AUSTRALIA DURING THE WAR 167
statistical measurement, he specifically excepts it from consideration
 in his analysis. But the fundamental condition by
means of which foreign trade should exercise its influence over
price-levels, i.e. through the gold-exchange standard, was now
missing. The peculiarity of the war-period as a phase in which
the gold standard in both Britain and Australia was temporarily
abandoned, and the consequent effects of this step upon
domestic finance and foreign exchange, will be noticed later.
An aspect of greater importance at the moment is the general
relation of this change to overseas borrowing.
From Copland’s exhaustive survey of the war-period it would
appear that the greater increase in the British price-level, relative
to the Australian level, indicates that the latter was much more
subject to local factors than at times when the foreign exchanges
were controlled by the gold standard! This is unquestionably
true ; but when he declares that, even in normal times, the Australian
 price-level is influenced only partly by external factors
because foreign trade is less important than home trade, he is on
much more debatable ground. The analysis of barter terms of
trade made for earlier borrowing cycles reveals a connexion of
very great significance between the volume of external loans,
and changes both in the relative levels of the borrowing and
lending countries, and in the sectional price-levels of the
borrowing country. But the fact that the export-import pricelevel
 increased during the war by 53 per cent. while wholesale
prices rose by 70 and retail prices by only 40 per cent., certainly
appears to support his conclusion, that local factors were
operating in addition to the external factor of loans, and operating
 to an extent so much greater than they would normally do
under a gold-exchange standard as to completely overshadow
| Commonwealth Labour Report, No. 13, p. 150.
Wholesale Price Index Numbers

1911
1913
1918
1920
1922

Year

Gt. Britain.
{ Board of
Teade.}

1,000
1,065
2,443 |
3,343
1.801

Australia.
(Commonwealth
Statistician.)

1,000
1,088,
1,934
2,480
1,758