Full text: Borrowing and business in Australia

in the table above tell the tale quite plainly. It is a matter for 
regret, nevertheless, that the recorded figures upon this aspect 
of the problem are not more satisfactory. It will be noted that 
there is an amount of £10,000,000 not accounted for over the 
whole period. While mathematical exactness is impossible of 
attainment, the disparity is too large to be ignored; but a 
possible explanation would lie in the relatively large amounts 
of gold that were hoarded during the disturbed years following 
she collapse, and of which no record could be made. 
All the circumstances passed in review up to this poiht con- 
stitute a coherent and causally connected series such as that 
which Viner has outlined in the parallel Canadian episode.! 
Expansion of settlement, rising loans and deposits, the depres- 
sion of reserves in proportion to deposits, a rate of exchange 
favourable to the borrower in the years previous to crisis, and 
a steady expansion of gold stocks, accomplished in Canada by 
zold imports and in Australia by a retarded export of the metal, 
mark the period. At this point, and at first glance, the Australian 
instance is apparently less satisfactory in its accordance with 
the previsions of theory. In direct contrast to the period chosen 
for Canada during which, after 1900, world prices were rising, 
the period under review for Australia was marked by a long 
down-swing in the price-level. But the discrepancy is only super- 
Seial, and tends but to reinforce the main thesis. 
In Canada, after 1900, prices rose, and rose on the whole 
[aster than did world prices owing to the heavy and continued 
import of capital. In Australia after 1880 prices fell more slowly 
than did world prices and for the same reason. The tendency 
in a period of falling prices would be for the level to fall more 
rapidly in the lending than in the borrowing country; and this 
is precisely what took place. Wholesale prices in Britain 
between 1880 and 1890 fell from 1,100 to 900; while in Australia 
this world movement was not only resisted but reversed, and 
prices actually rose from 1,112 to 1,174. This bulk movement 
of prices, however, tends to hide certain important facts con- 
cerning the movement of price-levels for particular commodi- 
fies. The argument for the rise of both general and sectional 
price-levels is given at some length by Viner for the Canadian 
mstance, The first result of the influx of capital is an increase 
1 Viner, op. cit,

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