In the 19th century, a healthy rivalry had built up between the sixcrown colonies that made up Australia. Investors had piled into the competing infrastructure projects to the tune of £275m, in the expectation of short-term rewards.
And who could blame them? Banks were only too willing to lend out more money than they had on deposit. Credit was cheap, and loans were simply paid back with more loans (all of which will sound familiar).
But with the arrival of the 1890s came a global financial crisis. The price of wool, which was a mainstay of the Australian economies, started to wobble. Farmers responded by increasing the size of their flocks to meet the interest payments on their loans, which caused wool prices to tumble even further. The weather phenomenon El Nio (currently doing the rounds in 2015) and a plague of rabbits made matters worse.
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Unemployment began to rise.Investors stayed away and credit tightened. Loans were called in and defaulted on, and out-of-work depositors were unable to draw on their savings as the banks ran out of money and collapsed.
Things did improve as the decade wore on. And the inter-colonial competition that existed before the crisis was replaced by a shared sense of culture, history and co-operation. Britain's insistence on the creation of an Australian army, and the breakout of the Second Boer War in South Africa in 1899 helped fuel Australian nationalism.
Referendums on a united Australia met the approval of voters in four of the colonies (Western Australia and Queensland were left out). The electorate in New South Wales were won over after an amended constitution guaranteed that the capital, Canberra, would sit in their corner of the country.
London gave the new arrangements the thumbs up, and on 9 July, 1900, Queen Victoria put her name to the Constitution Act, creating the Commonwealth of Australia. It came into being on the first day of 1901.
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