Week 4: Boom and Bust - 1850-1914 Flashcards
What was the average growth rate between 1580 (god rush) to 1890 (depression)
4.8 per cent.
Australia gained the highest livings standards in the world.
What were some technological and institutional developments in the 1850-90 that contributed to the high growth rates?
The development of new and comfortable ships also had a positive impact on trade and migration.
Capital, labour and goods flowed into Australia from Britain. Paddle steamers, trains and coaches and Government owned railways (which were quite well developed by the 1880s) reduced transportation costs and time.
Political and legal institutions were viewed as stable by investors.
What was the population impact of the gold rush?
The discovery of gold led to a surge in migration to Australia, increasing the labour supply and the capacity of the economy.
The migrants were predominately working aged men, resulting in a significant increase in the participation rate.
Per capita income increased.
After the gold rush, a large portion of migrants stayed in Australia (helping us avoid a downturn due to a mass exodus). A demographic bubble was created.
Why was gold so important?
Currencies at the time were pegged to gold (gold standard) to produce a basis for trade and a stable currency. This meant gold was extremely important to a country’s wealth. Our gold rush happened just after the Californian rush which had resulted in a downturn.
What were 4 economic impacts of the gold rush?
1) The large population increase and gold associated activity stimulated other sectors such as: Banking, mining, housing, food, shipping, etc.
2) Gold became more valuable than wool as an export (new staple) but also had a destabilising effect:
– Glut of goods and deflation
– Drew labour from other industries
– Civil unrest stemming from license fee frustration
3) As, mining was primarily carried out by individuals and the benefits were spread over a large population rather than concentrated. This is thought to have helped avoid the resource curse
4) Australia’s per capita wealth became the highest in the world. By 1890, most skilled workers had 8 hour days.
What helped avoid the resource curse?
The spread of opportunity is thought the have helped avoid the resource curse. The majority of mining was able to be undertaken by individuals as skills required to mine for gold were minimal, plots were small, the industry was not capital intensive and gold was close to the surface.
What was the impact of licence fees?
Victorian Government introduced licence fees for gold (1852). This helped to raise revenue to help with the increased demand from the growing population (law and order etc).
– Fees were set at a flat charge which became
burdensome if the person did not find much gold and acted as a barrier to entry. It also fed civil dissatisfaction and unrest which culminated in the Eureka Stockade as gold became scarce.
Which states were in favour/against free trade at the end of the gold rush?
Victoria experienced the bulk of the rush and was concerned about the future employment opportunities of the miners. It advocated a more protectionist approach so miners could be absorbed by factories.
New South Wales was more in favour of freer trade.
What caused the 1890 depression?
The exact cause of the 1890s depression is still debated. The concentration of capital in the preceding period (particularly in inefficient construction and manufacturing) is often cited as a cause as it led to distortions.
External factors also played a role. Argentina was in a difficult situation and was recognised as being similar to Australia, causing a capital flight from Australia at a time of falling commodity prices (particularly wool).
When did the 1890 depression end and why did it take so long?
. As activity looked like it was beginning to pick up, a severe drought occurred. In the mid-1890s, other economies were recovering but Australia was struggling (possibly due to weak institutions and the inability of the separate states for form a co-ordinated response). The severity of the recession suppressed consumption and the recovery did not begin until 1906.
When/what was the Harvester decision
1907 by Justice Higgins. This was the beginning of the concept of the living wage.
