Full text: Borrowing and business in Australia

community, and the enhanced importance which Australia 
assumed in the eyes of British capitalists were undoubtedly the 
chief circumstances which favoured the commencement of that 
policy of public borrowing for developmental works which has 
influenced so profoundly the later history of the continent. It 
1s interesting, and perhaps even profitable, to speculate upon 
the probable character of Australian development had gold not 
existed in the country in such large and accessible quantities. 
That the process of peopling the country would have proved a 
more lengthy business, that a less hurried national development 
Would have occurred, and that a vastly different complexion 
would have been given to our industrial and social life is highly 
Probable. But more significant for our purpose is the supposition 
that public borrowing would have begun later, and would have 
Proceeded on a far less grandiose scale. In the glamour cast 
upon the name of Australia by the gold discoveries, and in the 
Consequent greater attraction of the country for capitalistic 
enterprise, is to be found more than the mere groundwork of 
the economic troubles of later years. 
It is not possible after this lapse of time to reconstruct the 
Statistical data of the period with sufficient accuracy to bear 
eritical examination. There are too many missing links in the 
chain of evidence for the statement of a perfectly satisfactory 
case. Nevertheless, there is the strongest presumptive evidence 
that the events of the decade were strictly in accord with 
orthodox theory. The utmost that can be done with the statistics 
of the two leading colonies is to place the figures representing 
the introduction of capital, i.e. gold production, alongside the 
trade and banking figures, to compare the movement of com- 
modities and of gold, to set out the position of the banks in so 
far as this can be ascertained, and to note the movements of the 
exchange over the period. In so doing, the inadequacy of veri- 
fication which takes no account of other items in the balance of 
indebtedness than the movement of commodities including 
8old must be emphasized. 
But the connexion between the main phenomena is too plain to 
be doubted. and it was well recognized by bankers of that day. 
! The following is a typical comment: ‘In the meantime the merchants’ 
drafts against shipments of bullion assumed such magnitude that exchange on 
London was brought down to 10 or 12 per cent. discount, and the price of gold 

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