From Winton, July 17, 2017:
The typical Australian analogy for the China-fuelled expansion in
commodities trading would probably be the mid-19th century gold rush.
But there are many more
commodities booms and busts in the mid-20th century from which to
choose. From wool and uranium to nickel and diamonds, Winton brings you
some of the highlights and lowlights of Australian financial markets in
the post-war period.
Golden Fleeces
The first great post-war Australian commodity boom was in wool. Wool
had provided lucrative trade for the Australian economy since the 19th
century. By 1946, it accounted for nearly 20% of the value of Australian
agriculture.
The onset of the Korean War in 1950 led to large purchases of wool
for American military uniforms, causing the price of the commodity to
rise 150% between the start of the war and the spring of 1951. As a
result of high prices, in the 1950-51 season, wool sales brought in $1.5
billion, double the previous record. Wool’s share of the value of
Australia’s agriculture sector increased nearly to 60%.
Australian terms of trade. Source: Australian Department of Foreign Affairs and Trade.
At the peak of the boom, stories abounded of newly rich
farmers going on luxurious holidays and buying fancy cars. According to
some reports, they even took their beloved sheep along in their new
rides. “If you ever come across a brand-new Rolls-Royce with a couple of
ewe lambs sitting in the richly upholstered back seat…you can be pretty
sure you’re in Australia,” one foreign newspaper advised readers in
1951.
As American purchases petered out, wool prices collapsed, falling
from $3.73 per pound in March 1951 to $1.35 a year later. This drove
Australia’s trade balance deeply negative. In March 1952, the government
took the drastic measure of imposing import restrictions.
Hazardous Material....
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