Harold Holt disappeared while swimming on 17 December 1967 and was declared presumed drowned two days later.
His presumed successor was Liberal deputy leader William McMahon.
 However, on 18 December, the Country Party leader and Deputy Prime Minister John McEwen announced that if McMahon were named the new Liberal leader, he and his party would not serve under him.
 His reasons were never stated publicly, but in a private meeting with McMahon, he said "I will not serve under you because I do not trust you".
McEwen's shock declaration triggered a leadership crisis within the Liberal Party; even more significantly, it raised the threat of a possible breaking of the Coalition, which would spell electoral disaster for the Liberals.
 Up to that time, the Liberals had never won enough seats in any House of Representatives election to be able to govern without Country Party support.
 Indeed, since the Coalition's formation in 1923, the major non-Labor party had only been able to govern alone once, during Joseph Lyons' first ministry.
Even then, Lyons' United Australia Party had come up four seats short of a majority in its own right, and was only able to garner a bare majority of two when the five members of the Emergency Committee of South Australia joined the UAP party room.

The Governor-General Lord Casey swore McEwen in as Prime Minister, on an interim basis pending the Liberal Party electing its new leader.
McEwen agreed to accept an interim appointment provided there was no formal statement of time limit.
This appointment was in keeping with previous occasions when a conservative Coalition government had been deprived of its leader.
Casey also concurred in the view put to him by McEwen that to commission a Liberal temporarily as Prime Minister would give that person an unfair advantage in the forthcoming party room ballot for the permanent leader.

In the subsequent leadership struggle, Gorton was championed by Army Minister Malcolm Fraser, Government Whip in the Senate Malcolm Scott and Liberal Party Whip Dudley Erwin, and with their support he was able to defeat rivals Paul Hasluck, Les Bury and Billy Snedden to become Liberal leader even though he was a member of the Senate.
 He was elected party leader on 9 January 1968, and appointed Prime Minister on 10 January, replacing McEwen.
 He was the only Senator in Australia's history to be Prime Minister and the only Prime Minister to have ever served in the Senate.
 He remained a Senator until, in accordance with the Westminster tradition that the Prime Minister is a member of the lower house of parliament, he resigned on 1 February 1968 to contest the by-election for Holt's old House of Representatives seat of Higgins in south Melbourne.
 The by-election in this comfortably safe Liberal seat was held on 24 February; there were three other candidates, but Gorton achieved a massive 68% of the formal vote.
 He visited all the polling booths during the day, but was unable to vote for himself as he was still enrolled in Mallee, in rural western Victoria.
Between 2 and 23 February (both dates inclusive) he was a member of neither house of parliament.
Harold Holt disappeared while swimming on 17 December 1967 and was declared presumed drowned two days later. His presumed successor was Liberal deputy leader William McMahon.  However, on 18 December, the Country Party leader and Deputy Prime Minister John McEwen announced that if McMahon were named the new Liberal leader, he and his party would not serve under him.  His reasons were never stated publicly, but in a private meeting with McMahon, he said "I will not serve under you because I do not trust you". McEwen's shock declaration triggered a leadership crisis within the Liberal Party; even more significantly, it raised the threat of a possible breaking of the Coalition, which would spell electoral disaster for the Liberals.  Up to that time, the Liberals had never won enough seats in any House of Representatives election to be able to govern without Country Party support.  Indeed, since the Coalition's formation in 1923, the major non-Labor party had only been able to govern alone once, during Joseph Lyons' first ministry. Even then, Lyons' United Australia Party had come up four seats short of a majority in its own right, and was only able to garner a bare majority of two when the five members of the Emergency Committee of South Australia joined the UAP party room.
The Governor-General Lord Casey swore McEwen in as Prime Minister, on an interim basis pending the Liberal Party electing its new leader. McEwen agreed to accept an interim appointment provided there was no formal statement of time limit. This appointment was in keeping with previous occasions when a conservative Coalition government had been deprived of its leader. Casey also concurred in the view put to him by McEwen that to commission a Liberal temporarily as Prime Minister would give that person an unfair advantage in the forthcoming party room ballot for the permanent leader.
In the subsequent leadership struggle, Gorton was championed by Army Minister Malcolm Fraser, Government Whip in the Senate Malcolm Scott and Liberal Party Whip Dudley Erwin, and with their support he was able to defeat rivals Paul Hasluck, Les Bury and Billy Snedden to become Liberal leader even though he was a member of the Senate.  He was elected party leader on 9 January 1968, and appointed Prime Minister on 10 January, replacing McEwen.  He was the only Senator in Australia's history to be Prime Minister and the only Prime Minister to have ever served in the Senate.  He remained a Senator until, in accordance with the Westminster tradition that the Prime Minister is a member of the lower house of parliament, he resigned on 1 February 1968 to contest the by-election for Holt's old House of Representatives seat of Higgins in south Melbourne.  The by-election in this comfortably safe Liberal seat was held on 24 February; there were three other candidates, but Gorton achieved a massive 68% of the formal vote.  He visited all the polling booths during the day, but was unable to vote for himself as he was still enrolled in Mallee, in rural western Victoria. Between 2 and 23 February (both dates inclusive) he was a member of neither house of parliament.
John Gorton