Loans and Trade.

South Canterbury Times, Issue 7065, 10 February 1893, Page 2

Loans and Trade.

Tho following explanation of the effects of olouial loans on British trade has been given by a banking journal at Home; —Some pot* tion in shrinkage of British trade from time to time is dependent upon temporary cessation of borrowing by foreign' and colonial states. Say Australia barrows far public works £5.000,000 —nominally, in so much much money. Australia nevertheless gets no money, but instead gets so mnob in bills on itself to

itself for shipments to become due or already due, and eo much in new shipments of the goods required for the service of the public work?. Assume, as a fair approximation, that of the £5,000,000, bills on Australia have gone forward to Australia for £1,000,000, and that rails; girders, and other things have gone forward for £4,000,000. Certain of our export trades will have had employment famished to them by the loan which otherwise they would not have obtained; and, in addition, the presentation in bills on Australia of claims for the thus being dormant will have contributed to the trade activities here. In the long run, however, for Australian borrowing, the foregoing presentation of the case needs some modification. In the first place, as Australian imports slightly exceed Australian exports (if the freight charge paid to British owners be taken into account), the payment,of the annual interest charge on the public and private indebtedness of the colonies to the United Kingdom has been largely faciliated by fresh borrowing. The circumstances of the several colonies have differed, but if the colony (New Zealand) which has abstained from borrowing for several years be taken as an example, it will be found that her imports have fallen short of exports by a sum just about equivalent to the interest to be remitted annually. If Victoria were to abstain froth borrowing for several years the result would be the eame, excepting so far as earnings on transactions originated in other colonics are spent in Melbourne. It is difficult to estimate the total amount of the interest due by the Australian colonies to England every year, but if the borrowings of the Governments, the banks, the squatting companies and other institutions, and the lendings of British life assurance offices in the colonies be taken into account we think it mast be placed at from £12,000,000 to £14,000,000. An absolute stoppage of borrowing would practically mean that the extracolonial exports must exceed the imports by the sum indicated. In the second place, the proceeds of Australian loans have not of late years gone so much to support British trade as ia commonly supi posed. The colonies do a large trade with America, India, and China and (in good times) a growing trade with two or three Continental slates. To the expansion of that trade a largo portion of the borrowings has been applied. From the British point of view, the profitableness of lending to foreign and colonial states largely depends upon what proportion of the money obtained is taken out in British manufactures.