CHAPTER XIV 
THE BOOM OF 1919 AND THE SUBSEQUENT 
DEPRESSION IN RELATION TO PUBLIC 
BORROWING 
‘Statistics are, indeed, often powerful in the destruction of error. They seldom 
show precisely what share of any event is to be attributed to each of the many 
influences bearing upon the time and in preceding years. But they often prove 
that a result which has been attributed to a certain cause cannot have been produced 
9y it, and such destructive work is a considerable factor in scientific progress,’— 
AvrRED MarsuarL, Money, Credit, and Commerce. 
‘It was a common error to mistake these factors for the real causes of the crisis. 
They were results only, and arose through the inevitable delay in readjusting the 
varied elements of costs and expenditure to a new situation forced upon the economic 
system by the dramatic fall in wholesale prices. But they have led men to con- 
“lusions regarding the regulation of wages and industrial conditions, the functions 
of trade unions and labour organization, and the problems of public finance which 
might materially affect the future of government and industry.’—Prof. D. B. Cop- 
LAND, The Trade Depression tn dustralia. 
THE vicissitudes of business in Australia since 1918 have been 
commonly ascribed to the ‘aftermath of war’ and ‘war-time 
inflation’; and this current belief has found a certain measure 
of support in the utterances of economists and business leaders. 
This belief, with its implication that the exigencies of national 
orisis excuse all economic sins, has been responsible for a some- 
what fatalistic attitude in the face of serious difficulties, and 
for an apathetic state of mind which regards the situation as an 
inescapable reaction from the excesses of the war years, with 
particular emphasis on inflation. The close correspondence 
between economic conditions in Australia and in Europe has 
fostered this too-ready acceptance of a theory concerning the 
economic consequences of war. Such a comfortable shelving 
of the responsibility for our present economic disabilities, 
however, finds little support in the evidence so far adduced as 
to the effects of excessive borrowing abroad. It is, in fact, an 
attitude to be vigorously resisted rather than complacently 
condoned ; and it is believed that the present examination will 
place the years of depression since 1921 in rather a different 
light. 
The joint effect of inflation and heavy borrowing had, after 
1916, been plainly evident, and the outcome had been an era of