76 IMPORTATION OF CAPITAL INTO 
borrowing country mainly as commodity imports, we should 
expect some correlation to be observable between the ratio of 
sxports to imports and the new capital introduced. Unfortu- 
nately it has not been possible to estimate with sufficient 
accuracy the amount of private capital arriving each year; 
. PER. 
CENT). 
E870 
ON 
IPO; 
140 
ver 
“ndNS 
E101 
0 
100 
CENTAGE EXPORTS 
70 IMPORTS] 
3 
ANE 
14770 
PER 
CENT 
34 
30 
"0 RESERVES TO DEPOSITS 
pi —— i 
Eom 
— ao 
25 
2} 
1890 
Fie. IV. NEW ZEALAND. BORROWINGS, BALANCE OF 
TRADE AND BANK RESERVES, 1872-91 
Smoothed 5-year moving-average curves shown heavy 
but, accepting the public borrowings alone as an index, the 
correlation to be noted between the moving-average curves in 
the graph is well-nigh perfect. Interpolating a lag for a year 
in the arrival of imports due to loans, the annual plottings move 
consistently in opposite directions, i.e. exports increase as new 
capital declines, and vice versa. Again, if the capital borrowings 
do serve as a basis of credit expansion, the demand for accom- 
modation should show itself, if any degree of inflation exists,