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
struggle.’?
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.