day, everything must start de novo. Results have so far been unsatisfactory, but if success attends a new effort a severe restriction of extravagance is promised. Meanwhile the Federal Government will do what it can by lending its endorsement on its sons' promissory notes in strict moderation-such moderation as is possible. That the Bruce-Page Cabinet is in earnest admits of no doubt, but the situation is full of difficulty. During recent years the violent development of the industrial arbitration courts, both State and Federal, has led to the granting in all manner of industries of short hours and long-wage conditions, which have had a definite effect on production. A recent effort was that of the Queensland Board of Trade, which ordered a 44-hour week in the pastoral and agricultural industries, a minimum pay extending as high as £5 per week in some branches, wage and a half for overtime, and twelve days' holiday per annum. Circumstances render it exceedingly difficult, or impossible, to preserve that favourable balance of trade which is essential for an indebted country, and especially one which owes, when Federal and State burdens are added up, about £175 per head, half of this being due abroad where Australian Government paper money has no value, and most of that half being incurred for State public works, of which a considerable proportion are very non-payable. The situation in recent years has been estimated thus: Two redeeming features have to be taken into consideration. In 1922-3 and 1923-4 there came to hand sums totalling £11,200,000 for wool produced and exported during the war years, but not realized upon till later. This represented a windfall, not a recurrent item; and the Australian output of gold, though a sadly diminished quantity, is always helpful. So the figures might be condensed thus: There is a further set-off in the shape of money brought to Australia by new settlers; but new settlers are not a plutocratic flock, and there must be a huge balance which can only be met by adding it to the external debt in one way or another. The list of loan flotations shows that that is how it is met. The reform programme of the Bruce-Page Federal Government includes the establishment of a sinking fund against all the existing State debts-7s. 6d. per £100 per annum, the States to find 5s., and the Commonwealth, as an act of grace, to provide 2s. 6d. The plan also includes provision for a sinking fund against new State debts-10s. per £100 per annum, the Commonwealth and the State Treasuries contributing equally. Against the Commonwealth's own debts a sinking fund exists. The scheme is liberal and progressive, but if taken by itself it is like Othello with the Moor and Desdemona left out. Unless a paper-money fund can be transmuted into gold, or into surplus exports of merchandise capable of being turned into gold-unless, that is, the adverse trade balance can be changed for a favourable one-it seems a case of continuing to borrow abroad sufficient to cover (1) that portion of the interest on the Public Debt which is payable abroad, (2) that part of the sinking fund which is due abroad, and (3) the bill for surplus imports from abroad. As a permanent arrangement this leaves something to be desired. The last year which showed a surplus of exports sufficient to pay all external liabilities was that which ended in June 1920. There were years of deficit before that, notably in 1912, 1913, 1914, 1915, and 1916; but as recently as 1914 the estimated annual account for interest and services payable abroad was less than half what it has become, so the matter was then more easy to handle. State-owned, or nominally State-owned, railways measure about 24,000 miles. They have been built entirely with loan money, and owing to slackness in providing against depreciation there is reason to believe that the mortgage exceeds the value of the asset. Indeed, the value of an unpayable asset is difficult to fix, and the State Railways, taken as a whole, have not paid working expenses and interest on the money they owe in a single year since June 1914. The shortage in 1920-1 was £4,115,997. For 1925-6 it was set down as £7,103,051, but £3,982,314 of this was explained away as properly belonging to other years. It was genuine shortage, but should have been debited to different periods. Quite a number of explanations are advanced. The State lines are of five diverse gauges, three of which extend over thousands of miles each, while two are of very minor importance. This tells against economy of working. Railway-building has been carried on at too fast a pace; yet, despite the pace, the jealousy of overgrown capital cities and assorted political influences have prevented a number of good ports being adequately served, or even served at all. The passionate floating of new loans, and the renewal of old ones at any price which the market demanded because no provision had been made to meet them, raised the rate of interest on the aggregate State liabilities from £3 11s. 4d. per cent. in 1912 to about £5 per cent. in 1927, and the latter is a high figure when the railway capital is all of the cumulative preference variety. In the eleven years1916-26 inclusive-the annual interest bill charged against the railway systems of the six States rose from £7,378,959 to £13,230,928, which was a notable