114 THE COMMONWEALTH, 1900-14 
made wide swings which had very marked effects on Australian 
prosperity. Between 1846 and 1871, to review the fluctuations 
briefly, prices had risen by 28 per cent. ; but the cheapening of 
ocean transport towards the end of this period assisted a de- 
finite downward swing which, by 1896, marked a decline of 
about 30 per cent. below the 1871 level. After this a steady 
upward movement developed which by the year 1912, as 
estimated by the Economist, represented an increase of about 
34 per cent. upon the 1896 level. The search for reasons for this 
increase hardly lies within our province; but it is undoubtedly 
connected with the expansion of credit and enlargement of 
currency made possible by the great increase in world gold 
production. 
Unalloyed prosperity marked the whole of 1910 as the ex- 
pansive government programmes, based chiefly upon swell- 
ing customs revenue, the large capital borrowings, and in- 
creased productivity consequent upon bountiful seasons, took 
effect in industrial activity and increased purchasing power. 
By the middle of 1911, however, the critics were again stressing 
the dangers inherent in the business situation, and the possibi- 
lity of a sudden check being experienced. Extravagant public 
and private expenditure, the stimulation of city industries and 
the resultant rural depopulation, an indulgent bank policy, and 
the machinations of company promoters were all castigated. In 
that year, also, several remarkable developments tended to 
unsettle business and to promote uncertainty. Not the least of 
these was the establishment of the Commonwealth Bank and 
the passing of the Commonwealth Notes Act. While the 
Australian banking system was not greatly affected as the 
result of these changes, a great deal of uneasiness accompanied 
these adjustments. Rural industry was also much disturbed by 
the new Federal policy of ‘bursting up large estates’ by means 
of land taxation. While none of these innovations were revolu- 
tionary in themselves, the general suspicion which was en- 
gendered introduced an unfavourable factor at an inconvenient 
moment, since the export of specie was now exceeding the pro- 
duction and bank reserves were thus being depleted. The situa- 
tion held the germs of a contraction of credit which was to 
develop into something more serious. 
The cvele had, in fact, again come full circle. After years of