CONTINUOUS BORROWING 229 
borrowing. The readiness with which British investors have 
co-operated with Australian governments in the past, in order 
to obtain the mutual advantages to be gained from the part- 
nership has been sufficiently obvious. So, also, has been the 
distressing dislocation caused in the business of this country 
whenever the dominant partner has temporarily lost faith in 
the articles of the borrowing creed, or has lacked the financial 
ability to implement it. For this reason alone the British de- 
mand for an ‘orderly marketing’ of loan issues should find a 
ready response in the Commonwealth. 
But far more than regulative action on the part of the lender 
seems to be indicated by the necessities of the case as here 
presented ; and much of the plausible argument comparing the 
constitution of the British and the Australian national debt 
quite begs the main question. For the real economic criterion, 
and the chief test which may be legitimately applied to the 
justification of Australian loan policy, has reference to the effect 
on the balance between the cost of indebtedness and national 
income. The comparison of productivity with indebtedness per 
head is the true economic criterion; and economic opinion 
would be inflexible on this, that the safety-point in borrowing 
has been passed when the increase in productivity is less than 
sufficient to provide a surplus adequate to sustain the annual 
charge at a normal rate of taxation. 
Before, however, proceeding to investigate this phase of the 
problem, the very important effects upon a community of 
continuous supplies of cheap loan money must be considered. 
For the nation, as for the individual, it is still a truism, 
despite our twentieth-century technique in disguising the true 
inwardness of the case, that ‘borrowing dulls the edge of 
husbandry’; and the effects of unrestricted lending must be 
discussed, therefore, in its psychological, political, and economic 
bearings.! 
Every episode we have examined confirms the fact that 
cheap loan money has inevitably led to over-expansive schemes 
of national development, to that national attitude of mind 
which we can only describe as the abandonment of the prin- 
© Of. Bastable, op. cif., p. 657: ‘One general fact is discernible in the course of 
the modern history of debts, viz. the universal tendency to increase. and in some 
rases to press dangerously on the limits of national solvency.’