Great Depression in Australia - 1920s: The Calm Before The Storm

1920s: The Calm Before The Storm

World War I had depleted Britain's savings and foreign investments, and wartime inflation had upset the United Kingdom's terms of trade. A sluggish economy in Britain naturally reduced British demand for imports from Australia throughout the 1920s and this had affected Australia's balance of payments. Throughout the 1920s the Australian unemployment rate floated between 6% and 11%.

The Great War had also caused many necessary infrastructure projects to be delayed or abandoned, many of which began in the 1920s, including the Sydney Harbour Bridge and Sydney's underground railway system in addition to the Commonwealth government beginning to fund major highways. New dams and grain elevators were built, and the rural railway network was expanded in nearly every state. Large sums of government money were made available to provide returned First World War servicemen with farmland and agricultural equipment under soldier settlement schemes.

All these publicly funded projects were paid for by loans raised by both state and federal governments. Most of these loans were raised on capital markets in the City of London at an average of £30 million per annum.