130 AUSTRALIA’S FLUCTUATING ADVANTAGE IN 
antil the smoothed moving-average curves are introduced on 
the graph that the extraordinary inverse correlation between 
the two becomes apparent. The fall in capital exports from 
Great Britain, midway in each decade, is faithfully reproduced 
in the Australian curves. But it is in the rise and fall of the 
excess of exports that our interest chiefly centres. The increase 
in exports as capital loans diminish, and the decline, i.e. the 
growing excess of imports, as borrowing revives, are obviously 
very closely correlated. For the score of years after 1890 the 
evidence that capital loans had the effect of increasing British 
exports to Australia cannot be doubted. The cognate pheno- 
mena in the two countries fit together too exactly for any other 
explanation to be feasible. 
The next phase of our examination concerns the banking 
situation in Australia during the period following 1900. In 
supplementing what has been said already on this matter, we 
are unable, however, to do more than strengthen the conclusions 
obtained from the earlier period, i.e. before 1893. Theory would 
lead us to expect fluctuations in overseas trade corresponding 
with the rise and fall of capital importation ; but neither theory 
nor the geographical situation of Australia would lead us to 
expect the surprising rapidity with which variation in the volume 
of trade follows the fluctuations in the flow of capital from 
Britain to Australia. Not once or twice, but in practically every 
instance, effect follows cause so closely and corresponds so 
intimately in degree that no other explanation of our prosperity 
phases would appear to be tenable. 
Banking figures also show a close correlation with the increase 
and decrease in capital imports. In the light of what was said 
in the two previous chapters, consider the changes in the bank- 
ing position as revealed by the statistics for the period which 
are given immediately below. The spell of stationary advances 
and deposits between 1900 and 1904, and the relatively heavy 
drain on the gold reserves towards the end of that phase, a drain 
that was repeated again in 1906, tell in unmistakable language 
the story of the difficulties imposed upon a country obliged to 
sontinue heavy annual interest payments during periods of 
deficient production. Just as patently the lean years give place 
to the fat ones as the period of prosperity, expansion of credit, 
rapidly rising prices accompanied by rising bank deposits and