Borrowing and business in Australia

Bibliographic data

Monograph

Identifikator:: 183051623X

URN:: urn:nbn:de:zbw-retromon-222122

Document type:: Monograph

Author:: Wood, Gordon L. http://d-nb.info/gnd/1239193688

Title:: Borrowing and business in Australia

Place of publication:: London

Publisher:: Oxford university press, H. Milford

Year of publication:: 1930

Scope:: xv, 267 Seiten; graph. Darst.

Digitisation:: 2022

Collection:: Economics Books

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Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Part V. Australia during and after the great war

Collection:: Economics Books

TO CAPITAL REQUIREMENTS 251 n change of policy. The conclusions to be drawn from any speculation concerning the immediate future are matters of some consequence in determining Australian financial policy. The facts presented in the last two chapters would seem to support Copland’s conclusion that ‘our margin from savings has been much greater than our policy of foreign borrowing in the past would lead us to believe’;! but whether the margin is sufficiently large to enable us to proceed in the future without recourse to loan issues is a matter that cannot be theoretically established. That the resources of the country for the purposes of capital provision have been - greatly under-estimated is probably true ; but it is scarcely to be thought that a complete cessation of capital loans would not involve most, if not all of the adjustments predicted here. A legitimate objection to such an abrupt reversal of policy is that an absolute reliance upon domestic savings for develop- mental capital would force interest rates in Australia above the rates ruling overseas, and that, so long as foreign capital is obtainable, this would be far too costly a policy for a young and under-populated country. But it must also be assumed that higher rates would attract the investment of private’ capital, and that the shortage of supplies would be thus more effectively met than by a continuation of public borrowing, even if that course of action still remains open. Such a rise in interest rates, moreover, would not be without its advantages in compelling a more economic use of savings, at the same time that the inducement to save was increased. But in any case, if overseas borrowing has to be restricted for a period, Australia in common with all other countries would be under the necessity of facing higher interest rates and rising costs, accompanied, doubtless, by higher taxation. It would seem that the wisest policy from every point of view would have regard to the need for ruthlessly confining the ‘necessities’ of the community within its available resources. Should an entire renunciation of overseas borrowing not be forced on by a world credit shortage, or should it be deemed impracticable to reduce our dependence upon foreign capital supplies. the anticipated transition period may be indefinitely t See Copland, Economic Record, May 1926: ‘Respective Merits of Internal and External Borrowing.’

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