P. R. Stephensen returned to Australia in 1933 after spending most of the previous decade in England where he had been a Rhodes Scholar (1924), co-editor of the London Aphrodite and a publisher with Fanfrolico and Mandrake Presses. Persuaded by Norman Lindsay to establish a press devoted to printing the quality fiction and poetry rejected by other presses, Stephensen founded the Endeavour Press in partnership with the Bulletin. Stephensen left the press one year later to establish his own publishing house, P. R. Stephensen & Co. Limited, but by early 1935 this venture had failed financially. Despite this failure, Stephensen continued to propose new publishing projects. One of these projects was a literary periodical called the Australian Mercury.
Stephensen's plan was to provide an outlet for literary writers who found no room for their work in popular magazines. Only one issue of the Australian Mercury was published. Nevertheless, the magazine made a significant contribution to Australian culture in the late 1930s and 1940s, primarily because of the arguments put forward in Stephensen's 40-page editorial. Almost half of the first issue was devoted to the editorial, an examination of the idea of national culture that Stephensen believed was not receiving adequate attention in Australian literature because of the prejudices of Anglophilic cultural commentators and the strictures of major publications like the Bulletin. Stephensen encouraged writers to express the spiritual qualities of place as, he argued, the visiting D. H. Lawrence had done ten years earlier in Kangaroo (1923). Stephensen's argument, expanded further in his book The Foundations of Culture in Australia (1936), reverberated in much of the writing of the next decade, particularly that of the Jindyworobak movement.
For its part the Australian Mercury, as stated on the opening page of the magazine, was 'devoted exclusively to the encouragement of fine literature in Australia.' To this end, it included contributions from authors such as Miles Franklin, Frank Dalby Davison, Steele Rudd and Eleanor Dark. The magazine also contained a review section, written by Stephensen, that praised the recent publications of William Baylebridge, Furnley Maurice and Vance Palmer.
A second issue of the Australian Mercury was set in type and survives in proofs. It contains the second instalment of Stephensen's editorial and contributions by Dal Stivens, Frank Dalby Davison, Ian Mudie and Miles Franklin. But Stephensen once again experienced financial strife and the Australian Mercury folded before the second issue could be published.
