OVERSEAS TRADE AFTER 1890 101 
It becomes possible to compute the actual terms of exchange 
by means of commodity values, i.e. to measure the net and 
gross barter terms of Australian trade, and to trace the steady 
deterioration in bargaining power which affected prosperity so 
disastrously. The table which now presents the result in the 
form designed by Taussig will convey the essential features of 
the trade position, and the graph which follows will show at a 
glance the real and logical explanation of the crisis of 1893. 
Bearing in mind the fall of 25 per cent. in the export price 
level after 1886, the strength of the national effort to accumulate 
credits abroad is shown by an amazing expansion in production 
which drove up the export surplus from approximately £22 
millions in 1886 to an average of £33 millions for the six years 
following 1890, an increase in value alone of 50 per cent. The 
desperate nature of a trade situation caused, in the main, by 
excessive borrowing is now exposed ; and the mounting curve 
for the gross terms, the steady rise in that for net terms, and the 
fall in that for effective wages are charged with significance. 
(Fig. VII.) 
The plain text of this narrative is that the Australian episode 
was no ‘unique and unparalleled disaster’ as one economist has 
labelled it. It falls into place as merely one, albeit a distressing 
one, of a great series of such incidents occurring not merely in 
the economic history of Australia but in that of every new 
country. Further, by the very facts of its magnitude and of 
the severely isolated conditions of the experiment it has become 
a standard of measurement for subsequent Australian distur- 
bances of a similar character. The ‘incidents’ of 1901, 1907, 
and 1912 all reinforce the conclusions to be drawn from 1893, 
and provide a panorama of economic phenomena agreeing 
exactly with deductive expectation. ‘It is rare’, says Professor 
Taussig, after reviewing the Canadian experience, ‘that the 
possibility of verifying the deductions of theory is found so 
successfully; and it is of no little significance that for this 
particular sort of situation the conclusions of theory prove to 
be so completely verified.’* It may be claimed without any 
serious fear of contradiction that no neater case of such verifica- 
tion exists in the annals of international trade than that of the 
period leading up to the 1893 crisis in Australia. 
L Op. cit., p. 235.