Internal and External Factors of the Depression in Australia

Internal and External Factors of the Great Depression in Australia

Identify the internal factors that may have contributed to the Great Depression.

Compared to other countries, Australia depended heavily on overseas investment and trade. Australia’s economy with already beginning to crack in the 1920s, e.g. although Australia’s production rate of wool was the highest it has ever been, the price and demand of wool was drifting downwards. Australia was a country in which any fall in export prices, reduction in exports and reduction of funds borrowed from overseas could cause significant damage to Australia’s economy.

What were the external factors that sent Australia into an economic depression?

The main external factor was the massive stock market crash which occurred in the United States of America. At the end of December 1929, the value of US stocks dropped $40 billion. Many people lost everything they had and the fact that lots of people were investing on credit didn’t help either. The United States of America was such a large part of the economy that the effects of the crash spread quickly around the world.

How might the external crisis have led to a depression?

The United States of America was the backbone of the world economy, so this stock market crash soon started causing chaos around the world. Europe was hit first and eventually this was passed onto Australia. Australia was one of the nations hardest hit by the Depression because they were already under pressure due to falling export prices.

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"Australia and the Great Depression." Trinity. 2007. 24 Nov. 2007 <http://www.trinity.wa.edu.au/plduffyrc/subjects/sose/austhist/depression.htm>

Posted by Proabffmm on Friday, June 6, 2008.