244 THE IMMEDIATE FUTURE IN RELATION
effected by the deliberate adoption of policies aimed at stimula-
tion of primary industries, by public retrenchment and private
sconomy, and by such a reorganization of national industry as
would intensify the effort to discover and exploit new resources.
If secondary industry remained static, such a change would
entail a reversal of the movement of population towards the
capital ports such as took place after the 1893 crisis in Victoria.
This rearrangement of the factors in national production would
necessarily accentuate unemployment during the adjustment,
and would entail some sacrifice upon almost every section of
urban population—the sections, that is, which stand to gain
most by the expansionist tendencies associated with periods of
heavy borrowing. The process, when complete, would realine
national production in accordance with Australia’s existing
comparative advantage in overseas trade; would, by the con-
sequent changes in relative price-levels, intensify any advantage
in trade that formerly existed ; and would tend to increase both
the volume and the value of export commodities.
This is not to assert that the existing secondary industries
would necessarily disappear or be left relatively weaker. Those
which are based more upon natural economic foundations than
upon tariff buttresses would, at the most, be in no worse posi-
tion ; but it is not to be supposed that the uneconomic diversion
of large blocks of productive power to inefficient industries could
be maintained in the face of the circumstances that we have
assumed are likely to arise. It may be that the increased
efficiency induced by hard necessity, and the relative fall in
labour costs, would enable most of the existing manufacturing
plants to continue. The elimination of the economically in-
efficient would, at the worst, merely mean the postponement
of that ideal self-sufficiency in industry to which no modern
sommunity has yet attained.
The transition period now being contemplated would bring
its own difficulties connected with the operation of the foreign
exchange. The probable maladjustment of domestic credit
owing to tapering capital imports would need careful manage-
ment of bank credit; and, in the international sphere, the
oppressive factor of adverse exchanges would call for counter-
measures. All the conditions of expanding credit and favourable
exchanges associated with vigorous overseas borrowing would,