The Public Debt of Australasia.

The subject I have chosen for to-night is not one, I fear, which you will think lively or entertaining, dealing as it does with dry figures; hut it is one of consequence to yourselves as well as to us colonists, and I made choice of it for the following reason.

Since I came over to England about eighteen months ago, I have watched with care what has seemed to me a growing anxiety on the subject of the Public Debt of Australia and New Zealand, So far, however, from being vexed at this, I have welcomed it; because the very existence of such a feeling must lead those to whom we owe so great a sum of money, to look more closely than they have done into our power to pay. Nothing will give the colonists a greater pleasure, than for the financiers of this great city to examine our position and our resources with critical care; and the more thoroughly they do it, the more satisfied we shall be.

It is only of late years that the growing wants of the many settlements which England has founded on the other side of the world, have led to the rapid accumulation of debt which has taken place; and it was, perhaps, quite natural that the frequency with which we have been coming to London for Government loans, should excite some fear that we were borrowing beyond our means. I hope that what I am about to say to-night, may help to a fair judgment of whether there really is good ground for any alarm.

I have chosen to group together, for my present purpose, all Australia and New Zealand, because I think (if such a remark does not sound like an impertinence from one who is not himself a member) that it is the especial province of the Royal Colonial Institute to examine such a question as the one I am bringing before you, in no narrow or provincial spirit, but from a national point of view. It is true that the public debt of each colony, and a comparison of the debt of each with its separate resources, would be an interesting enquiry. Their relative indebtedness and power to pay vary widely; and I feel that I may even be open to the imputation, that it is because New Zealand has the heaviest debt of all, that I am taking them all together and concealing her relative weakness to bear her debt as compared with the better power of her sister colonies. This is the last thing I should wish to do: yet I could not go into the New Zealand debt separately, without referring to her peculiar position; for instance, our native troubles have cost us nearly 6 millions, which in proportion to population is more for us there than 400 millions would be in England. But to do this would be to change the object of this paper. What I really want to do is to look at all the southern colonies together, and so to inspire, if I can, a better appreciation of their united financial strength. For our debt has increased more than nine fold in the last twenty years, and it now amounts, after deducting accrued sinking funds, to rather more than 96 millions: of which about 84 millions are held in England, and 12 millions on the other side. The question of our solvency, therefore, is of as much consequence to you as it is to us.

Before going any further, let me ask you to consider for a moment the inevitable conditions which have led to this indebtedness. Fifty years ago the colonies of Victoria, South Australia, Queensland, and New Zealand did not exist. A narrow fringe along the coast of New South Wales alone was sparsely settled. Step by step the adventurous pioneer took up country for pastoral pursuits, and waited for the wave of settlement to come up after him. When the point was reached where the cost of bringing produce to the nearest harbour became prohibitive, we had either to build railways or cease any further colonisation. A curious calculation was made by the late Justice Chapman, whose name is familiar to all Victorians and New Zealanders. He examined what it cost the population of a certain district in Victoria, a mere handful in number, for the carriage of their goods to and from Melbourne by drays; he proved that they were paying £700,000 a year for transport; and he showed that if this handful of settlers were to undertake the whole burden of the interest on a loan for a railway, without allowing for a single new passenger or a single ton more goods, they would not only pay that interest, but make a saving of hundreds of thousands every year. The freight of Hour from Melbourne to the Bendigo gold-field was at that time £140 a ton; it is now 140 pence; and the building of a single line has, in transport alone, saved the people who are settled by its side, not thousands but millions.

But if we ever were to have a railway system into the interior of each colony, it was evident that we must come to the great money centre of the world for the means of doing it. You lent us all the money we asked for that purpose. But as fast as we built railways, other wants page 6 sprang up. The population increased more rapidly than the country was opened up. The more money was spent on our railways, the more was wanted for roads and bridges at their side: the people demanded their post offices, their telegraphs, their courts of justice, their hospitals, their schools, and they insisted on having these all at once. We not only had to come to you for more and more, but every Government on the other side of the world had a hard task to keep pace with the progress and the impatience of the people,

The same question that presented itself then, presents itself to-day. The colonists will suffer no barrier to stop them from going on to conquer the wilderness. We must perforce fulfil the law of our existence, and to fulfil it we must have money. So we come to you more frequently, and for larger sums; but in doing so we recognise your right to ask what we have to show for the money you have already lent us, and what is our real power to repay it.

It is in the hope that I may satisfy you on this, that I am speaking to you to-night.

We therefore are even now nearly three millions of people, and more than a million of these have been added in the last 10 years.

Now in 1860 we owed only 10 millions. We have added 8G millions in the last 20 years. I willingly allow that this is a very great and sudden growth of debt in so short a time. The real question is, has the progress of Australasia been equal to the growth of her debt? And the answer to this is, that it has been greater in many ways.

Out of the 96 millions borrowed by us, we have spent more than 56 millions on railways, 20 millions on other public works, and nearly 10 millions on immigration.

