The war had a great effect on the Australian economy, and the impacts of these changes were mixed.
One of the earliest impacts of the war was the government’s cancellation of existing trade agreements with Germany and Austria-Hungary. So Australian firms in industries such as steel-making and pharmaceuticals suddenly found themselves taking up contracts that had previously been filled by German rivals - and fortunes were suddenly available to firms such as BHP and Nicholas.
The government was keen to make sure that Australian wheat, wool and meat reached Britain and helped the war effort there. So it passed a law giving it the power to compulsorily acquire the whole wheat and wool harvests - an impossible action under the Constitution, but able to be done under the War Precautions Act.
- 1915 - No wheat available to Britain from Russia.
- Poor crops in North America.
- Britain bought the whole refrigerated mutton and beef supply for the rest of the war.
- Whole wool clip bought at 55% above pre-war values.
However, shortages and war profiteering (selling scarce goods at a very high price) meant that many ordinary working people suffered a fall in their purchasing power, and their standard of living. This led to a series of major strikes in the major cities.
- Government dropped a referendum to get price fixing powers.
To finance the war the Commonwealth had a series of war loans, and then peace loans. All were over-subscribed. This seemed to some to be further evidence of the inequality of sacrifice in the war - those with money to spare could actually profit from the war, while others were suffering economic loss and decline.
The war provided a form of protection to Australian industries - removing competition. By the end of the war over 400 products were being produced in Australia which had not been produced here before the war.