APPENDIX
TrE preceding chapters left my hands towards the end of 1929.
Since that time a conjunction of evil circumstances—not unknown in
sarlier days—has afflicted the Australian Commonwealth. Falling
world prices, unresponsive loan markets, declining production due
to unfavourable seasons in some states, and adverse exchanges have
been marked features of the more recent period. The impact upon
the Australian financial and industrial system has caused such grave
dislocation as to menace the established standards of living of the
entire population of the continent. Preoccupation with the economic
problem has become an obsession which leaves little room for the
consideration of the many important social and political difficulties
associated with Australian development.
The whole problem is essentially one which is conditioned by
fluctuations in national income, and every analysis made by econo-
mists and business men emphasizes this aspect. The adversity of
the moment is, admittedly, due only in part to conditions that have
their origin in the Commonwealth ; but some interest remains in the
task which I have attempted of tracing those effects which are merely
the normal accompaniments of the borrowing cycle. The immediate
decline in national income is due in the main to three causes: (a) the
fall in world prices for primary products; (b) the contraction in the
volume of loans; and (c) the decline in productivity due partly to
unfavourable seasons, and partly to those more obscure causes
associated with ‘easy money’ to which reference has been made in
an earlier chapter. It must be emphasized that no fall in national
income of a marked character occurred until the early months of
1930; or, rather, that the downward movements of national income
before that time were compensated by the volume of capital flowing
in from overseas.
The monetary problems arising from the fall in prices of Australian
export commodities have affected all countries possessing a similar
economy. The decline in national income from this cause is not due
to any marked decrease in the volume of national production ; nor
does the present financial situation have its origin in any fundamental
unsoundness in business such as the excessive speculation which has
prevailed in some oversea countries in recent years. An important
fact calling for attention, however, is the persistently high level of
Australian wholesale prices in relation to those of Great Britain and
the United States. Still more significant is the fact that, since 1920,
the general trend of Australian retail prices has been upward, whilst