Borrowing and business in Australia

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Monograph

Identifikator:: 183051623X

URN:: urn:nbn:de:zbw-retromon-222122

Document type:: Monograph

Author:: Wood, Gordon L. http://d-nb.info/gnd/1239193688

Title:: Borrowing and business in Australia

Place of publication:: London

Publisher:: Oxford university press, H. Milford

Year of publication:: 1930

Scope:: xv, 267 Seiten; graph. Darst.

Digitisation:: 2022

Collection:: Economics Books

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Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Part III. The boom of 1890 and its economic consequences

Collection:: Economics Books

OVERSEAS TRADE AFTER 1890 91 and exports tend to exceed imports as a regular condition of trade. As a matter of fact, however, the stages of youth, adolescence, and maturity in national borrowing never exhibit this ideal regularity. ‘On the contrary they usually take place with marked irregularities. And not only are they irregular: they are subject to abrupt stoppages. They frequently entail spasmodic changes in international payments and in the move- ments of goods.” It is in this irregularity, rather than in the economic effects of borrowing as such, that the chief mischief of the situation lies. To a steady and economically justifiable increase in the national debt most new countries can adapt themselves easily; but intermittent and uncertain supplies of capital may strangle legitimate development, just as easily as a too copious supply may drown it in a flood of credit with the help of the mill-stone of over-capitalization. The life-history of most countries in relation to capital move- ments may be likened with some effect to that of a river. In the early stages the youthful borrower resembles the stream in its mountain tract—vigorous, plunging, and liable to sudden falls and freshets; but easily capable of carrying off the new accessions to its volume from the tributary streams. In the second stage our borrower enters the valley that lies between youth and maturity, where the stream fluctuates between the riches of winter and the poverty of summer, a phase where great accessions to volume may easily choke the channel, cause disastrous flood, and hold up production. Here, too, are to be found those rapids that impede the even flow of the stream, always to be feared bub always looming in view when least expected. Lastly, our stream meanders over the plain as the broad and placid river, easily able to assimilate the sudden floods which spell such trouble in the higher reaches, but which here merely hold the promise of greater productivity on the plains fertilized by the overflow. This irregularity in the flow of capital and the consequences of intermittent supply in all borrowing countries merits some further consideration. ‘If’, says Taussig, ‘loans on capital account were continued regu- larly at the same amount year after year, the accumulating interest 1 Taussig, op. cit., p. 129.

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