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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