In the first place, therefore, I must point this out: If you take the railways, immigration, and telegraphs, these three alone comprise nearly 70 millions of the debt. I shall presently show you that our railways are even now yielding a net return all but equal to the interest on the money we borrowed to make them; the telegraph yields much more than the interest; and as for immigration, since every immigrant immediately begins to pay each page 8 year a contribution to the revenue equal to a third of his passage money, he pays greatly more than the interest on all that is borrowed to bring him. Then if you take off these 70 millions for only three income-earning items, there are not much more than 26 millions left as the debt on which the interest is not actually earned even now.

If you could raise the same sum per head in England as easily as we raise it in Australia, Mr. Gladstone would be dealing to-day with a revenue of 245 millions.

And you must not suppose that this revenue means taxation to the same amount. We divide our revenue into three parts: one we derive from Crown lands, which of course is not taxation; another from railways, telegraphs, &c., which we call payment for services rendered; and it is only the residue which can be called 'taxation' at all. In a paper read last month by Mr. Brett before the Institute of Bankers, he put the proportion of Australasian revenue for 1880 which was raised by taxation, at a little over 6 millions; it would be an outside estimate to put it now at 7 millions, or a third of our total revenue.

We derive four times as much revenue from Customs per head as in England, six times as much as in France, ten times as much as in Germany, and nearly three tunes as much as in the United States. Our Customs duties are page 9 5 per cent on our commerce, compared with 3½ per cent in Great Britain, and 4 per cent, in France; but they press much less heavily on us than they do in the United States, where they are equal to 13 per cent.

Out of this total of more than 21 millions, about 5 millions are land revenue.

I have said that in the last 20 years our revenue increased twice as fast as the population. Now if we may-suppose that in the next 10 years the revenue will not do more than keep pace with the population, instead of growing twice as fast, it will amount in 1890 to nearly 30 millions, and at the end of the century to not far from 50 millions. Even now our revenue is equal to that of many nations of Europe, and not much less than the revenue of Austria, or even of Russia, was at the accession of Queen Victoria.

It is a common mistake to suppose that the annual charge of our debt, in proportion to the revenue, is heavier than in other countries. On the contrary, it is lighter than in most of the great countries of Europe. page 10 The charge of our debt absorbs 25 per cent, of our revenue, against 33 per cent, in England, 41 in France, 30 in Russia, 12 in Germany, 32 in Austria, 47 in Italy, 37 in Spain, and 31 in Belgium. It is only in the United States that the charge of the public debt absorbs so small a part as 16 per cent, of the revenue.

From these 133 millions our Governments take 21 millions for revenue, and we have 112 millions to do what we like with. We save 27 millions, and the rest we spend upon ourselves. You will say this is a very extravagant rate of national expenditure. But we take care of our money all the same, for while the deposits in our banks were only 48 millions five years ago, they now exceed 60 millions, and the annual increase is going on at the rate of 3 millions a year. And our savings are, in proportion to gross income, much higher than in England or France.

There is also another thing to be considered in relation to the charge of our debt. Our land revenue, speaking page 11 broadly, is about the same as the interest of the debt. It would be a good way of putting it if I said that we apply our land revenue to paying interest on the money we have borrowed for railways, immigration, and public works. It is often made a reproach to us that we have discarded the famous Wakefield theory, and are using our land fund for ordinary affairs of government instead of applying it to the purposes of colonisation. But do we not, in reality, apply it to those purposes, when we use it for paying interest on the money by which alone those purposes could have been secured?

I was saying just now that our public debt had increased 86 millions since 1860. Well, let us compare for a moment this increase in the debt with the increase in revenue and trade.

The increase of exports in the last 10 years has been more than 20 millions, while the revenue has increased more than 10 millions. It is clear, therefore, that the colonists have been doing a very fine business in borrowing English capital at 4 or 5 per cent., and obtaining an increase of production yearly equal to 33 per cent, of the total amount they have borrowed, at the same time as the increase in revenue was equal to 16 per cent, on the loan capital. And it follows that although our debt has so largely increased, the security for it has improved, since our profits have risen at least three times more than the additional interest we have to pay.

It is true that the ratio of debt to total assets is now much higher than it was in 1860 and 1870, because at that time the colonies had hardly begun their borrowings. Comparing our assets with our debt, these are the results in millions sterling, exclusive of the public lands:— page 12

	The Amount of Debt was	And the Assets	Ratio of Debt to Assets
In 1860	£10,412,000	192 millions	5.4
In 1870	36,170,000	323 millions	11.2
In 1882	96,082,000	598 millions	16.1

If the value of the Crown lands were included, the assets of the colonies would have to be stated at much more than 1,000 millions; but I especially exclude these now. Leaving the Crown lands out altogether, the value of our assets has risen 400 millions in the last 20 years, and 275 millions since 1870; and the rise in the last 12 years has been at an average rate of 23 millions per annum: this is more than double the rate of accumulation in the United Kingdom, for our ratio is equal to £9 per head as compared with £4 here. Our assets, in fact, have increased nearly five times as much as our debt since 1870, and this without taking in the Crown lands at all; while it is certain that the Crown lands are now much more valuable than they were then. For instance; the rental of Crown lands occupied by squatters has risen in the last ten years from £500,000 to £800,000; and on the west coast of New Zealand, Crown land, which only three years ago was worthless on account of the Maori troubles, sold the other day first-hand at a Government sale as high as £16 per acre, and the average of the sale exceeded £7.

