Australia - it just has to be differentApr 13, 2002 Write an essay on this topic.
The Bottom Line yet another unique aspect to Australia
Now if I tell you a story you have to go to bed..........er..................whoops..sorry I regressed. No, no forget that.
Here in Australia we have the "forty year rule". What that means is that all things that were kept secret have to be divulged to the public unless the matter is ongoing or would compromise national security. Much of what is released has names deleted and sometimes certain facts.
So forty years is well passed so I can tell you something you may find a little hard to believe. We often here about the 1930 depression that swept the world and there is no question it was an appallingly tough time. We don't here as much about the one in 1893, often referred to as the "1893 Bubble", as in the Bubble of world prosperity had burst. As to which was worse is still being debated by Historians but the probability is that 1930 is the "winner" only because much of the world was fully industrialised and most people just had a house without the acres on which to grow food.
Now as is usual some Governments did little about it and others tried all sorts of things to jump start the economy. In the 1930's here it was the Sydney Harbour Bridge that was ordered to be built using loan funds from overseas to finance the entire operation and cost. The Prime Minister at the time chose the Bridge for three reasons - firstly it was needed, secondly it employed thousands indirectly and directly and thirdly it was a huge visible symbol that all was not hopeless.
In 1893 times were very different. The vagaries of international finance, stock markets and exchange rates were very little understood. It wasn't a whole lot better in 1930 but at least some understanding had been achieved.
In 1893 in Australia one thing became apparent that changed Australia forever and in this respect the country is unique in the world to this day. From the earliest times, as had been done in the USA a hundred years earlier, settlements evolved over pretty much all of thee country and from the better located of those towns and cities developed.
Now in the larger towns and small cities Australia followed the US idea of having a bank in that small city and it would in fact usually be called "The Bank of Alice Springs" or whatever name the small city had. This system was never question in the USA simply because there was no reason to.
But the 1893 depression had a much more profound effect on Australia than any other "western" country for one very simple reason - it co-incided with the worst drought then known.
At the time there were literally hundreds of Banks in Australia, in fact close to a thousand, and the drought plus a world depression was more than thee fledgling economy, barely over a hundred years old, could stand. People were going broke everywhere and we unable to make their loan repayments. Those that had accrued some money in the Bank were now unemployed so started withdrawing their savings in order to live. Therefore the Bank had little money coming in and a lot more going out. In the majority of rural areas the Banks themselves were facing bankruptcy and as usual word would get around that the Bank wasn't as safe as it should be so even investors, those with large amounts, sought to withdraw.
Pretty soon the whole country was in panic. Some Banks had gone broke and virtually no one, even in the bigger and/or better areas trusted their Banks with their money.
A complete collapse of the whole financial system was very close. The Government of the day had to say the least a major problem on its hands. As luck would have it another country once faced a similar problem although no where near to the same extent.
Of all places that country was Scotland. In opposite conditions to Australia, the had had about a hundred or so years earlier a similar dilemma but as things turned out they didn't have to do anything about it. What had happened was Scotland had its coldest winter and its longest winter in history that severely effected the growing of vegetables and other crops. People were, in some cases, reaching starvation stage and the Banks were effected quite dramatically but being an old fully developed country they never reached anywhere near Australia's position of imminent total collapse.
However they were ready. Someone had advised the Government that as a last resort they would have to order all Banks' closed and then force them to merge into about a dozen Banks. By doing that not only would each Bank be bigger but it would have branches spread country wide. The lesser effected areas in effect prop those most effected and the system doesn't collapse. The idea was called "Branch Banking" - so one head office and any number of branches radiating out from it.
While this whole concept was put together and ready for action they never used it because the weather improved and all was well. Not only that but they new from hundreds of years of records that it wasn't likely to see a repeat for a very long time.
But in Australia we already new that while this particular drought was the biggest so far, with less than a hundred years records there was no confidence in it not happening again - and maybe even soon.
The Government ordered all Banks in any danger of financial collapse whatsoever to close their doors. Only one Bank in the whole country remained open, "The Bank of Adelaide", my first employer.
Every other Bank was ordered to merge with about ten that were known to be the strongest. Each of the ten Banks had close to a hundred Branches, and "The Bank of Adelaide" was ordered to "take in" about thirty. This all took place in several days, forever changing thee Australian Banking scene. Through mergers of those ten Australia now has four big Banks, all in the world's top twenty. In the last thirty years "Building Societies" and "Credit Unions" have evolved but they account for only about five or so per cent of the system.
Effectively there has been no absolutely basic, fundamental change to Australia's financial system in the last hundred odd years except for on very important event on February 14th. 1966.
Prior to that date the Australian Dollar had been valued a little higher than the US dollar. Currency values have nothing to do with living standards or individual country worth. They are really purely a reflection of trade between the two countries, but it is actually more than just supply and demand. But this is why comparing one country with another by simple conversion of exchange rates is meaningless.
The importance of February 14th., 1966 was not just because on that day we converted to decimal currency. The real importance was that we slit our currency in two. That is one Australian pound became two Australian dollars, not one as would normally be expected. When the British changed to decimal currency it was a pound for a pound - that is no change. But we made the Australian Dollar half an Australian pound or ten shillings. Multiples of ten being at the core of the metric system this made conversion much easier to understand. However everything appeared twice as expensive! That was good when it was your house which appeared to double in value but not so good when say something costing one pound now cost two dollars!
Interestingly thirty five years on the exchange rate between Australia and the USA is near identical to what it was before. At around fifty five cents, allow for the halving and its a dollar ten Australian to a US dollar still after all that time. Of course it has moved around somewhat in the interim.
So, it is not just the animals that are unique in the land "down under".
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