Full text: Borrowing and business in Australia

TRADE BETWEEN 1900 AND 1913 127 
settlement had passed; and the stage of expansion and the 
moving frontier was merging into that stage of consolidation 
marked mainly by the need for capital. From about 1870 
onwards one of the great bursts of international capital move- 
ment was associated very intimately with railway construction 
in most of the new lands; and, without sufficient counting of 
the costs, expansion was pushed on recklessly in both Australia 
and the United States. The crisis of 1873 was the nemesis in the 
United States just as that of 1893 was in Australia! 
“The collapse’, to use Taussig’s words, ‘was as severe in the United 
States as elsewhere, and—what is significant for our subject—led at 
once to a reversal of the relation between imports and exports. 
Imports suddenly dropped and continued low until the end of the 
decade. Exports increased almost at. once, continued to expand, 
and began to be greater than the imports. The situation thus 
dramatically initiated was thereafter maintained for over forty years, 
until a new dramatic overturn came with the Great War.’ 
So singular is the precise application of these words that, with 
the substitution of ‘twenty’ for ‘forty’ years, they might have 
been written of Australia after 1893. But the facts of capital 
loans dominate the situation in both countries to such an extent 
as to put the possibility of a mere coincidence completely out 
of court. The circumstances but reflect the long-period effects 
of two large-scale, but identically similar, experiments in 
capital injection carried out in different laboratories. 
The course of events in Great Britain during this time was 
in nearly every respect the complement of that in the United 
States, Canada, and Australia. In particular, the international 
trade of Australia and Great Britain represents ‘two aspects of 
one and the same series of operations. More especially the loans 
of one and the borrowings of the other were closely connected with 
the recurring alternations of activity and depression. The export 
of capital from Great Britain increased rapidly during the 
upswing stages of the several cyclical periods, and her excess 
of merchandise imports then declined: relatively her exports 
became greater.’? The same stages appear in both Australian 
and American experience. In Australia, after a period of vacilla- 
tion, imports achieved an overwhelming dominance during the 
\Taussig, International Trade, Chapter XXIV. 
? Paussig, ibid., p. 283.
	        
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