242 THE IMMEDIATE FUTURE IN RELATION 
a cessation of loans would have upon industry and prosperity in 
Australia. 
Movements of capital have assumed an enhanced significance 
in the world economy during the post-war years. Immense 
changes in the amount of international indebtedness, and in the 
character of a great portion of the mass of debt, have occurred. 
Economically, we are now realizing that the war years cannot be 
regarded otherwise than as a temporary ascension of the forces 
making for capital consumption over the forces making for 
capital accumulation; and the cost of this temporary domi- 
nance is to be measured by the increase in net indebtedness. 
Australia, in common with Britain, enormously increased her 
external obligations during the war and after; and because of 
the peculiarly close economic and financial nexus between the 
two countries, it is inevitable that world conditions which affect 
Britain's economic stability will not be without commensurate 
reactions upon the prosperity of Australia. 
The conclusions to be drawn from the general theory of inter- 
national indebtedness must, therefore, have a particular interest 
for Australia in the years immediately ahead. The development 
of the Commonwealth, like that of all other debtor countries, 
must be profoundly influenced by the conditions governing the 
world supply of capital in the future. If, and in proportion as, 
the stream of capital loans from Britain diminishes in volume, 
Australia will be compelled either to have resort to other sources 
and at increased cost, or to maintain development and expansion 
out of domestic savings, i.e. by internal loans, at the same time 
that the old debt is being renewed or redeemed. There is no 
necessity to enlarge upon the effects of merely exchanging one 
creditor for another. Our immediate interest lies in an examina- 
tion of the probable economic effects of a cessation or diminution 
in the supply of new capital over a term of years. 
That the resultant situation would be difficult in the extreme 
needs no emphasis. The decision to renounce the traditional 
policy of borrowing abroad, either through conviction of its 
attendant disadvantages or because of inability to obtain ac- 
commodation, would reverse the operation of most of the factors 
which have co-operated to produce an extremely complex situa- 
tion. To a greater or lesser extent, determined mainly by the 
volume of internal savings, Australia would be faced by the