THE BALANCE OF INDEBTEDNESS, 1918-28 197 
by increasing domestic consumption. (iv) Finally, over the long 
period, the relative changes in the import and export price-levels 
which have been indicated as a normal function of the borrowing 
cycle pile further disadvantages on the export as compared with 
the import trade. How serious this effect may be at the end of 
the cycle is indicated by the analysis of the terms of trade in the 
two previous periods examined. 
Arising partly from the operation of tariff amendments after 
1920, and partly from altered conditions in Australia’s overseas 
markets, certain remarkable changes in the direction of trade 
have now to be noticed. The most important of these changes 
has reference to the diminished proportion of total imports and 
exports that is represented by the trade with Great Britain and 
Germany, as compared with pre-war years. No less significant 
is the increased proportion of Australian trade with non-British 
countries, especially with the United States, Japan, and France. 
These changes are best represented by setting side by side the 
percentages of import and export trade with each country for 
the pre-war and post-war years. The decline in the share of the 
United Kingdom and the increase in that of the United States 
are of the utmost significance in regard to the effect of capital 
movements on commodities, and to the manner and form in 
which capital imports reach this country. 
Direction of Australian Overseas Trade 
Shares of various counlries as percentages of total trade. 
Exports. 
1998 
1908 
U. Kingdom . . 
Brit. Possessions * 
Total. Brit. Countries . 
50-10 | 
12-83 
72.09 
42-65 
13-06 
Bb571 
15-83 
14-39 
A029 
37.90 
10-63 
18-53 
France . ® . 
Germany . , " 
[taly z . . 
Japan ’ 2 
[Tnited States 
0-97 
7-058 
0-46 
1-09 
2-13 
2-65 
312 
0-92 
2-90 
99.686 
8-01 
14-32 
0-53 
1.97 
3.73 
10-59 
8-39 
3-59 
878 
6-25 
1 An Economist editorial (9th March, 1929) makes the following comment: 
‘Tracing the various stages of the effect of an investment abroad is as difficult a 
task as tracing the course of a drop of sea-water that rolls around the oceans of the 
world.” To vary the explanation of the Statist (21st Oct. 1905), Australia borrows 
money in London to finance rural development; and with this capital Australian 
farmers purchase American tractors. motor-cars, and agricultural machinery, so