In this table I am only taking the value of sheep at ten shillings a head, but I need not say to any squatter who is listening to me, that I do not suppose he would sell his runs at a price which only reckoned his sheep at ten shillings.

So far with respect to the question of assets. But it is not only to the capital value of a country's assets that the financier looks for the safety of the money he page 14 lends to it. He looks more closely at the power of the community to bear whatever burthen of taxation is necessary to ensure the punctual payment of his interest, Now it is perhaps the safest, and at any rate it is an easy, way of measuring the burthen of a public debt in any nation, to compare the amount of the interest it has to pay on its debt with the earnings of its people, and their annual accumulations. This is shown, for a few cases, in the following table:—

	Annual		Interest on debt in millions.	Percentage of
	Earnings in millions.	Savings in millions.		interest to earning.	interest to saving.
Australasia.	162	23	5	3.1	22
United Kingdom	1247	154	25	2.0	16
France	965	160	32	3.3	20
Italy	292	25	19	6.6	75
United States	1420	320	12	0.9	4

Thus the income of the Australasian is so much better than that of the Englishman or the American, that although the apparent burthen of the debt per head of the population is greater, its real weight is much less. He can accumulate 24 per cent, of his income, while the average accumulation in the United Kingdom is only 13 per cent., in France 19 per cent., and in the United States 22 per cent. The taxation, accordingly, which he has to bear in order to pay his share of the interest on the debt, is much less oppressive upon him than it is on the inhabitants of other countries.

The incidence of taxation upon a people is always a subject of engrossing interest; and it is now demanding incessant attention from every public man who has to do with the finances of the country in which he lives. Everywhere the demands of each community are pressing more and more on the resources of their Governments, and everywhere it is becoming more and more difficult to meet the increasing volume of national expenditure. In no country is the struggle between the Treasury and the Parliament more constant as to expenditure than it is with us on the other side of the world; and we cannot complain, when the English capitalist hears so often of the "great burthen of taxation" which so much debt imposes upon us, if he gets alarmed at the apparent recklessness with which we seem to be increasing it. You all know that in New Zealand the burthen of the debt in proportion to the population far exceeds that of any other colony, and that our taxation is very severe compared with that of our neighbours. Yet when we recently had to examine closely what the incidence of taxation in New Zealand really was, some very curious results came out. page 16 We had suddenly to impose new taxation, three years ago, to an extent which in England would give a new revenue of 15 millions. The question before us was whether the existing taxation pressed unfairly on any particular class, and especially upon the class which was least able to bear it. We divided, for the purpose of the enquiry, the population into three classes: the wage-earning class, the intermediate class between wage-earners and owners of property, and the propertied class. The most careful calculations were made into the earnings and expenditure of the wage-earning class, following the best authorities on the subject; the results were carefully checked by comparison with calculations relating to the same class in England; and we found that while the taxation paid by the "intermediate class" was £2. 13s. 3d. per head, and by the "propertied class" £6. 18s. 6d. per head, the taxation paid by the "wage-earning class" did not exceed 17s. 3d. per head, against 27s. 3d. per head by the same class in England. Now if you compare the taxation per head with the earnings of the working classes, you will have some idea of the great difference between their condition in New Zealand and their condition in England, where the cost of some necessaries of life is much higher and the rate of wages much lower. This is the secret of our attaining the high rate of savings to which I have just referred.

But while this accumulation of wealth in Australasia is sure to go on side by side with the growth of our population and industries, it is equally sure that our public debt will not increase in the same ratio. Increase it certainly will, and I should be wasting your time if I did not say so plainly. But we have not to build again the railways page 17 we have made, nor the public buildings we have put up. It is quite beyond doubt that the increase of our wealth will be far greater in the next 10 years than the increase in our debt, and if we are "good security" now for the amount of debt we have already incurred, no statistician would for a moment doubt that we shall be far better security for whatever we shall owe then. I have already shown that in the past 12 years our assets have increased nearly five times as much as our debt, and if the same ratio is maintained in the next ten years the amount of our debt will then seem really insignificant. According to the growth of our population since 1870, we ought to number more than four millions of people in 1890, and nearly seven millions at the end of the century. It would require our debt to be then 230 millions to maintain the same proportion to population as it bears now; and it is of course quite needless for me to say that there is not the remotest chance of our adding 135 millions to our debt in the next 18 years, or anything approaching to it. I believe I am well within the mark in saying that 150 millions will be the outside we shall then owe; while even if our progress in that time should be no faster than during the last ten years, our revenue will be not far from 50 millions, our commerce nearly 270 millions, and our assets, without counting the Crown lands, at least 1,300 millions.

