i 4 04 AUSTRALASIA ILLUSTRATED. 



cases where the Government does not feel itself strong enough to borrow the 

 necessary money. This Australian policy, therefore, which has been so general, which 

 has evidently developed itself under the compulsion of circumstances, and which has 

 been so largely carried out, is a characteristic feature of Australian finance, and 

 must not be overlooked by any one wishing to understand the commercial history of 

 these colonies. Their gross indebtedness amounted in 1889 to ,180,000,000, and the 

 debentures thus represented have furnished a very welcome opportunity for investment 

 to English lenders. The growing credit of the borrowers is sufficiently illustrated by 

 the fact that while thirty years ago they had to give six per cent, interest, they can 

 now borrow at three and a half. Over and over again, they have been warned by 

 financial authorities in England that they were borrowing too fast for their population 

 and their rate of progress, but up to the present time each colony has been able to 

 carry its burden ; although sometimes rather heavy taxation has been necessary. The 

 two colonies which have borne the pressure the most easily are naturally New South 

 Wales and Victoria, each of which has a million of people, and each of which possesses 

 considerable taxation resources and reserves. The colonies which have most tried their 

 present resources are the younger ones, where the area of occupiable land is large, and 

 where the eagerness to open up the country and promote settlement has been very 

 great. It is well known that, in young colonies, railways which precede settlement are 

 for a time unproductive. Where these railways are made by private companies, the 

 speculators have to wait for their return. Where they are made by the Government, 

 the general revenue has for a term of years to make good the deficit on the railway 

 returns ; and if that deficit is considerable, extra taxation may for a time be necessary 

 to meet the requirements. The indisputable advantages of railways are so great that 

 there has been, on the whole, very little dissatisfaction at the outlay. The mistakes 

 made have not been so much in the magnitude of the railway investment, as in the 

 political influence used to control their direction and management ; and to meet this 

 difficulty the colonies are, one after another, placing them under the management of 

 independent Commissioners. This arrangement has already given good promise that 

 before many years are over all the Australian railways will be self-supporting. Those in 

 Victoria, where the new system was first begun, have already reached that happy 

 state. The colonial view of the indebtedness is that the English hostile critics look too 

 much at figures and too little at facts. Those on the spot, and who are responsible for 

 the policy adopted, contend that the national investments in railways must turn out 

 right, for three reasons : first, because the Government, as the part owner of the land, 

 improves its national estates ; secondly, because, as the great collector of revenue, it 

 strengthens its fiscal position by developing the resources of the country and increasing 

 the taxable wealth of the people ; and thirdly, because, having a monopoly of railway 

 communication, and being therefore free from the risk of ruinous competition, the 

 railways, as a whole, improve as a property every year. It is possible that some of 







the lines may be badly designed, some constructed in too costly a manner, some too 

 much in advance of settlement ; but these mistakes are far more than neutralized by 

 the steadily improving position of the Governments as the great land-owners, the carriers, 

 and the revenue receivers. The only point connected with the national indebtedness 



