INTRODUCTION 
IN these days when economic opinion is divided between an 
unwavering allegiance to some theory of the business cycle and 
a sceptical refusal to acknowledge any cyclical movement in the 
fluctuations of prosperity, any attempt to find an adequate 
explanation of the instability that has manifested itself from 
time to time in Australian economic affairs is bound to meet 
with formidable criticism. Under these circumstances it will 
tend to avoid argument that would merely cloud the main issue 
if it is declared at the outset that the use of the term business 
cycle in these pages depends rather upon the welcome con- 
venience of a label that can be applied to these fluctuations, 
than upon the acceptance by the writer of any particular theory 
which professes to explain this instability. 
It may, indeed, be objected that this somewhat naive attempt 
to disarm criticism is invalid in that the whole trend of the 
thesis merely constitutes one more interpretation of the causes 
lying behind business cycles in Australia. The objection may 
or may not be tenable, since it is contended that the present 
argument postulates one efficient cause that is external to 
Australian business, rather than the operation of a number of 
inter-related factors forming a complex whole within the 
economic structure itself. The dominant control of Australian 
business has, in fact, usually been sought in conditions that 
are external to Australia; and, apart from the meteorological 
tactor, the contraction of world credit has most frequently been 
regarded as the chief cause of our economic indispositions. A 
marked consilience can, indeed, be traced between credit con- 
traction in London and commercial crises in Australia, a close 
connexion that tempts explanations of the post koe ergo proper 
hoc order. For example, the crisis of 1843 followed the British 
crisis caused by the multiplication of banks and credit facilities, 
that of 1866 was apparently consequent upon the Qverend- 
Gurney trouble in England, while the Baring crisis of 1890 and 
the post-war depression of 1921-2 were closely followed by 
financial malaise in Australia. What more natural than to find 
a causal sequence in these events ? 
But it becomes abundantly apparent upon investigation that 
these events overseas were not responsible for the sudden