But although I am chiefly concerned with the relation between our resources and our public debt, no statement which is confined to the debt would give a true idea of the extent to which English capital is embarked with us. Besides the money which has been lent to our Governments, more than 110 millions of English capital page 18 are even now embarked with us in private loans: counting the commerce, there are more than 260 millions of your money altogether placed with us: and we return you altogether 18 millions a year in the shape of interest. One-fifth of the total amount of English capital invested throughout the world outside of England, is already embarked with us, and this proportion is growing every day. The amount of our public debt is after all much the smaller part of what we owe you. Yet when the financier is tempted to doubt our power to pay him his interest on the one, he may be reassured by the confidence which the merchant has in the commerce which ensures so much of the interest on the other. Let us look a little into this.

Thus while the total volume of our trade is but a sixth of that of England, the amount of business per head is twice as great. It would be a good way of illustrating our trading activity, if I said that one Australasian does as much trade as 2 Englishmen, 4 Frenchmen, 5 Germans, 6 Americans, or 8 Italians.

The commerce of Australasia is now greater than that of the United Kingdom at the accession of Queen Victoria. It was 94 millions only two years ago, and is now about 100. The Queen ascended the throne in 1837, and the Board of Trade Returns for that year showed that after deducting 'goods in transit,' the volume of the commerce of the United Kingdom for 1836 was only 98 millions. If our trade goes on increasing only as it has done in the last ten years, it will amount in 1890 to 163 millions, and at the end of the century to 267 millions. I was showing you just now that the ratio of our trade per inhabitant was £34; this is over all Australasia; but already it is £40 per inhabitant in New South Wales, which is much higher than the rest of the group, and is nearly three times as great as in England, four times as great as in France, and seven times as great as in the United States.

And it is not so long ago that the Economist, a journal as much relied upon for its caution as its ability, was saying that the time had come when New South Wales —admittedly, I allow, the richest of us all, with her surplus of 2 millions for 1882 and probable revenue of 8 millions in 1883—could safely expect to place a loan at 3½ per cent.

I have told you that I excluded the Crown lands altogether in valuing our assets. The area of the United Kingdom is 80 million acres, while there are 2,000 page 21 millions of acres within our vast boundaries. These are no mere "assets" of ours. They are the splendid patrimony of England, which she confides to us to deal with as trustees for the benefit of the empire. Let me for a moment ask your attention to the strides which have taken place in the occupation of this great estate, and give you an idea of the wealth it is producing.

That is to say, our squatters occupy a territory four times as large as France; and yet it is not even a third of the vast area of 2,000 million acres which is our portion of the surface of the earth.

If you add the 64 millions of acres occupied by farmers to the 540 millions occupied by squatters, you have a total of more than 600 millions of acres in actual occupation: an amount which, though not a third of our territory, is larger than England, France, Germany, Austria, Hungary, Italy, Belgium, Holland, and Switzerland, all put together.

Let me ask you for a moment to think what this trade in wool alone means. We owe England 9G millions; well, in the last five years we have sent you more than 100 millions worth of wool; and if we do not send you an ounce more than we are doing, that is to say if our flocks only remain where they are to-day, you will before the end of the century have given us 400 million sovereigns for this article of commerce alone. Nor shall I be page 23 satisfied with only asking you to look at this wool production of Australasia as the chief source of our wealth. Rather I would invite you to think how it has not only grown to be one of your great necessaries of life, but is also something which you can get nowhere else. For large as are the supplies of wool of various sorts which are drawn from other countries, the world has not yet succeeded in producing wool of a higher class than the Australian merino; and you may well ask yourselves how you could now get on without it.

The capital value of these farms is 182 millions sterling. If, then, you add the 68 millions which I have given as the value of our cattle and sheep, you will see that our agricultural and pastoral capital is already 250 millions. Now I have just said that the gross product of the two pastoral and agricultural industries together, is little less than 76 millions sterling per annum: and even if you take off three-fourths of this as working expenses—an estimate which would not give as much as 8 per cent. page 24 on the capital employed—there would still be left a net return of 20 millions, which is four times the sum we have to pay as interest on the public debt.

The acreage of grain and other crops has multiplied six times since 1860. In that year we had less than 1½ million acres under tillage; we have now more than 10 million acres, of which not far from half is in New Zealand. I do not like to break the general line of what I am saying by alluding to any colony in particular, but I cannot forbear asking your attention to the noticeable extent of cultivated land in New Zealand; and especially to the fact that in 1881 New Zealand had 3½ million acres laid down to English grasses out of 4¾ million acres cultivated, which is a much larger proportion than in England and Scotland, where (according to the Agricultural Returns for 1882 just issued by the Board of Trade) the permanent pasture is 46 per cent, of the cultivated land. The same Returns give the area under wheat in the Australasian colonies last harvest at 3,361,000 acres, or 200,000 acres more than the area under wheat in the United Kingdom this year: and they show, that while the average yield for all Australasia was 9 bushels, against 10 bushels for all the United States, the yield in New Zealand was 22½ bushels to the acre.

I would like to call your attention to the fact that the number of holdings compared to population is larger than anywhere in the world. This fact alone is really one of the best securities to which the English capitalist can look for the stability of our public finance.

