Full text: Borrowing and business in Australia

TRADE BETWEEN 1914 AND 1928 189 
for its various payments, and then used and spread broadcast 
by the contractors, merchants, manufacturers, farmers, soldiers, 
into whose hands the “money” flowed. The really significant 
operations were purely domestic—quite divorced for the time 
being from international trade.’ 
But a halt had to be called some time, and a period set to 
both the abnormal excess of exports and the rise in prices, and 
this was brought about by the natural death of war-time 
Anancial measures. 
‘The revulsion did not take place immediately. For a few months 
succeeding the armistice there was a halt, a taking of breath as it 
were. Then the business world (in Australia as elsewhere) made an 
endeavour to resume and maintain the mad pace of the war... a 
stage of release and buoyance, and then at last the slow and 
bitter process of recovery from the lasting effects of the desperate 
In this recovery from the manifold excesses of the years be- 
tween 1914 and 1020 is to be sought the explanation of the 
economic difficulties in Australia for the next decade. The 
historian of the future may tease out from the tangled skein the 
main threads which still run through the fabric of business, and 
may indicate unfalteringly the chief controls in what appears, 
at this distance, little better than a chaotic and depressing 
tangle defying our best efforts to unravel. 
In one important respect the theory presented here quite 
fails to fit the facts of the post-war situation. The movements 
of group prices were too disturbed and spasmodic, the distortion 
of the whole field of prices too great in consequence of the de- 
Aation policies being pursued at home and abroad, to enable us 
to detect those phenomena connected with group prices which 
were indicated for the more normal pre-war period. Changes 
in domestic price-levels, due to the reaction from the extra- 
ordinary internal inflation that had occurred, were too over- 
whelming in their effects to enable the relatively fainter trends 
due to the borrowing cycle to be clearly discerned, although the 
conviction that these weaker currents were present in the main 
stream remains. Here again the explanation has to be sought 
in the fact that the gold standard—the regulator of the relative 
price-levels for our purpose—had ceased to operate for the 
1 Paussio. op. cil., parenthesis by present writer.

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