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For many years, wool was the most important product to the Australian economy. The wool industry dates from 1797, when John Macarthur and Reverend Samuel Marsden imported Spanish merino sheep to attempt to start a wool industry. Up until then, the only sheep in the colony were the fat-tailed sheep which the First Fleet brought with it from the Cape of Good Hope. These were used primarily for meat, rather than wool.
It took almost a quarter of a century for Macarthur’s breeding program to produce enough wool to auction. In 1821, the first Australian wool was sold at Garraway’s Coffee House in London. Before 1840, Australia was producing more than two million kilos of wool each year. The success of the wool industry made many squatters and pastoralists immensely wealthy and by the 1880s the wool business was booming. Sheep breeders gathered in numbers in large metropolitan centres to buy and sell stock and wool each year. The Sydney Mail described the scene at the Sydney Wool Exchange in 1897:
'One of the most remarkable sights in Sydney is that of the Wool Exchange in full blast. both buyers and brokers are men of weight and substance and responsibility in the community, but when the auctioneer puts up a lot the buyers spring to their feet, wave their catalogues over their heads, and shout their bids frantically at the seller... It is not unusual for 100,000 [pounds'] worth of wool to be put through during an afternoon.'
Sydney Mail, October 16, 1897
In 1894, the Australian Pastoralists' Review called the Sydney sheep sales of July 2 - July 6 a 'Carnival' and produced a small booklet for the sheep breeders which included essays on cross breeding, the New Zealand sheep experience and more. Interestingly, the sheep industry had become so important by this time, that the advertisements contained within the booklet give an idea of whole side industries which had sprung up alongside the merino industry, including wool consigners, book keepers and cargo shipping.
In the late 1890s, lower wool prices and the infamous Federation drought devastated the industry. Sheep numbers dropped by half and industrial action by shearers seeking better wages and conditions also took its toll. The unions formed by the shearers became the Australian Workers Union in 1894 and eventually helped give rise to the Australian Labor Party. The industry recovered from these setbacks and the first half of the twentieth century saw the formalisation of education for those wishing to enter the wool industry, and colleges such as the Sydney Wool Institute were set up to provide a grounding in all areas of the business.
Two world wars and a depression affected both wool prices, demand and labour negatively, but the industry boomed again in the 1950s. By now, however, other agricultural industries – particularly wheat and cattle – had overtaken wool in terms of economic importance.
Australian sheep producers now tend to focus on the production of meat – the demand for prime lamb has increased over the past half century – but Australian merino wool is still considered to be a high quality, luxury item, much in demand by the fashion and textile industry. In 2011-2012, the Australian wool industry is expected to produce 355 million kilograms of wool worth almost two billion dollars.