Ongoing industrial disputes on the coalfields of the Hunter Valley and Newcastle dragged on throughout Scullin's government, the Commonwealth lacking the power to coerce a solution and numerous negotiations between owners and workers collapsed.
As a Labor Prime Minister, expectations ran high that Scullin would force the mine owners to submit to worker demands.
Scullin was sympathetic, but refused to go beyond negotiations and inducements to end the disputes.
Many within the New South Wales Labor branch were infuriated and felt they had been betrayed, catalysing a beginning of a separation between the state branch (led by fiery demagogue Jack Lang) and the federal party led by Scullin.

Heavily indebted and with conditions worsening, Scullin and Theodore took many novel steps in an attempt to turn the economy around.
Appeals were made, both to the Australian public and on overseas markets, to bolster confidence and boost government bond subscriptions.
A "Grow More Wheat" campaign was launched in 1930 to encourage farmers to plant a record crop and attempt to improve Australia's serious trade deficit, although ultimately Scullin was unsuccessful in convincing the Senate or the Commonwealth Bank to support this program through price guarantees.
At the same time unemployment had hit a record high of 14.6% in the March quarter of 1930.
Scullin's election promise of unemployment insurance was discussed in this period, but with dire predictions for government finance the promise was continually stalled.
Scullin made major proposals to change the constitutional amendment process; expand Commonwealth powers over commerce, trade and industry; and to break apart the Commonwealth Bank to separate out its reserve bank and trading bank functions.
The Senate blocked them all, or made amendments which rendered them unrecognisable.
A double dissolution was threatened, though for various reasons both practical and political, Scullin never took this step.
In June 1930 the government suffered a heavy loss when Theodore was forced to resign after he was criticised by a Royal Commission enquiring into a scandal known as the Mungana affair, claims of corrupt deals dating back to Theodore's time as Premier of Queensland.
Scullin took over the Treasury portfolio in the interim while Theodore went to Queensland to face charges, and was compelled to bring down the 1930 budget personally.

Tarred with the political scandal, the budget, which raised taxes, cut spending and still did not deliver a surplus, was very unpopular with all sections of the community.
What is more, the budget proved overly optimistic as Australian revenues continued to plunge and the deficit rose.
By August 1930, crisis meetings were held in which Sir Robert Gibson and Sir Otto Niemeyer were demanding further economies in Commonwealth spending.
Niemeyer, a representative of the Bank of England, had arrived in Australia to inspect financial conditions on behalf of creditors and had a grim report – that "Australian credit is at a low ebb...lower than that of any of the other dominions" and that without drastic steps default and financial collapse was assured.
Gibson agreed, and as Chairman of the Commonwealth Bank Board had the power to deny the Australian government loans to finance the budget unless more cuts were made by both the national and state governments.
After meeting with Scullin and state premiers, the 'Melbourne Agreement' was reluctantly struck in which further major spending cuts were agreed to, although opposed by a significant minority of Scullin's party.

In the heat of this crisis, matters were made worse still by Scullin's decision to travel to London to seek an emergency loan and to attend the Imperial Conference.
While in London, Scullin succeeded in gaining loans for Australia at reduced interest.
He also succeeded in having King George V appoint Sir Isaac Isaacs as the first Australian-born Governor-General, despite the King's personal opposition and the strong objections of both the British establishment and the conservative opposition in Australia, who
Ongoing industrial disputes on the coalfields of the Hunter Valley and Newcastle dragged on throughout Scullin's government, the Commonwealth lacking the power to coerce a solution and numerous negotiations between owners and workers collapsed. As a Labor Prime Minister, expectations ran high that Scullin would force the mine owners to submit to worker demands. Scullin was sympathetic, but refused to go beyond negotiations and inducements to end the disputes. Many within the New South Wales Labor branch were infuriated and felt they had been betrayed, catalysing a beginning of a separation between the state branch (led by fiery demagogue Jack Lang) and the federal party led by Scullin.
Heavily indebted and with conditions worsening, Scullin and Theodore took many novel steps in an attempt to turn the economy around. Appeals were made, both to the Australian public and on overseas markets, to bolster confidence and boost government bond subscriptions. A "Grow More Wheat" campaign was launched in 1930 to encourage farmers to plant a record crop and attempt to improve Australia's serious trade deficit, although ultimately Scullin was unsuccessful in convincing the Senate or the Commonwealth Bank to support this program through price guarantees. At the same time unemployment had hit a record high of 14.6% in the March quarter of 1930. Scullin's election promise of unemployment insurance was discussed in this period, but with dire predictions for government finance the promise was continually stalled. Scullin made major proposals to change the constitutional amendment process; expand Commonwealth powers over commerce, trade and industry; and to break apart the Commonwealth Bank to separate out its reserve bank and trading bank functions. The Senate blocked them all, or made amendments which rendered them unrecognisable. A double dissolution was threatened, though for various reasons both practical and political, Scullin never took this step. In June 1930 the government suffered a heavy loss when Theodore was forced to resign after he was criticised by a Royal Commission enquiring into a scandal known as the Mungana affair, claims of corrupt deals dating back to Theodore's time as Premier of Queensland. Scullin took over the Treasury portfolio in the interim while Theodore went to Queensland to face charges, and was compelled to bring down the 1930 budget personally.
Tarred with the political scandal, the budget, which raised taxes, cut spending and still did not deliver a surplus, was very unpopular with all sections of the community. What is more, the budget proved overly optimistic as Australian revenues continued to plunge and the deficit rose. By August 1930, crisis meetings were held in which Sir Robert Gibson and Sir Otto Niemeyer were demanding further economies in Commonwealth spending. Niemeyer, a representative of the Bank of England, had arrived in Australia to inspect financial conditions on behalf of creditors and had a grim report – that "Australian credit is at a low ebb...lower than that of any of the other dominions" and that without drastic steps default and financial collapse was assured. Gibson agreed, and as Chairman of the Commonwealth Bank Board had the power to deny the Australian government loans to finance the budget unless more cuts were made by both the national and state governments. After meeting with Scullin and state premiers, the 'Melbourne Agreement' was reluctantly struck in which further major spending cuts were agreed to, although opposed by a significant minority of Scullin's party.
In the heat of this crisis, matters were made worse still by Scullin's decision to travel to London to seek an emergency loan and to attend the Imperial Conference. While in London, Scullin succeeded in gaining loans for Australia at reduced interest. He also succeeded in having King George V appoint Sir Isaac Isaacs as the first Australian-born Governor-General, despite the King's personal opposition and the strong objections of both the British establishment and the conservative opposition in Australia, who 
James Scullin