In what I have already said, I have called your attention to the great development of material wealth which has been taking place. But the financier looks more closely, as I was saying a little while ago, to the number of population than to anything else, when he is examining the potentialities of a new country which is incurring a heavy public debt. In England and France, for instance, he knows there is a vast reserve of accumulated wealth to form a perfect security; as when, in 1817 after the great war, the debt of England was 841 millions while there were less than 20 millions of people to bear it; or again, when in 1870 France suddenly asked for 200 millions to liberate her territory and the world offered her 1,500 millions, and when her nearly stationary population, which had in a single year of war suffered a loss of many hundreds of millions of capital, not only freely gave a revenue of 110 millions, but increased her own wealth every day. In the United States the financier sees a people advancing in numbers by leaps and bounds, and passing even England and France in its yearly accumulations. We in Australasia cannot present such vast numbers to his gaze: yet we may ask him to reflect a little on the increase in our population, when we tell him that it is proportionately going on much faster than even in the great Republic.

The Australasian census for 1861 showed that we had 1,315,000 people. In the succeeding 10 years we had page 26 280,000 immigrants, and the total increase of that decade was 660,000: so that we had 380,000 excess of births over deaths in that time; that is to say, there was a natural increase of 29 per cent, in the decade. In Europe the increase of population did not exceed 10 per cent. Between 1860 and 1870, Australasia had a natural increase of twice the rate of the United States, and three times that of Europe. Our present population, allowing for increase since 1880, is 2,844,000; in round numbers we may call it 3 millions, including the Maoris in New Zealand. In the 10 years between 1870 and 1880 we had 307,000 immigrants, and the excess of births over deaths was 701,000; that is to say, there was a natural increase of 32 per cent, in the decade. Now during the same 10 years the natural increase in the United States was 24 per cent., and in Europe under 9 per cent.

I may perhaps be forgiven, as one of the Founders of New Zealand, to point with pride to the probability of her page 27 possessing, as I have just shown, the greatest numbers at the end of the century. This will arise from her having the highest rate of natural increase in the world:—

	Per 1,000 inhabitants per annum.
	Births.	Deaths.	Natural increase.
New Zealand	41	11	30
Australia	36	14	22
United States	40	22	18
England	34	21	13
France	26	24	2
Germany	40	27	13
Italy	37	30	7

Thus the velocity in the natural augmentation of our people has been much greater than that of the United States, more than twice that of England or Germany, and 15 times that of France. Including immigrants, the population in Australasia grows 50 per cent, faster than in the United States, and three times as fast as in England. In a new country population is the chief element of national wealth and progress. How narrow, then, is the class prejudice which in some of our colonies would check the tide of immigration, and arrest the onward numbering of our people! Nor, happily for us, have we to dread the evils which in Europe retard the growth of every nation. Not only are we free from the load of pauperism by which they are oppressed; the ratio of sickness is so low, that the vitality of the people is at a very high point. In England, the adults between the ages of 20 and 60 undergo, in that period of 40 years, an average of 11 days of sickness in each year; in Australia they have only to undergo seven days, and in New Zealand hardly more than five. England loses 3 per cent, of the productive power of her people by pauperism, and 4 per cent. by page 28 sickness, or in all 7 per cent.; the total loss in Australasia is only 2½ per cent., which is the lowest of any country in the world. The vital statistics of Australasia, in fact, are far better than in any other country whatever, and the highest natural increase is that of New Zealand, namely 30 per 1,000, or 3 per cent, on the population, which is the highest ratio in the world. Thus in what creates and preserves the strength of a people, we stand pre-eminent. Does it need that I should ask you whether so great a vitality does not offer the most solid guarantee for the safety of our public finance?

I should not omit to invite your attention to the very material question whether our railways are a paying investment for the money we have borrowed to build them. I must in the first place repeat, that as we have spent more than 56 millions upon them, they have absorbed much more than half our debt. But for this expenditure on railways, we should hardly owe more than 40 millions: and it has been greater, compared to population, than in any other country of the world except England.

The following table gives the distribution of the railways in the several colonies:— page 29

	Miles open.	Total cost.	Cost per mile.
		£	£
New Zealand	1,288	11,030,000	9,550
Victoria	1,225	16,120,000	13,160
New South Wales	1,042	15,070,000	14,470
South Australia	827	5,410,000	7,185
Queensland	760	6,270,000	9,326
Tasmania	178	1,690,000	9,410
Western Australia	72	610,000	8,475
	5,392	£56,200,000

Let us now look for a moment into the question of nett earnings on these lines. In 1880, the average nett earning of all the railways in the world was 41/8 per cent, on the capital; in the United States it was 5 ½; in Germany 41/8; in France nearly 5; and in England rather less than 4¼ per cent. In Australasia, taking all the colonies and all the lines together, it is not quite 4 per cent.; but this is steadily increasing. It must be remembered that our railways are not like those made in countries where the growth of the population is blow, or where, as in France, the population is nearly stationary and the room for increase of traffic small. Our population is sparse, and our lines are made more with the purpose of opening country to new settlement and occupation, than for the purpose of serving people already settled. The rate of interest yielded by our lines, after paying working expenses, is not only increasing, but in some places is showing rather surprising results, of which I will give you a few instances.

