement, but, in the end, no such revival was forthcoming. Instead, Western Australia for the first time provided an Australian prime minister (Labor’s John Curtin, 1941–45) and returned Labor members to every seat in the House of Representatives in 1943. That same year, Western Australia sent the first woman into the federal Senate, having already elected Australia’s first woman member of a state parliament (Edith Cowan, 1921–24). The state later provided Australia’s first woman state Cabinet minister (Dame Florence Cardell-Oliver, 1947–53).