expansion, and out of all proportion to the mileage, which expanded from 19,336 to 23,645 miles. But working expenses rose from £15,709,436 in 1915-16 and £29,052,407 in 1922-3 to £38,622,149 in 1925-6. The intermediate date is a sort of landmark. In 1923 a Federal Industrial Court, against which there was no appeal, assumed the right to fix wages and hours for railways and other national industries, as well as for private employment. Its prevailing tendency has been to decide, by a majority of one, for a 44-hour week, or a shorter one in some cases, with increased pay and more privileges. This has a disturbing effect on the calculations of Treasurers and Railway Commissioners. There are signs that this judicial, if injudicious, body may be nearing the close of its activities. The Federal Government owns 1,733 miles of railway of the pioneering sort, built with loan money. It began the active collection of fares in 1911. Until the year ended June 1926 its lines paid no interest, and failed badly to cover working expenses. In 1926-7 the earnings covered working expenses and provided £27,213 towards interest. What should be the best of the Federal lines, from Port Augusta in the south to Port Darwin in the north, consists of a fragment at each end and a gap in the middle, and progress is painfully slow. When it is finished and turned into a payable asset, the Commonwealth will own a considerable railway system with the usual drawback of being partly 4 ft. 8 in. and partly 3 ft. 6 in. The present Government is a warm advocate of uniformity of gauge, but its theory and its practice fail to square, and it fails to explain why. In the last year of last century railways represented about 65 per cent. of the States' loan expenditure, said to be for permanent and reproductive works." They stood for £60 10s. 10d. per cent. in 1908 and for £57 19s. 2d. per cent. in 1925. This revealed an increasing tendency to spend borrowed funds borrowed funds on odd jobs and indefinite undertakings. The Federal Quarterly Statistics gives an abbreviated list of the loan assets of the six States as at June 30, 1926: £ Railways and Tramways Telegraphs and Telephones (these Services have been bought up by the Commonwealth, but scraps of debt mysteriously remain) Water Supply, etc. (etc. is expounded more fully in other publica tions) 297,961,000 3,893,000 Roads, Bridges, Harbours, Rivers, etc. 57,370,000 Public Buildings 20,829,000 Defence (Defence and the works connected therewith were taken over by the Commonwealth very early, yet this item remains) Land Purchased for Settlement and Advances to Settlers All Other 2,389,000 77,815,000 73,154,000 624,410,000 The item "Land Purchased for Settlement and Advances to Settlers" is in part, but only in part, traceable to the war. The State Governments were the ground landlords of all Australia and Tasmania until the Federal authority took over the Northern Territory and the Federal capital area. They sold some land, but less than is generally supposed, and spent the proceeds as ordinary revenue. A return brought up to 1924 showed this subdivision of the whole country: Land absolutely sold A considerable amount of the unoccupied Crown land has no value which can be identified, and some of the area held under lease or licence is not much better. But there is much Crown land which has a value, the drawback being that it lies far from any of the five State capitals in which is compressed nearly half the continent's population. There was an element of the grotesque in buying back, with loan money, at a high price, and one which Government competition made higher, bits of soil which were sold at a low price not very long ago, cutting the acquisition into farms which were often too small to give the owner much hope of success, and planting on them men who in many cases had no qualifications except a good war record. They were a deeply mortgaged crowd, and not over-successful, and large amounts are already being written off their indebtedness to the States and the Commonwealth, though the difference between millions being written off and the same being paid off must not be overlooked. It is an incident of the case that £30,964,000 of the "land settlement" liability was incurred by Victoria, the smallest and most densely peopled mainland State, and the one which had the least need to buy new population regardless of cost; and £16,413,000 was spent by Western Australia, a huge space where over 95 per cent. of the soil (or close on 600 million acres) is still public property. Another quaint feature is that the Federal Government is owner of the Northern Territory, which is at least good in patches, and the Territory measures 335,116,000 acres, of which over 99 per cent. is Crown land. It has a population of 4,260. Yet the Federal authority raised £34,694,411 of the land settlement money on its own credit, and sub-lent it to the State Governments to spend in riotous landdealings, while leaving its own great estate in neglect and emptiness. The Summary of Australian Production Statistics, a Federal Government publication of repute, estimates the number of persons actually employed in the three landed industries, pastoral, agricultural, and dairying (which includes sundries), as 451,909 in 1916, 457,274 in 1921, and 432,134 in 1926. This covers the period of the |