THE AUSTRALIAN BALANCE OF PAYMENTS AND CAPITAL IMPORTS, 1914-15 TO 1923-24.

This paper presents some revisions to estimates made initially by Wilson and more recently revised by Butlin of the balance of payments and capital imports for the period of the First World War and five subsequent years. The acceptance of the existing residual estimate of net private capital inflow for the post First World War period 1919-20 to 1923-24, based on the Wilson-Butlin balance of payments statistics, would immediately raise a paradox, for it suggests that negligible foreign investment took place in Australia during a boom period of rapid industrial development and at a time when British and American investors were once again looking for profitable investment opportunities. This paradox can be resolved only if it is realized that the impression of negligible private capital inflow in the post-war period is a statistical illusion due to the failure of the previously available estimates to take into account the fact that payments for Australia's major exported commodities were made a number of years prior to their ultimate shipment overseas. The revised estimates suggest that private foreign investment in Australia during the nineteen twenties is more important than has previously been thought—the new estimate of its magnitude being fifty percent higher than the previous estimate. Sections II and III respectively place wool and wheat exports for the period, on a "payments basis" rather than the existing "shipments basis". Payments for many millions of pounds worth of these two commodities were made a number of years prior to actual shipment. Export data in the Overseas Trade Bulletins are based on the time of shipment rather than the time of payments for exports. For most purposes, including analysis of the balance of payments, capital imports, the banking system and the level of economic activity within Australia, the actual value at the time of payment rather than the "declared value" of an export commodity at the time of shipment is the... [ABSTRACT FROM AUTHOR]