256 APPENDIX 
those of the other two countries mentioned have been downward. 
This may be interpreted as the normal movement to be expected 
in a country that has resorted to overseas borrowing as freely as 
Australia has done during the last decade. It will be anticipated 
that the introduction of capital into Australia would be regarded 
by me as the chief factor maintaining this relatively higher price 
level; but this does not prevent me from conceding considerable 
weight to the joint effects of tariff and wage fixation policies. 
The compulsory contraction in the volume of overseas loans is due 
in great measure to the disturbance of the world money markets by 
the events of 1929. Uneasy conditions, especially in Britain following 
the Hatry crisis, the steady draining away of British gold occasioned 
by French financial policy, the break in the speculative boom in 
the United States, and the general failure of the central banks of 
the world to ‘keep in step’, occasioned the reluctant response to the 
demands for loan issues, a reluctance which finally hardened into 
positive denial. These causes tending towards a shortage of world 
sredit have intensified Britain's difficulties in the matter of overseas 
loans, difficulties that were already troublesome on account of the 
demands for domestic issues for the rehabilitation of British indus- 
tries. For Australia, accustomed to the annual receipt of from £25 
to £30 millions of fresh capital, this meant a second sudden contrac- 
tion in national income. Crippled in both feet, productivity and 
fresh capital, her financial system hobbled painfully through a period 
of grave crisis; and the restoration of equilibrium became the great 
obsession of her people. The effect of these world changes has been 
such seriously dislocated exchanges that the most adverse rates 
within living memory were experienced. 
The third circumstance affecting national prosperity concerns the 
comparison of earning power, or borrowing capacity, with the felt 
burden of overseas indebtedness. This is the economic criterion 
already indicated as the final economic test, and a recent computa- 
tion made by the Commonwealth Statistician makes possible the 
most exact application yet made to the Australian situation. From 
a comparison of total output from all industries with the number of 
workers engaged, adjusted to the 1911 price level, he reaches the 
index of productive efficiency which is here reproduced. In the final 
analysis the burden of overseas debt must be sustained by the workers 
in all industries. After computing this indebtedness per worker it is 
then possible to reach a figure for the ‘felt’ burden by adjusting the 
interest figure for each year to the price level for exports by means 
of which the interest is payable. The construction of an index for 
this felt burden gives an immediate comparison of the rate of pro- 
ductivity increase as compared with the rate of increase in the