AUSTRALIA DURING THE WAR 167 
statistical measurement, he specifically excepts it from con- 
sideration 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 Aus- 
tralian 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 price- 
level 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 operat- 
ing 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