THE COMMONWEALTH, 1900-14 105 
was, moreover, accompanied by a realinement of all industries, 
and by developments in land and water transport that have a 
very definite bearing upon the organization of trade. 
For the study of business cycles, in particular, this period 
presents certain features which are not projected with quite the 
same clearness during any other phase of our history. In the 
first place, two interruptions in prosperity occurred of suffi- 
cient severity to be classed as major crises, viz. those of 1903 
and 1907; and both of them coincide in a remarkable manner 
with world business crises. This fact has a very definite 
bearing upon the task of exposing the relative force of foreign 
and ‘domestic factors in influencing the Australian business 
situation. The link between the external and internal con- 
ditions of Australian business is, of course, that of capital 
borrowing ; and over the period under review there were phases 
during which the importation of capital was alternately 
accelerated and retarded in a manner most satisfying to the 
mind of the experimental economist. 
Further, the activities connected with settlement and 
development were not disturbed during this period by any 
abnormal external or internal complications other than those 
connected with the credit cycle; and a laboratory atmosphere 
is thus given to the experiment which is again eminently 
satisfying. Finally, the whole period is marked by a clearly 
defined rise in world price-levels; and this rise has been the 
subject of careful measurement and analysis. The improved 
statistical data for trade, currency, and production, in both the 
foreign and domestic spheres, gives to the years following 1900 
an accuracy for analysis that cannot be approached by earlier 
periods. 
Most inauspiciously for the new Commonwealth, the years 
immediately following Federation were marked by a reaction 
from the prosperity which had characterized the close of the 
century in Australia. Severe drought, which affected Queens- 
land and New South Wales most seriously, resulted in a dimin- 
ished volume of production at a time of falling prices for most 
Australian staples. The lowest recorded wool prices accom- 
panied a fall in metal values, the export of dairy products 
declined by 50 per cent., and the record harvests of the southern 
states had to be marketed under conditions of high freights and 
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