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The Pamphlet Collection of Sir Robert Stout: Volume 70

Amount of the Yearly Interest on Australasian Indebtedness

Amount of the Yearly Interest on Australasian Indebtedness.

What is the yearly burden of interest Australasia has to carry? Mr. Coghlan says, "There is ample evidence to warrant the supposition that the income of non-residents (of New South Wales) amounts to not less than £3,500,000 per year." It will be remembered that in the second article we calculated that Victoria derived £750,000 a year income from New South Wales properties; if we take this sum from Mr. Coghlan's total estimate, we have £2,750,000 as the interest, profit, income—call it what we will—derived by capitalists residing in Great Britain from private investments in New South Wales. The interest on the public debt of the colony is now fully £2,000,000 per year, Throwing off £250,000 to cover (and more than cover) the small portion paid here, we have £1,750,000 as the sum now being paid away to Great Britain yearly for interest on the indebtedness of New South Wales, making, it will be seen, a total yearly payment by this colony to residents in Great Britain of £4,500,000. On the basis of these figures we can calculate the probable payments by the whole of Australasia, If two-and-three-quarter millions in New South Wales represents the interest, &c., on private indebtedness, and the average were the same for all Australasia, then the yearly interest on the private indebtedness of all Australasia would be a little over nine millions. We are under no necessity to estimate the interest on the aggregate public debts, as we can calculate that to a nicety: it amounts to eight millions. Adding together nine millions on private debts, and eight millions on public, we get seventeen millions as the page 26 sum which must be paid yearly by the four millions of people in Australasia to the capitalists of Great Britain. An estimate was published in Melbourne two years ago, and the figures were pal at fourteen millions interest and three millions income of absentees, making also a total of seventeen millions. The sum may be estimated in another way. We have taken 400 million as the aggregate indebtedness of Australasia; as fully half of this is represented by colonial and municipal loans, on which we know the interest payable, we have other 200 millions of private indebtedness of which the interest or profit is very doubtful Here and there investments are yielding as high as 25 per cent, and some investments are yielding nothing. Probably we should not be far wrong in saying that the average rate on the 200 millions was 5 per cent, which would represent a yearly payment of ten millions, which, with the interest on public debts, would make the aggregate yearly payments eighteen millions. Of tie capital that flows out through private channels a portion, the larger, is actually borrowed or deposited at fixed rates of Interest, and, whether Australasia be prosperous or depressed, that interest must be met. Another portion, the smaller, is embarked in speculative ventures, and the owners themselves carry all the risks, and if nothing is earned then nothing is paid. Of course, also, large sums that have been speculatively employed in these colonies have been lost, but every needful margin of allowance was made for this fact in estimating the aggregate of British investments in Australasia at 400 millions. This sum is supposed tobe an aggregate of something like solid investments: 200 million public, 200 millions private, If times were generally very baa, then there would be a falling-off in the total amount of interest payable corresponding with the portion of capital invested entirely at the risk of the owners, and if such portion amounted to about eighty out of the 200 millions, then the payments would be eight millions on public debts, six millions on private debts, making a total of fourteen millions. Below this total it seems impossible to go. We think we are on absolutely safe ground in saying that the lowest possible minimum payment for interest on present Australasian indebtedness is fourteen millions, and that in actual fact the payment at present being made is somewhere between fifteen and eighteen millions sterling per annum. This is equal to about £4 per head per year for every man, woman, and child throughout Australasia, or the sum of £20 per year for every average family of five persons.

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It is frequently said that the interest payable on Australasian indebtedness is much less burdensome than the interest payable on the British debt, and it is pointed out that we have assets against our debts whilst the British have none against theirs. It is well to look this foolish fallacy straight in the face. Australasia pays away the interest on her debts, Great Britain keeps the interest on hers. As Ave have seen Australasia has to pay—is paying—between fifteen and eighteen millions sterling per annum actual wealth to people on the other side of the world. Great Britain collects from the whole of her people the money required for interest; but she does not send it away; she simply distributes it again, in a narrower circle it is true, but still it is retained, and is available for new enterprises in Great Britain itself. Here interest is a drain; there it is rather i distribution.