The nett yield of the New South Wales lines is now close on 4½ per cent.; in Victoria rather more than 4; in South Australia 3½; in Queensland nearly 2¾ and in New Zealand close on 4. But the nett earnings of the page 30 north-eastern system in Victoria (284 miles) now exceed 8½ per cent.; one short line in South Australia is earning 71/8; and in New Zealand the main trunk line of the Middle Island (260 miles) has just earned nett 51/8 over all, while the Dunedin section of it (115 miles) has earned more than 6½, and the Christchurch section (145 miles) within a fraction of 8 per cent. nett.

Nor must it be forgotten that this revenue is very much less than would be received if the lines belonged to private companies. Not only is it never an object with our Governments, as would be the case with companies, to show 'big dividends'; on the contrary, the people insist on rates being kept down to the very lowest point, and there is an incessant warfare going on between the public and the railway departments as to the reductions demanded in the working tariff. If it were not for this, I believe I should be safe in saving that the north-eastern system in Victoria and the Christchurch section in New Zealand, would even now be earning a nett 10 per cent. And so, in the nature of things, it must continue to be. The lines are there, but the people are not. They will be there presently; and it will certainly not be long before the nett yield of the Australasian lines surpasses that of any European country.

I have detained you so long, that I must leave unnoticed many other evidences of progress and stability such as may be seen in the statistics of our banking, and of our mining enterprise. It has been said that we are on the threshold of a gold-famine; but Australasia, which has already sent you more than 260 millions sterling of gold, equal to nearly half all the coinage in the world and 21 per cent, of all the gold known to be extant, will yet page 31 send you plenty more. The diamond drill is making a revolution in gold mining. In former days the only means of exploring at great depths was by sinking shafts, which often ended in money, time, and labour being all thrown away; to-day, the diamond drill pierces the hard rock fast enough to let the miner do in hours what once cost him days, and deep ground is now being tested with high results, which must otherwise have been left untouched.

Nor have I space to speak of the wheat we send you, nor of the wine we shall soon send too. The Board of Trade Returns give our area in vineyard now at 15,000 acres; but what may be looked for hereafter is evidenced by California, where the area in vineyard is already 100,000 acres, with a probable production in three or four years of 40 million gallons. What is of greater consequence from a national point of view, we have great fields of coal: nor is it necessary to point out what it means to the naval power of England, to hold the command of a vast coal supply in the southern seas.

I hardly like to single out any industry for notice, yet there is an entirely new one which not only must be counted among the greatest of the resources of Australasia, but is probably destined to produce a far-reaching change even in England.

It would be a platitude to say that the food supply of a people is a matter of national importance. Mr. Mulhall lately pointed out in his 'Balance Sheet of the World,' that you are becoming more and more dependent upon foreign nations not only for your grain but for your meat. We know there is no fear of corn being ever dear again here, for although England requires to import nearly 300 million bushels, or 40 per cent, of her consumption, she has page 32 the choice of so many countries to get it from, that cheap bread for her people is practically assured. But it is not so with meat. You consume 120 lbs. of meat and only produce 80, so that you have to get 40 somewhere. In fact you consume more than double the average of Europe. If you were content, for instance, to eat no more meat than is eaten in France, your own production would be nearly sufficient. Instead of that, you have to import more than 600,000 tons of meat every year; and if population goes on increasing as it has been doing, it will not be long before you find that you are only producing as much meat as will feed your people for 5 months in the year, and you will have to import a million tons. But all this time your power of supplying the deficiency is steadily decreasing. The Board of Trade Returns just issued show that you have 100,000 less cattle and half a million less sheep than last year; that last year you had 2 million less sheep than the year before; and that in Ireland there are only about two-thirds of the sheep there were 10 years ago. It is not so long since you had 40 million sheep, and now you have only 28 million all told. Meat is in consequence fast rising in price, and this rise is becoming, for the people of this country, a matter for serious alarm. Ten years ago the wholesale price at Smithfield was Sd. a pound, it is now I0d; and those best qualified to judge predict as certain a still further advance. Only the other day the wholesale salesmen in the metropolitan meat market were getting 10½d. and 11d. for American fresh meat, and, but for that supply, it was openly asserted that beef would have been selling in the London shops at half-a-crown a pound. But you can no longer make sure of American supply even at 11d. Notwithstanding the page 33 fact that (according to the Board of Trade Returns) there were last year 33 million cattle and 43 million sheep in the States, it is quite certain that the prodigious increase in the population of the States and Canada is fast overtaking their own available stock of meat: and speaking as one who has himself been a "squatter" all his life, I do not hesitate to say that it will not be long before it becomes impossible for either the States or the Dominion to keep up the supplies of meat they have been sending you. I am fortified in this opinion by a much higher authority than mine. The Quarterly Review has just told us that "beef is at this moment as dear in New York as in London, and the power of the States to supply England with meat is obviously declining. The greatest perplexity with which statesmen can be threatened, a deficiency in one of the most essential staples of the nation's food, seems to be impending over Great Britain and Ireland." The Agricultural Returns for 1882 which I have just quoted, show how enormously the imports of meat into England have increased in the last 10 years. Including fresh and salt meats, hams and bacon, and live cattle, these imports, which in 1871 were under 11 millions, had risen in 1881 to £24,754,000. Moreover, in the last 20 years both the rate and cost of consumption have so much more than doubled, that the value consumed per head, which in 1863 was only £l. (6s. 10d., is now £3. 0s. 2d. It is not three years ago since Mr. Head and Mr. Pell computed that American meat could be sold in Liverpool to a profit at 6½d. per pound; but the cost of rearing has since so much increased that it cannot now be placed in England under 7½d. The average price of imported oxen, which in 1870 was £18, is now nearly £22; and the average price of page 34 sheep, which was under 35s then, is now 47s. It has become imperatively necessary for you to look betimes to other sources: and it is the insight into this necessity, now fast changing into a formidable danger, that has now led to the creation of an entirely new trade, in meat which has been frozen on the other side of the earth.

