AUSTRALIAN FEDERAL DEBT. 



be converted into the Australian stock alluded to, and be 

 known locally as the Federal Local Loans Stock. It should 

 be distinctly understood, however, that whilst the several 

 colonies thus make themselves jointly and severally liable for 

 mutual benefit, each colony must provide adequate security 

 for the actual amount borrowed from this stock on its own 

 account. 



Each colony could thus obtain a supply of money for its 

 local i-eproductive works on the lowest possible terms, and 

 instead of each colony floating a series of petty loans on its 

 own separate account, the colonies would in regard to future 

 borrowing present a united front in London, with one large 

 uniform Australian Stock. Moreover the careful scrutiny 

 which would of necessity have to be exercised by the Federal 

 Government before granting a loan for local purposes, which 

 would practically render the several states jointly and severally 

 liable, would tend to restrict the money borrowed to works of 

 a strictly reproductive character, and so raise the status of an 

 Australian Stock that it may eventually take precedence, 

 after British Consols, over all other public securities. 



As regards the form which a Federal Stock should take, it 

 is considered that, after the present depression prevailing in 

 London — arising from the crisis in South American States — 

 has passed away, there would be no difKculty in obtaining 

 par for a 3^ per cent. Australian Federal Stock. If this be the 

 case, then a permanent stock might be created bearing interest 

 at that rate, but redeemable at the option of the Government 

 after a period of say 15 years, so as to derive any advantage 

 that might then or thereafter accrue from a fall in the rate of 

 interest, as may be anticipated to 3 per cent. The interest 

 on the stock should all be payable quarterly, either at the 

 beginning, or preferably at the end, of each quarter. 

 Hitherto interest has usually been payable half-yearly, but 

 this either resulted in great inconvenience by having to remit 

 large amounts of interest at one time, or necessitated the issue 

 of two separate stocks with interest payments alternating 

 quarterly, which destroyed the uniformity and thus depreciated 

 the values of the several stocks. It may be mentioned that 

 a change from half-yearly to quarterly interest payments vv^as 

 made in converting the old British 3 per cent, consols into 2| 

 per cents. The object of paying the interest at the end 

 instead of at the beginning of each quarter is to make the 

 interest payable during any year identical with the interest 

 accrued — an advantage which is obvious, for at present there 



