74 IMPORTATION OF CAPITAL INTO
of Europe is an exceedingly difficult matter. The complexities
of long-established business, and the continuous movement of
securities to and fro across frontiers make anything more
than approximate estimates of the net migration of capital
almost an impossibility. While these difficulties do not exist
to the same degree in Australia because of the simplified
economic structure and geographical isolation that were dis-
cussed earlier, the methods and distribution of capital importa-
tion are not easy to trace. Especially is this true for that
portion, ‘the speculative stream’, which is invested privately.
[t reaches the country through so many carefully concealed
channels, and from so many sources, and it assumes such diverse
forms, that nothing more accurate than approximation can be
attempted.
A very complete and concise instance of the effects of borrow-
ing upon an isolated community is afforded by the statistics of
New Zealand trade after 1872, and a brief survey of these will
serve as an effective preliminary to the examination of the
Australian figures. An increased flow of British capital began
in 1872; and, for the next nine years, the average of borrowings
was maintained at about £4,000 per annum for every thousand of
population. After 1882 the stream of loans rapidly diminished ;
and, by the close of 1886, it was completely dry. A situation
then arose in which not only was Britain declining to lend new
capital but was not even re-lending sufficient of the old capital
to balance New Zealand’s interest payments. In the decade
immediately following 1886 the community was faced with the
alternatives of insolvency, or of paying unaided the whole of
the interest bill. The contrast between the early years when
sapital was flowing in freely at the rate of £4 per head per annum,
and the later years when £5 per head was being raised with
sxtreme difficulty to cover the payment of interest on the over-
seas debt, is the key to the history of the colony over those two
decades. The extraordinary prosperity of the early period when
population was increasing at the rate of 10 per cent. per annum,
when industries were prosperous and labour and enterprise
handsomely paid, has to be set against the depression of the
later years, when population was emigrating at such a rate that
natural increase barely balanced the exodus, and when the
standard of living had fallen in a startling manner. ‘Secarcely