The question was whether the thing could be done at all. There were two problems to be solved; one whether meat in a frozen state could pass through the great heat of the tropics and get here fit for human food; the other, whether it could be sent here at a profit. Both these questions have been answered in the affirmative. Some months ago, 5,000 frozen sheep came here in one lot from New Zealand. The conditions were rather adverse to success: the voyage had been prolonged to over 90 days, the heat experienced in the tropics had been exceptionally great, and the ship had been becalmed upon the Line; but the very fact of these conditions being so adverse, enabled the freezing process to be thoroughly tested. It had been feared that the sheep packed in the lower tiers would be crushed and bruised by the weight of those above, but nothing of the kind occurred. The meat arrived here in such excellent condition that the whole of it was sold within a fortnight. It was taken out of the freezing chamber at night and sent to Smithfield market, where it was still hard frozen when the butchers came to buy it in the morning. Such a thing as a cargo of 5,000 frozen sheep never having been seen before, it attracted much attention, even the Times speaking of it as a "prodigious fact." The meat was readily taken into consumption, and I can speak from my own experience of how sweet and good in quality it was. It was proved that it is not of the least consequence how long the page 35 meat remains frozen, or what is the outside temperature: you put it into one freezing chamber 12,000 miles off, and you take it out of another here three months after-wards, as sweet and fresh as it was the first day.

The first part of the problem had therefore been solved: it remained to be seen how the money part of it would come out. The gross proceeds for the 5,000 sheep came to £7,978: the charges, including freight and insurance, coal, expenses of sending to the markets in London and Glasgow, and sale commissions, to £3,793, or a little under 3½d. a lb. The sheep netted 21s. 9d. a-piece, a return eminently satisfactory to their owners, because they would not have sold for more than 12s. in New Zealand. It happened that the meat arrived here at a good time for the shippers, and rather better prices were then obtained than could be expected as a rule; but, on the other hand, there was strong prejudice to overcome, there were no regular channels for the sale, no properly constructed cool chambers in which to store the meat and thaw it by degrees, so as to turn it out at its best in quantities suited to the day's demand; above all, there was undisguised hostility from many of the retail butchers. Nevertheless, it was soon quite clear that as the wholesale price to the salesman had only been a fraction over 6½d, a lb., a very good profit was left to the retailer. It may now, I think, be safely said that frozen meat in any quantity can be placed upon this market from the other side of the world at 6d. to 6½d. a lb., leaving a good profit to the grower. This ought ultimately to make meat cheaper here, or at least prevent the further rise now threatened. Australia and New Zealand can, in fact, export 700,000 tons of meat a year, or 2,000 tons a day, which is not much more than you page 36 want in England even now, without reducing even the present capital number of their sheep and cattle; and we are able to send our sheep to Smithfield with greater ease to-day than the Tweed farmers could theirs 100 years ago, when meat was selling at a penny a pound in Scotland against tenpence in London. The existence of this immense reserve of food supply at the command of England, is already being welcomed, not only by householders but by statesmen, as it deserves.

