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