International Borrowing and Financial Crisis in Australia and Argentina in the 1890s

[摘要] The main features of this study are the magnitude of capital inflow and borrowing during the 1880s, the growth and unbalanced nature of private and public investment associated with accelerated urbanization, the growth of government and the nation state, the sudden ending of capital inflow, and the collapse of the financial structure of the early 1890s. It is not generally emphasized that these events took place against a background of almost continuous price deflation for commodities traded on the world market.In Argentina and Australia, along with the inflow of British capital on private and public account, there occurred in some years rapid inflation in the prices of certain assets, capital gains, particularly land equities and the building industry. Given that the general price level of commodities traded on the world market was declining, the real value of private wealth and rents increased as a result of these relative price movements. All these factors together created a borrowing-trade cycle over an extended period, which led to growing expectations that real wealth through capital gains and rents (urban and rural) would continue to increase for a long period.This comparative study has shown that two countries at the periphery of the international economy, with similar roles as exporters of primary goods and borrowers of capital but differently integrated into the international money market, developed a different role and size of their public sectors with important implications for their future development and origins of their financial crises. Argentina and Australia represent two cases of a sub-set of peripheral economies with many similarities with other members of the international economic environment which attempted to integrate to the world system with important implications for their stability and room of maneuver.

[关键词] Economics, History