When the first shipment of 5,000 sheep arrived, fears were entertained that the inroad of such numbers must have a very evil effect on the value of land in England; and even the Duke of St. Albans said so in a letter to the Times. I believe any alarm of the kind to be a complete delusion. But if it were otherwise, surely it cannot be denied that if we in Australasia can afford to supply you with sweet and wholesome meat at 6d. to 6½d. a pound, there is in it the promise of a great boon to the poorer classes, and one that will be welcomed in every household. I was saying just now that there was strong prejudice to overcome; and really, if you had to believe the butchers, you would imagine there was something dreadful and disgusting in the idea of eating frozen meat, forgetting how many millions of the human race even now subsist on frozen food for a large part of every year. I daresay some of you have read a lively and entertaining account which appeared last August in the Daily News, in which we were told of milk sold by the cubic foot, and wine sold in lumps like coal; of the Gostinnöi market-place with its countless rows of oxen, pyramids of pigs, mountains of sheep and goats, sacks of little fish that rattled like walnuts, blocks of salmon and sturgeon cut out of the snow with axes, and sledge-loads page 37 of snow-white hares and reindeer lying as if asleep; where the butcher made no distinctions about his joints, but sold them in square blocks, and where the children gathered up the dust that fell upon the snow, for it was powdered meat: or of another market-place in Canada, where there were singed pigs standing upright, deer from the backwoods, obelisks of cod and haddock, and solid milk in columns. Even now nearly 12 millions of the human race are consuming a million tons of frozen food each year; and the wonder will soon be that there should be any prejudice about it in England. I ask you whether this new industry of ours is not a matter of national importance? And I say again to-night, as I said in answer to the Duke of St. Albans' letter, that if the landowners and farmers of England are tempted for a moment to look askance at so novel a competition from us, they ought to think how vast is the supply that must be had somewhere every year, and how much better it is for England that she should come to us for part, rather than continue to be dependent on foreign countries for the whole.

Before closing this paper, I ought not to omit one subject to which we in Australia and New Zealand may point with legitimate pride. Amidst the bustle of a great material prosperity we have not forgotten the duty which every country owes to the education of its children. We have so munificent a provision for education, that if your expenditure in England were on the same level you would have to devote 25 millions a year to it; and we have founded Universities of which so young a people may well be proud. We recognise the truth of what the Times was saying only yesterday, that 'at this moment page 38 education is the greatest question of the day; that there is no hold upon the millions except the appeal to their right reason, their healthy sentiment, and their sound information; and that if all classes are not well instructed and well trained by the end of this century, then woe to the British Constitution of our fond idolatry.' We know that this truth is not more essential in politics than in finance. And if you have trusted us with great sums, you will see, in what I am saying at this moment about the education of Australasia, the surest element of our future power, and a material guarantee for the honest payment of the money you have lent us.

Well, I am very sure that by this time I have exhausted all your patience; and indeed I have only a few more words to say. If you have gone with me into all these details without distaste, you will be glad to know that I am not asking you to take them on my authority alone. For some time past I have been engaged in the investigation of financial questions with Mr. Mulhall, the well-known statistician, and it is to his friendship that I owe the figures on which this paper rests. I really was afraid that if I presented them to you as my own, you would think I was 'romancing'; and I knew you would be more satisfied if you could rely for them on the guarantee of his name, where they have not been taken by myself from official records. The statist is often voted a bore, even by politicians who forget how much they are indebted, for an insight into affairs, to his patient industry and research: but the bright way in which Mr. Mulhall presents his figures always makes them interesting. The statist records either the rise or the decay of nations: and it is because the Royal Colonial Institute best fulfils its mission when it page 39 looks at questions from a national standpoint, that I have thought it would be pleasing to you to have such a poor picture as I could give, not of a single country, but of a group of colonies some of which were founded by men now in this room. My immediate purpose, I do not deny it, was to inspire a firmer confidence in our financial strength, and remove the fear that our public debt was getting too much for us. But I also had another aim. To Englishmen who think much upon affairs, there can hardly be a more curious speculation than the one of what ultimate shape the connection between England and her colonies will take, and whether these will bear themselves worthy of a high destiny. It is well, then, to mark from time to time what stages her great dependencies have reached, and what lessons there may be in the story for us all. But how wide must be our survey! In one continent, India must ever remain the most wondrous and fascinating monument to the genius of the men whom England sends forth to conquer the world: in another, the great Dominion beyond the Atlantic sweeps on to a dazzling future: in a third, the disaster of a day is avenged by victories which place in England's hands the destinies of Africa. And we too come from the other side of the earth, to take our place in this marvellous company of nations. I often hear the reproach that we are not more separated from you by our vanity and arrogance, than we are divided among ourselves by narrow provincial jealousies, by conflicts of fiscal policy, by the very rivalries that have made us what we are. But all this will one day vanish in the 'infinite azure of the past/ If it is true that we are divided among ourselves, it is not less true that we are united to England by her glorious traditions, by her immortal literature, by the page 40 example of her private life, by the political liberties which have been her precious gift to us; above all, by loyalty to our Queen, and by love of country, that well-spring of all national virtue. So splendid an inheritance cannot but one day stifle petty and ignoble dissensions in our midst, as it will assuredly make us only more and more tenacious of our union with the fatherland. That union is our hearts' desire. It is maintained by the cordial relations which the Colonial Office preserves with us, by the true goodwill of so many English statesmen, by the rule of Governors like Lord Norman by and Sir Hercules Robinson, and (with only a few exceptions) by a generous public opinion: nor is it here, and in the presence of the Royal Colonial Institute, that I could forget how it is strengthened by the gracious interest of your illustrious President, and by the personal and practical co-operation of men like our noble Chairman to-night. May these genial kindly sympathies ever flourish! So shall you join hands with us across the sea, and cherish the remembrance that we too, with yourselves, belong to England, and are citizens of the greatest Empire the world has ever seen.