242 THE IMMEDIATE FUTURE IN RELATION
a cessation of loans would have upon industry and prosperity in
Australia.
Movements of capital have assumed an enhanced significance
in the world economy during the post-war years. Immense
changes in the amount of international indebtedness, and in the
character of a great portion of the mass of debt, have occurred.
Economically, we are now realizing that the war years cannot be
regarded otherwise than as a temporary ascension of the forces
making for capital consumption over the forces making for
capital accumulation; and the cost of this temporary dominance
 is to be measured by the increase in net indebtedness.
Australia, in common with Britain, enormously increased her
external obligations during the war and after; and because of
the peculiarly close economic and financial nexus between the
two countries, it is inevitable that world conditions which affect
Britain's economic stability will not be without commensurate
reactions upon the prosperity of Australia.
The conclusions to be drawn from the general theory of international
 indebtedness must, therefore, have a particular interest
for Australia in the years immediately ahead. The development
of the Commonwealth, like that of all other debtor countries,
must be profoundly influenced by the conditions governing the
world supply of capital in the future. If, and in proportion as,
the stream of capital loans from Britain diminishes in volume,
Australia will be compelled either to have resort to other sources
and at increased cost, or to maintain development and expansion
out of domestic savings, i.e. by internal loans, at the same time
that the old debt is being renewed or redeemed. There is no
necessity to enlarge upon the effects of merely exchanging one
creditor for another. Our immediate interest lies in an examination
 of the probable economic effects of a cessation or diminution
in the supply of new capital over a term of years.
That the resultant situation would be difficult in the extreme
needs no emphasis. The decision to renounce the traditional
policy of borrowing abroad, either through conviction of its
attendant disadvantages or because of inability to obtain accommodation,
 would reverse the operation of most of the factors
which have co-operated to produce an extremely complex situation.
 To a greater or lesser extent, determined mainly by the
volume of internal savings, Australia would be faced by the