The depression era saw major investment on the railway network come to a virtual halt until the mid 1930s. The effect of the stringent policies followed by the State Government of the era had major repercussions throughout the organisation. With the intended reduction in services forced on the railway department harsh measures were undertaken to cut back on all areas of unnecessary spending.
Three short extensions - Lawgi, Morganville and Glenmorgan - were completed in 1931 and 1932 as depression relief measures. The period of the late 1930’s was a time of expansion in the Queensland Railways after the period of contraction of the early 1930’s. New locomotives and new carriage stock were placed on order including special carriages for the tourist passenger train through to Cairns; the Sunshine Express.
Due to years of neglect much of the network was in poor shape. The railways however were unprepared for the role which they were to be called on as at the end of 1941 war broke out with Japan in the Pacific. Until this stage the war had not seriously affected the workings of the Queensland Railways. Overnight this situation changed. Railway staff leave was suspended in December of 1941, as the realisation took hold that the defence of North Australia would be based on utilising the North Coast Railway. T
he difficulties experienced by railway personnel were extreme at this stage. Running extra trains was possible by reducing turn-around time running engines beyond the normal times for maintenance and overhaul, and finally by running locomotives in need of repair. Old locomotives stored during the depression were returned to traffic. There had been little recruitment of staff during the depression years and many men had to defer retirement during the war.
The railway workers had borne a major role in the defense of Australia and had played in many ways a near heroic role in keeping the trains going. Soon after the end of the war in May of 1947 the worst railway accident in terms of loss of life occurred in Queensland, when a special May Day excursion to Dayboro left the rails at Camp Mountain.
In the late 1940s the decision was undertaken to invest and rebuild in the Queensland Railways. New locomotives, carriages, rollingstock, lines, buildings, and electrification of the suburban network, were all part of this new vision. However as a new government came to power in the late 1950s there was a re-ordering of the priorities of state spending towards health, education, and roads. Investment that would continue in the railway network would be for regional, or rural services.
Modernisation of the network began with the introduction of new diesel-electric locomotives, new country passenger trains, and new buildings on stations in regional Queensland (such as Charleville), and overdue investment in specific infrastructural works.

Chronology
1941
Dec - War with Japan places enormous load on QR for which it was not built
1943
Goods ton-mileage up 66 per cent on pre-war level
1947
May 5 - Worst accident on QR when 14 passengers, 2 crew die Camp Mountain
1952
Oct - First diesel-electric locomotives begin revolution in hauling power
Nov - First full carriage size rail motors delivered since 1915
1953
Feb 12 - First air-conditioned train (Inlander) begins operation
Nov 9 - Opening branch Dakenba-Callide Coalfields (1st new line since 1932)
1955
Closure of six branch lines, first closures since 1930
1956
Jan 18 - First branch-line diesel electric locomotive delivered
1957
Jun 15 - High-level Burdekin rail bridge opened on North Coast Line
1958
Further branch line closures in 1958, 1959, 1960, 1961
Mar 23 - Last steam locomotive delivered by Walkers (ordered in 1948)
Jul 14 - Opening Redbank Workshops for repair of diesel electric locos
1959
Jul 22 - First Queensland-built Main line diesel locomotive delivered
1960
Feb 26 - First fatal train accident to passenger in steel carriage Medway Ck
1961
Major rehabilitation of Mount Isa Railway begins
Aug - First stainless-steel carriages replace wooden cars in suburbs
1962
Jul 22 - First pre-stressed concrete rail bridge opened Woogaroo Creek
1963
First contract for wagons for bogie exchange use on standard gauge
1964
Closure of 12 branch lines and South Coast Line to Southport