Full text: Borrowing and business in Australia

Two considerations arise here with reference to capital loans. 
[t is widely assumed that such loans enter the borrowing 
sountry mainly as capital goods. Viner found in the Canadian 
investigation that it was impossible to determine what propor- 
tion of the imports was properly to be classed as capital and 
what proportion as consumers’ goods. The problem is closely 
allied to the old controversy as to the distinction between 
necessities and luxuries. No hard and fast line can be drawn in 
either case. But, after an attempt to group Canadian imports 
into capital and consumption goods, he is forced to the con- 
slusion that, while capital goods did enter to some extent as 
direct purchases by the borrowing from the lending country, 
the loans entered predominantly in the form of consumption 
goods. Pursuing the same plan for the investigation of Australian 
imports it is possible to summarize the inquiry in the form of 
a statistical comparison. 
Australian Imports 
Group 1. Capital Goods. 
115 21-2 | 304 
1-5 41 15:1 
130 | 263 | 455 
100-0 195-0 350-0 
Metals and Machinery . 
Vehicles and ships 
Index " ' . 
Increase, for Capital Goods, per cent. of 1908, 250. 
Grove II. Consumption Goods. 
"1919-20 | 1925-6 
£m. £m. 
69-7 95-8 
233-0 | 320-0 
All commodities . r 
Index . £ 
Increase, for Consumption Goods, per cent. of 1908, 220. 
that the borrowings arrive partly in this form. Britain has then to settle with the 
United States, herself a capital exporter. Now the U.S.A. requires very little of 
Britain’s manufactures, but she does need wool, silk, and rubber. The export of 
the first from Australia and of the second from Malaya partly satisfies the creditor. 
The silk is purchased from Japan, and this is paid for in raw cotton from India. 
[ndia takes payment for the raw cotton in cotton manufactures and heavy goods 
of all kinds. In this way British capital may be exported to Australia in the form 
of cotton piece-goods or motor-cars exported to Bombay.

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